6. When preparing cash flow statement with indirect methodology. we need to take

Question

6. When preparing cash flow statement with indirect methodology. we need to take into account: a. Increases in current assets and decreases in current liabilities affects negatively to Cash b. Decreases in current assets and increases in current liabilities affects positively to Cash c. Increases in Net Working Capital affects negatively to Cash d. Al of the are right 7. An asset: a. It is recognized when it is acquired in a past transaction or Exchange b. The value of its future benefits can be measured with a reasonable degree of precision c. It is a resource that is expected to provide future economic benefits d. All of them are right 8. Which one of the following sentences are right? a. 10-K annual report is obliged to public companies b. 10-K annual report is obliged to private companies c. 10-K annual report is only for companies that issue bonds d. a and c are right 9. Income Statement is based on a. Cash principle b. Accrual principal c. When is produced the flow of money d. Increase the sales as much as you can 10.Example of adjusting entries are: a. Prepaid expenses, unearned revenues and depreciation b. Deferred taxes c. Interest and Salaries payable d. All of them 11. Which are fundamental bookkeeping equations? a. AssetsExpensesLiabilities EqityRevenues b. Sum of Debits # Sum of Credits c. Beginning accounts balance IncreasesDecreasesEnd account balance d. All of them

Explanation / Answer

Question 6 - When assets increase it decreases cash as we have to spend cash to buy these assets and when liability decreases it decrease cash as it we are paying liabilities

Similarly when assets decrease it increases cash flow and when liability increase it increases cash flow

Net Working Capital = Current Assets - Current liabilities

If Net Working Capital increase its means increase in assets is more than increase in liabilities so cash will decrease and if net working capital decrease then cash will increase

Therefore, answer to this question is 'd' i.e. All above options are right

Question 7 - We record an assets when it is bought or acquired in the past transaction or exchange based on matching principal of accounting

An assets value is measured based on future economic benefits provided by it

An asset is a resource that is expected to provide future economic benefits

Therefore, answer to this question is 'd' i.e. All above options are right

Question 8 - 10-K is filed by companies to SEC to disclose its earnings and all business related information. These reports are only filed by public companies no matter whether they issue bonds or not

Therefore, answer is option 'A' i.e. 10-K annual reports are obliged to public companies

Question 9 - While making income statement we use accrual principal i.e. to record income when it happens instead of when cash will flow

Therefore, answer is option 'b' i.e. accrual priniciple

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.