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- Choose the correct statement below: A. Unearned income is income earned and already collected.B. Contra asset is an account shown as an addition to the asset.C. Prepaid expenses are expenses paid and already incurred.D. Accrued expenses are expenses already incurred but not yet paid.Directions: Indicate the effects of the transactions listed in the following table on total current assets, current ratio, and net income. Use (+) to indicate an increase, (−) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. (Note: A good accounting background is necessary to answer some of these questions; if yours is not strong, answer just the questions you can.) Total Current Assets Current Ratio Effect on Net Income 4. A fixed asset is sold for less than book value. + + - 5. A fixed asset is sold for more than book value. + + + 6. Merchandise is sold on credit + + + 7. Payment is made to trade creditors for previous purchases. - + 0 8. A cash…Directions: Indicate the effects of the transactions listed in the following table on total current assets, current ratio, and net income. Use (+) to indicate an increase, (−) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. (Note: A good accounting background is necessary to answer some of these questions; if yours is not strong, answer just the questions you can.) Total current assets Current ratio Effect on net income 1. Cash is acquired through issuance of additional common stock. 2. Merchandise is sold for cash. 3. Federal income tax due for the previous year is paid. 4. A fixed asset is sold for less than book value. 5. A fixed asset is sold for more than book value. 6. Merchandise is sold on credit.…
- 1. Which statement is incorrect? Under the transactions approach, net income is computed as the excess of income over expenses Under the capital maintenance approach, net income is computed as the excess of ending capital over beginning capital, excluding the effect of investments and withdrawals by owners. Unusual and infrequent items of expenses should be presented in in the income statement as a component of income from continuing operation. The single statement of comprehensive income shows a detailed presentation of all income and expenses, regardless of whether these income and expenses are recognized or not in the profit or loss. None of the above 2. S1: In the statement of changes in equity, the effect of the correction of a prior period error is presented separately for each component of equity. S2: Preference share dividend appear under the retained earnings section of the statement of changes in equity. True, True False, False True, False False True 3. The…Which statement is incorrect? a. Under the transactions approach, net income is computed as the excess of income over expenses b. Under the capital maintenance approach, net income is computed as the excess of ending capital over beginning capital, excluding the effect of investments and withdrawals by owners. c. Unusual and infrequent items of expenses should be presented in in the income statement as a component of income from continuing operation. d. The single statement of comprehensive income shows a detailed presentation of all income and expenses, regardless of whether these income and expenses are recognized or not in the profit or loss. e. None of the above Statement 1: In the statement of changes in equity, the effect of the correction of a prior period error is presented separately for each component of equity. Statement 2: Preference share dividend appear under the retained earnings section of the statement of changes in equity. a. True, True b. False,…b. Give an example for each of the following types of transactions for the accounting equation: i. Increase in one asset, decrease in another asset.ii. Increase in an asset, increase in liability.iii. Increase in an asset, increase in owner’s equity capital.iv. Decrease in an asset, decrease in liability.v. Decrease in an asset, decrease in owner’s capital.
- Accounting treatment of prepaid expenses will be: a. Added to that expenses in income statement b. Added in liabilities c. Deducted from assets d. Deducted from the expense in income statementWhich of the following accounting procedures are INCORRECT? I) Asset An increases, Debit & A decrease, Credit II) Capital - Arn increases, Debit & A decrease, Credit II) Expenses - An increases, Debit & A decrease, Credit IV) Income An increases, Debit & A decrease, Credit V) Liabilities An increases, Credit & A decrease, Debit I and V only Il and IV only I,Il and III only I,IIl and V onlyAccording to the IASB Framework for the preparation and presentation of financial statements, which TWO of the following are examples of expenses? A loss on the disposal of a non-current asset A decrease in equity arising from a distribution to equity participants A decrease in economic benefits during the accounting period A reduction in income for the accounting period I and II II and III I and III III and IV
- please answer the following 2 questions: 3. Any Loss in the Income statement should be: a) added to the net income because they are non-cash activities b) added to the net income because they are cash activities c) deducted from the net income because they are non-cash activities d) deducted from the net income because they are cash activities 4. Any increase in Current Assets should be a) Dedected from Net Income b) It depends on the circumstances c) Added to Net Income d) None of the above.Which of the following statements regarding the income statement are true? Group of answer choices A. The net income from the income statement is included on the asset section of the balance sheet. B. The income statement shows the cash flows from operations during a period of time. C. Net income or loss from the income statement is included in the calculation of ending retained earnings on the Statement of Retained Earnings. D. The income statement shows how much the company owes.Which of the following normally has a net credit balance? A. Asset accounts such as cash, accounts receivable, inventory, and equipment B. Expenses that decrease retained earnings C. Dividends that decrease retained earnings D. Revenues that increase retained earnings