Exam 3: Accrual Accounting Concepts

Eagle Eye,Inc. ,a corporation,received an additional investment of $6,000 cash in exchange for shares of capital stock.How does this transaction affect Eagle Eye's accounts?

Physical assets of a long-term nature are referred to as fixed assets.

Deferred revenues (unearned revenues)are items initially recorded as liabilities,but expected to become __________ over time.

Under accrual accounting,expenses are recorded when incurred regardless of when paid.

Which asset is NOT depreciated as it usually does NOT lose its ability to provide service?

Using accrual accounting,expenses are recorded and reported only

Accrued revenues would appear on the balance sheet as

The accrual basis recognizes liabilities at the time the business incurs the obligation to pay for the services or goods purchased.

X&Y Co.received $4,000 in payments from clients for services billed in a previous month.What effect does this transaction have on the accounts under the accrual basis of accounting?

Which of the following is an example of an accrued expense?

On April 1,Bear,Inc.paid $2,400 for an insurance premium on a three-year insurance policy.At the end of December,Bear's fiscal year-end,what should be the balance in the prepaid insurance account?

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.

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

Land is an example of a current asset.

Refer to Donald Duck Co.How much cash will be paid on Friday?

The accrual basis of accounting recognizes

Gaston Corporation's accumulated depreciation increased by $10,000,while patents decreased by $3,200 between consecutive balance sheet dates.There were no purchases or sales of depreciable or intangible assets during the year.In addition,the income statement showed a gain of $3,500 from sale of land.Reconcile a net income of $45,000 to net cash flow from operating activities.

To determine cash payments for operating expenses for the cash flow statement using the direct method,depreciation expense is added to net income.

Unearned rent,representing rent paid for the next six months' occupancy,would be reported on the landlord's balance sheet as a(n)

Which of the following is an example of a deferred expense?