- This transaction is a distribution of cash to the owner. Even though equity decreased, that decrease did not occur in the process of providing goods or services to customers. - This transaction decreased cash in settlement of a previously existing liability (equity did not change). Supplies expense is recorded when assets are used, not necessarily when cash is paid. . This transaction involves the purchase of an asset. The form of the company's assets changed, but total assets did not (and neither did equity).

- This transaction is a distribution of cash to the owner. Even though equity decreased, that decrease did not occur in the process of providing goods or services to customers. - This transaction decreased cash in settlement of a previously existing liability (equity did not change). Supplies expense is recorded when assets are used, not necessarily when cash is paid. . This transaction involves the purchase of an asset. The form of the company's assets changed, but total assets did not (and neither did equity).

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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Similar questions

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.
When an owner withdraws cash or goods from the business, why is this considered an increase to the Drawing account and not an increase to the Wages Expense account?
Which is NOT an example of a type of event that is not currently recognized in the financial statements but could impact future cash flows? A. litigations against the company B. services that were billed to a customer on account but payment has not been received C. a contract to deliver goods D. existing contract to preform services
An accounting trasaction simultaneously decreases assets and equity.This transaction is explained by which of the following scenarios: A.An expense was incurred on credit B.Accounts Payable owed were paid with cash C.An asset was purchased with cash D.The owner withdrew cash from the business
When cash is paid for expenses, the business has less cash; therefore, the asset account Cash is decreased and the owner's equity account is deacreased. Is it true or false? Explain your answer
An accounting transactioin simultaneously decreases assets and equity.This transaction is explained by which of the following senarios: A.An expense was incurred on credit B.Accounts Payable owed were paid with cash C.An asset was purchased with cash D.The onwer withdrew cash from the business
Which of the following transactions violates the balance sheet equation? (check all that apply) a. Reduce cash and reduce a liability b. Increase revenues and reduce a liability c. Increase cash and increase an expense d. Increase cash and reduce inventory (a non-cash asset) e. Increase cash and reduce a liability
The collection of cash from customers to which they owe to the entity from its past rendering of services would cause what effect on corresponding accounts? a. No effect on neither assets nor liabilities b. Decrease in assets c. Increase in assets d. Increase in liabilities
Which of the following statements is incorrect? A. The accrual method, which builds directly on the revenue and matching principles, ignores the timing of cash receipts or payments determining when to revenue or expenses. when recognize B. In accordance with the going concern assumption, the life of the business is presumed to be indefinite. C. Expenses are matched with revenues, not the reverse. D. In accordance with the unit of measure assumption, accountants normally revise the amounts to reflect the changing purchasing power of money due to inflation or deflation.
Which statement about accrual basis of accounting is incorrect? * A. Accrual accounting adheres to the matching principle.B. Accrual accounting ignores the timing of cash flows in the business.C. Under accrual basis, a deferral is a transaction that impacts cash before impacting the income statement.D. none of the above
Which sentence is incorrect? Select one: a. Cash-basis accounting is not in accordance with generally accepted accounting principles. b. In the Accrual-Basis Accounting, expenses are recognized when incurred. c. In the Cash-Basis Accounting, Revenues recognized when cash is received. d. According to the GAAP in Accrual-Basis Accounting, companies recognize revenues when they record cash receipts for their services.
Which of the following type of transaction will NOT cause a business cash inflow?A. decrease in assets other than cash.B. increase in liabilities.C. decrease in liabilities.D. increase in owner’s equity.