Assume a company has a $350 credit (not cash) sale. How would the transaction appear if thebusiness uses accrual accounting?A. $350 would show up on the balance sheet as a sale.B. $350 would show up on the income statement as a sale.C. $350 would show up on the statement of cash flows as a cash outflow.D. The transaction would not be reported because the cash was not exchanged.

Assume a company has a $350 credit (not cash) sale. How would the transaction appear if thebusiness uses accrual accounting?A. $350 would show up on the balance sheet as a sale.B. $350 would show up on the income statement as a sale.C. $350 would show up on the statement of cash flows as a cash outflow.D. The transaction would not be reported because the cash was not exchanged.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter2: Introduction To Financial Statements

Section: Chapter Questions

Problem 5MC: Assume a company has a $350 credit (not cash) sale. How would the transaction appear if the business...

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Assume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting? A. $350 would show up on the balance sheet as a sale. B. $350 would show up on the income statement as a sale. C. $350 would show up on the statement of cash flows as a cash outflow. D. The transaction would not be reported because the cash was not exchanged.
What is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changes
Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither. A. sold goods to customers on credit B. collected cash from customer accounts C. sold goods to customers for cash D. collected cash in advance for goods to be delivered later
Which of these transactions would not be part of the cash flows from the operating activities section of the statement of cash flows? A. credit purchase of inventory B. sales of product, for cash C. cash paid for purchase of equipment D. salary payments to employees
For each of the following transactions, state which special journal (Sales Journal, Cash Receipts Journal, Cash Disbursements Journal, Purchases Journal, or General Journal) and which subsidiary ledger (Accounts Receivable, Accounts Payable, neither) would be used in recording the transaction. A. Sold inventory for cash B. Issued common stock for cash C. Received and paid utility bill D. Bought office equipment on account E. Accrued interest on a loan at the end of the accounting period F. Paid a loan payment G. Bought inventory on account H. Paid employees I. Sold inventory on account J. Paid monthly insurance bill
Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Accrual-basis accounting records both cash and noncash transactions when they occur. Generally accepted accounting principles require companies to use cash-basis accounting. The key elements of accrual-basis accounting are the revenue recognition principle, the expense recognition principle, and the historical cost principle.
Assume a company has a $350 credit ( not cash) sale. How would the transaction appear if the business uses accrual accounting ?
What does the phrase "Revenue is recognized at the point of sale" mean? (Assume the company reports using ASPE.) a.Revenue is recorded in the accounting records when the goods are sold to a customer and reported on the statement of earnings when the cash payment is received from the customer. b.Revenue is recorded in the accounting records and reported on the statement of earnings when the cash is received from the customer. c.Revenue is recorded in the accounting records when the cash is received from a customer and reported on the statement of earnings when sold to the customer. d.Revenue is recorded in the accounting records and reported on the statement of earnings when goods are sold and delivered to a customer.
When converting accrual basis to cash basis of accounting, which of the following adjustments should not be made to accrual basis sales to arrive at the cash basis sales? a. Deduct beginning balance of advances from customers. b. Subtract ending accounts receivable c. Add ending accounts receivable d. Add beginning accounts receivable
If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as "Other Income" on the income statement. Please explain with full explanation. a. True b. False
What are the effects of the following types of transactions on the accounting equation? Also identify the financial statements that are affected. (Assume that the perpetual inventory system is used.) Acquisition of cash from the issue of common stock. Contribution of inventory by an owner of a company. Purchase of inventory with cash by a company. Sale of inventory for cash.
* ?Which one of the following is correct The term 'Sales' include the sales of fixed assets for cash as well as on credit The term 'Operating stock' means the goods lying unsold at the beginning of current accounting period The term 'closing stock' means the goods lying unsold at the end of accounting period The term 'Purchases' include the purchases of fixed assets for cash as well as on credit