Question

In: Accounting

1. Which of the following decreases owner’s equity? a. losses b. investments by owners c. gains...

1. Which of the following decreases owner’s equity?

a. losses

b. investments by owners

c. gains

d. short-term loans

2. Which financial statement shows the financial performance of the company on a cash basis?

a. income statement

b. statement of cash flows

c. statement of owner’s equity

d. balance sheet

3. 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 statement of cash flows as a cash outflow.

b. $350 would show up on the income statement as a sale.

c. $350 would show up on the balance sheet as a sale.

d. The transaction would not be reported because the cash was not exchanged.

4. Which of the following is not an element of the financial statements?

a. liabilities

b. future potential sales price of inventory

c. assets

d. equity

Solutions

Expert Solution

Solution 1:

Losses decreases owner’s equity.

Hence option a is correct.

Solution 2:

"Statement of cash flows" shows the financial performance of the company on a cash basis

Hence option b is correct.

Solution 3:

transaction appear if the business uses accrual accounting "$350 would show up on the income statement as a sale."

Hence option b is correct.

Solution 4:

"future potential sales price of inventory" is not an element of the financial statements

Hence option b is correct.

ekkarill92 answered 1 year ago

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