Exam 3: Basic Accounting Systems: Accrual Basis

Accrued revenue is shown on a balance sheet as:

Accrual accounting does not require that the accounting records be updated prior to preparing financial statements.

Which of the following is the effect of depreciation being recorded by a company?​

Under the accrual basis of accounting, net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Cash and other assets that are expected to be converted to cash or sold or used up within one year or less through the normal operations of the business are called:

Under the cash basis of accounting, expenses are recorded when paid.

Describe deferrals and accruals.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Under accrual accounting, expenses are recorded when incurred regardless of when paid.

Which of the following statements is prepared with various sections, subsections, and captions?

Which of the following is an accrued expense?

Which of the following transactions will affect the profitability metric of a company?​

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

Flyer Co.billed a client for flying lessons given in January.The payment was received in February.Under the accrual basis of accounting, when should Flyer Co.record the revenue?

Accounts receivable arising from trade transactions amounted to $62,000 and $78,000 at the beginning and end of the year, respectively.Net income reported on the income statement for the year was $125,000.Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method are:

Which transaction would be recorded in a cash basis system of accounting?

Electrodo Co.purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable.What effect does this transaction have on the accounts under the accrual basis of accounting?

Which of the following is not reported as revenue on the income statement?

At the end of the fiscal year, the following adjusting entries were omitted: (a)No adjusting entry was made to transfer the $3,000 of prepaid insurance from the asset account to the expense account. (b)No adjusting entry was made to record accrued fees of $500 for services provided to customers. Assuming that financial statements are prepared before the errors are discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces.Insert "0" if the error does not affect the item.

Using accrual accounting, expenses are recorded and reported only: