Exam 3: Accrual Accounting Concepts

When are sales recognized under the cash basis of accounting? When are expenses recognized?

Three measures useful in assessing liquidity and the ability of a company to pay its current liabilities are ,the current ratio,and the quick ratio.

When cash is received in payment of an account receivable,which section of the Statement of Cash Flows is affected?

St.Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800.There were $400 of supplies on hand at year-end.The year-end adjustment would include an increase in Toy-Making Supplies Expense for

The financial statements are affected by which type(s)of adjustments?

Which of the following is true about quick ratio?

ASE Company sold goods,receiving $35,000 in cash and $15,000 on credit.How much revenue should it record under the accrual basis of accounting?

In October,cash is received in advance of rendering services.Assuming that half of the services have been performed by December 31,the year-end adjustment would:

Under the cash basis of accounting,no adjustments are necessary prior to the preparation of the financial statements.

Under the balance sheet classification of property,plant,and equipment,some accounts need adjustment and others do not.Which do and why? Which do not and why?

Which of the following is not reported as revenue on the income statement?

Current assets are assets that are expected to be converted to cash,sold or used up within 6 months.

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Accumulated depreciation is to get the carrying value.

The balance in the office supplies account on May 1 was $6,380,supplies purchased during June were $4,740,and the supplies on hand at May 31 were $2,360.The amount to be used for the appropriate adjusting entry is:

Under the cash basis of accounting,expenses are recorded when paid.

Updating accrual accounting records prior to preparing financial statements is called:

The liabilities that are due to be paid usually within a year or less are called:

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

To arrive at cash flows from operations,it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.