Why are bankers interested in the income statement of a business to which they loan money?
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- What is the effect on the fundamental accounting equation if supplies are purchased on account? How will the fundamental accounting equation change if supplies are purchased with cash? Explain how this purchase will or will not change the owners equity.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.~Why would investors provide a business with cash? ~ Why must a business provide an income statement to the government? ~ Why are drawings not included in the income statement? Short explanation pls thank you
- Which one of the following is not a nominal account?A. purchases accountB. sales accountC. salaries accountD. cash account Which one of the following is a characteristic of a valid business transaction? A. It is an event measurable in terms of money B. It affects the financial position of the business C. It should be supported by a source document D. All of the aboveWhich of the following transactions will increase an asset and increase stockholders’ equity?a. Performing a service on account for a customerb. Borrowing money from a bankc. Collecting cash from a customer on an account receivabled. Purchasing supplies on accountIdentify if it will Increase, Decrease or No effect. 1.What happens to the owner’s assets when the company receives cash from a bank loan? 2.What happens to the owner’s equity when the company receives cash? 3.What happens to the owner’s equity when the owner invests personal cash in the business? 4.What will happen to the company’s liquidity when some of its products are sold from inventory? 5.What happens to the owner’s assets when the company purchases equipment with its cash? 6.What happens to the owner’s assets when the company repays the bank that had lent?
- Why would a loan officer at a bank or a potential investor in the business prefer reading a multiple-step formatted Income Statement versus a single-step formatted Income Statement?According to concept of accounting, financial or business transaction is recorded: a ) when cash is received or paid b) when transaction occurs c) when profit is computed D) when balance sheet is prepared =================================== Which of below users considered as Internal users of accounting information system? a. Investor b. Middle management c. Bank d. Buyer ========================== Creditors of a business may want to use the financial statements to: a. Be sure that after-sales service will continue b. Be sure of an increasing share of the market c. Check that the business is making a profit d. Check that they are likely to be paid when dueGenerally Accepted Accounting Principles (GAAP) require that we account for Revenues when earned and expenses when incurred regardless of when we receive or pay cash. However, that being the rule, "Cash is still King." This is why we have the Statement of Cash Flows. The Statement of Cash Flows essentially converts the accrual basis numbers to a cash basis. Why do you think investors and creditors often focus on the Statement of Cash Flows when making decisions about whether to invest or loan money to a business? Why do you think that they look for positive net cash provided by operations?
- Which of the following is not a question that can be answered with the cash flow statement?A. How much cash did the business spend or receive in investing activities for the accounting period?B. How much inventory does the business have on hand at the end of the accounting period after cash purchases?C. What was the cash movement for the accounting period? D. How much cash was provided or used by the business’s operating activities for the accounting period?Which of the following is given as a means to search for unreported income or hidden assets: Group of answer choices Look at the lifestyles of the individuals (behavioral aspects). Look at the expenses of the business. Compare the cash flow with income. Know the business operations. All of the above.which of the following is an operating avtivity? A. billing customers for services rendered but not yet paid for B. paying off a loan to the bank C. purchasing equipment for cash D. receiving cash investments from owners
