During a period of inflation in which a liability account remains constant, which of the following occurs? a. A purchasing power loss if the item is a nonmonetary liability b. A purchasing power gain if the item is a nonmonetary liability c. A purchasing power loss if the item is a monetary liability d. A purchasing power gain if the item is a monetary liability

During a period of inflation in which a liability account remains constant, which of the following occurs? a. A purchasing power loss if the item is a nonmonetary liability b. A purchasing power gain if the item is a nonmonetary liability c. A purchasing power loss if the item is a monetary liability d. A purchasing power gain if the item is a monetary liability

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter2: Introduction To Financial Statements

Section: Chapter Questions

Problem 12MC: Which of the following is not an element of the financial statements? A. future potential sales...

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During a period of deflation in which liability account balance remains constant, which of the following occurs? a. A purchasing power loss if the item is a nonmonetary liability. b. A purchasing power gain if the item is a nonmonetary liability. c. A purchasing power loss if the item is a monetary liability. d. A purchasing power gain if the item is a monetary liability.
What are the criteria for classifying an item as a current liability? What are some examples of current liabilities? Why is it important to classify a portion of long-term debt on a yearly basis as a current liability? What is the implication of misclassifying a liability as current or long-term?
Which of the following statements about the LIFO Reserve Disclosure is NOT true? a. Usually, FIFO balance sheet amounts are much higher than LIFO balance sheet amounts. b. LIFO reserve indicates the difference between inventory cost reported on the balance sheet under the LIFO cost flow assumption and inventory cost under the FIFO cost flow assumption. c. When the LIFO reserve amount increases, FIFO Cost of Goods Sold equals to the sum of LIFO Cost of Goods Sold and the Increase in LIFO Reserve. d. The LIFO reserve must be reported at each balance sheet date.
Which of the following best describes Accrued Liabilities?a. Long-term liabilities.b. Current amounts owed to suppliers of inventory.c. Expenses incurred, but not paid at the end of theaccounting period.d. Revenues that have been collected but not earned
In the context of handling debt - like items in M&A, what is the most buyer-friendly approach for items representing a hard claim that must be paid post-close? a. Purchase price adjustments b. Escrow accounts c. Insurance policies d. Working capital adjustments e. Debt refinancing
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For the purpose of classifying liabilities as current or noncurrent, the term operatingcycle refers toa. the time period between the date the sale is made and the date the related revenue iscollected.b. the time period between the purchase of merchandise and the conversion of this merchandise back to cash.c. a period of one year.d. the average time period between business recessions
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