Exam 11: Understanding Accounting

The earnings cycle is complete under two conditions: ___________ and ___________. revenue recognition; matching the sale is complete; the customer has paid the company at least two years have passed; the customer has paid the company the sale is complete; the customer has promised to pay the company the cost of goods sold has been determined; operating revenues exceed operating expenses

Streeter & Sons is a regional service company that has been in business for a few years, but has not employed a controller or anyone else full-time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices, in order to prevent possible financial meltdown. Which of the following, if true, would strengthen the case that Streeter & Sons will be able to meet its current financial obligations? The company has high levels of accounts payable. The company's liabilities exceed its assets. The company currently has a negative cash flow. The company needs to expand its number of customers. The company has more assets than it has liabilities.