Mastering Company Purchases and Expenses

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Which accounting method provides a more realistic idea of income and expenses during a period of time?

Accrual basis accounting (correct)

Cash basis accounting

Hybrid basis accounting

Modified basis accounting

Which accounting method does not provide any awareness of cash flow?

Hybrid basis accounting

Modified basis accounting

Accrual basis accounting (correct)

Cash basis accounting

If you invoice a client for $5,000 in December of 2017 and receive the payment in January of 2018, which accounting method would record that transaction as a part of your 2017 income?

Accrual basis accounting (correct)

Modified basis accounting

Hybrid basis accounting

Cash basis accounting

According to the American Accounting Association (AAA), accounting is defined as:

The classification and recording of monetary transactions Signup and view all the answers

What is the purpose of financial statements?

To assess a company's financial position on a specific date Signup and view all the answers

What is considered a transaction in accounting?

Any event that involves a change in a company's business and is measurable in terms of money Signup and view all the answers

Which step involves transforming resources and purchased operating means into finished products/services?

Processing and producing Signup and view all the answers

What type of expenses are recorded as costs in the income statement?

Current expenses Signup and view all the answers

What represents the means that a company owns to conduct its business?

Assets Signup and view all the answers

What brings a double change in the financial position of a business?

Business transactions Signup and view all the answers

Which financial statement shows the financial position of a company at a specific point in time?

Balance Sheet Statement Signup and view all the answers

What is the basis for accounting that records revenues and expenses when they are earned, regardless of when the money is actually received or paid?

Accrual basis Signup and view all the answers

Which method of accounting recognizes revenues when cash is received and expenses when they are paid?

Cash basis Signup and view all the answers

What is the master book where transactions are recorded in accounting?

General ledger Signup and view all the answers

Which of the following is an example of a non-monetary event in accounting?

A company records the depreciation of a fixed asset Signup and view all the answers

When a company sells a car and receives the money immediately, it is an example of a __________ transaction.

Cash Signup and view all the answers

Which of the following is an example of an internal transaction?

A company transfers goods from one deposit to another Signup and view all the answers

What is an account receivable?

The right to claim money after a certain period Signup and view all the answers

Which of the following features must a monetary event have to be considered a business transaction?

Changing the financial position of the company Signup and view all the answers

What is the difference between a quantitative change and a qualitative change in a business transaction?

Quantitative change involves a change in the total value of assets or liabilities, while qualitative change involves a change in more than one element of assets or liabilities Signup and view all the answers

How can a company gather operating resources to run its business?

By receiving money from an external institution as debt capital Signup and view all the answers

How can shareholders receive their money back from a company?

Through dividends when the company revenue exceeds the cost Signup and view all the answers

Mastering Company Purchases and Expenses

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Questions and Answers

Which accounting method provides a more realistic idea of income and expenses during a period of time?

Which accounting method does not provide any awareness of cash flow?

If you invoice a client for $5,000 in December of 2017 and receive the payment in January of 2018, which accounting method would record that transaction as a part of your 2017 income?

According to the American Accounting Association (AAA), accounting is defined as:

What is the purpose of financial statements?

What is considered a transaction in accounting?

Which step involves transforming resources and purchased operating means into finished products/services?

What type of expenses are recorded as costs in the income statement?

What represents the means that a company owns to conduct its business?

What brings a double change in the financial position of a business?

Which financial statement shows the financial position of a company at a specific point in time?

What is the basis for accounting that records revenues and expenses when they are earned, regardless of when the money is actually received or paid?

Which method of accounting recognizes revenues when cash is received and expenses when they are paid?

What is the master book where transactions are recorded in accounting?

Which of the following is an example of a non-monetary event in accounting?

When a company sells a car and receives the money immediately, it is an example of a __________ transaction.

Which of the following is an example of an internal transaction?

What is an account receivable?

Which of the following features must a monetary event have to be considered a business transaction?

What is the difference between a quantitative change and a qualitative change in a business transaction?

How can a company gather operating resources to run its business?

How can shareholders receive their money back from a company?

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