When a company purchases supplies on account Multiple Choice O O O Liabilities increase Total assets decrease Expenses increase Cash flow from financing activities decreases
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- Expenses represent outflows of assets or increases in liabilities as a result of efforts to produce revenues.Which of the following would be classified as a cash outflow from an operating activity? a. Purchase of an investment b. Payment of dividends c. Purchase of equipment d. Payment of goods purchased from suppliersMatch the correct term with its definition. A. cost principle i. if uncertainty in a potential financial estimate, a company should err on the side of caution and report the most conservative amount B. full disclosure principle ii. also known as the historical cost principle, states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition C. separate iii. (also referred to as the matching principle) matches expenses with associated revenues in the period in which the revenues were generated. D. monetary iv. business must report any business activities that could affect what is reported on the financial statements E. conservatism v. system of using a monetary unit by which to value the transaction, such as the US dollar. F. revenue vi. period of time in which you performed the service or gave the customer the product is the period in which revenue is recognized. G. expense vii. business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally.
- A company wishing to increase earnings in the current period may choose to:A . decrease the useful life of depreciable assets.B . lower estimates of uncollectible accounts receivables.C . classify a purchase as an expense rather than a capital expenditure.Asset utilization ratios: A. Are most important to stockholders.B. Measures the company's ability to generate a profit on sales.C. Measure how much cash is available for reinvestment into current assets.D. Relate balance sheet assets to income statement sales.Net working capital increases when: A. a credit customer pays for his or her purchase B. inventory is sold at cost. C. fixed assets are purchased for cash D. inventory is purchased on credit
- Difference between source and use of funds? A decrease in Accounts Payable is a ( SOURCE / USE) of funds. A decrease in inventory is a ( SOURCE / USE) of funds. A purchase of Fixed Assets is a ( SOURCE / USE) of funds.Revenues come from sales of goods and services to customers and result in A.decreased assets or increased liabilities B.decreases in both assets and liabilities C.increases in both assets and liabilities D.increased assets or decreased liabilitiesIndicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fixed asset is sold for more than book value. Net income will ______ Answer 1 A fully depreciated asset is retired. Net income will experience ______ An increase in inventory turnover ratio signifies _____________________ in a firm's efficiency. Merchandise is sold for cash. Total current assets will ________
- A company may generate sufficient cash to pay its debts, it may use for other purposes refers to * a. Collateral b. Capacity c. Cash d. Charactertell whether the assets, liabilities andequity will increase (I), decrease (D) or is notaffected (NE). The company purchases supplies on credit.answer true or false: gains are increases in net assets from peripheral activities while revenues are increases from ongoing activities.
