Which of the following transactions violates the balance sheet equation? (check all that apply) Increase cash and reduce inventory (a non-cash asset) Reduce cash and reduce a liability Increase revenues and reduce a liability Increase cash and reduce a liability Increase cash and increase an expense

Which of the following transactions violates the balance sheet equation? (check all that apply) Increase cash and reduce inventory (a non-cash asset) Reduce cash and reduce a liability Increase revenues and reduce a liability Increase cash and reduce a liability Increase cash and increase an expense

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 5MCQ

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Similar questions

What is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changes
Which of the following statements is false? A. Noncash activities should be reported in accrual basis financial statements. B. Net cash flow from operating activities relates to normal business operations. C. Net income usually equals net cash flow from operating activities. D. The statement of cash flows is an essential part of the basic financial statements.
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.
Which of the following statements is true? a. Net cash flow from operating activities must be determined using the indirect method. b. The indirect method adjusts sales for changes in noncash items to produce net cash flow from operating activities. c. Many companies prefer the indirect method because it is easier and less costly to prepare. d. The FASB prefers the indirect method.
Which of the following would be considered a cash outflow for investing activities? a. cash paid to purchase product for inventory b. cash paid to reacquire common stock c. cash paid to repay debt d. cash paid to purchase equipment
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 suppliers
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
which of the following statements regarding free cash flow is true? a.Free cash flow measures the operating cash flow of a company after the purchase of inventory. b.Free cash flow is a valuable tool for evaluating net income. c.Free cash flow ignores productive capacity. d.None of these choices are correct.
The payment of past debt by the entity will cause a decrease in asset due to the outflow of cash, and what corresponding effect on liabilities? a. No effect b. Decrease c. The transaction would cause no effect on both accounts. d. Increase
Which statement is incorrect? Under cash basis of accounting, * A. the matching principle is ignored.B. if cash is collected, revenue is recorded regardless of earning process.C. revenue is recognized when the receivable is initially recordedD. the projection of the timing and amounts of future cash flows is less accurate than under accrual accounting.E. none of the above
Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin a. I, II, III, and IV b. I, II, and III c. I and IV only d. II and III only
Which of the following is not an example of a cash outflow? Select one: a. Purchase of inventory on credit b. pay employee wages and salaries c. cash withdrawal by the owner d. payment of income tax e. payment of accounts payable