Question

In: Accounting

6. Shareholders’ equity equals Assets minus Liabilities. True/False 7. Accumulated depreciation and accrued liabilities are examples...

6. Shareholders’ equity equals Assets minus Liabilities. True/False


7. Accumulated depreciation and accrued liabilities are examples of contra accounts: True/False


8. Current assets include cash and other assets expected to be used within the greater of one year or one operating


cycle of the business: True/False


9. Changes in accounting estimates are accounted for retrospectively. True/ False


10. Indicate the natural / normal balance of each account as Debit (DR) or Credit (CR) or Not Applicable (NA)
__ Cash
__ Sales
__ Inventory
__ Accrued expenses
__ Deferred revenue
__ Interest expense
__ Vendor relations expense
__ Retained earnings
__ Prepaid expenses
__ Income taxes
__ Gains from investments
__ Cash flows from operations

Solutions

Expert Solution

6. Shareholders’ equity equals Assets minus Liabilities. True/False
TRUE. Because Assets = Liabilities + Stockholder’s equity.


7. Accumulated depreciation and accrued liabilities are examples of contra accounts: True/False
FALSE.
Accumulated Depreciation is a contra asset account, but accrued liabilities are simply liabilities account.


8. Current assets include cash and other assets expected to be used within the greater of one year or one operating cycle of the business: True/False
TRUE.


9. Changes in accounting estimates are accounted for retrospectively. True/ False
FALSE. The changes in estimates are recorded prospectively as per accounting standards.


10. Indicate the natural / normal balance of each account as Debit (DR) or Credit (CR) or Not Applicable (NA)
__ Cash – Debit (DR)
__ Sales -Credits (CR)
__ Inventory – Debit (DR)
__ Accrued expenses – Debit (DR)
__ Deferred revenue -Credits (CR)
__ Interest expense – Debit (DR)
__ Vendor relations expense – Debit (DR)
__ Retained earnings -Credits (CR)
__ Prepaid expenses – Debit (DR)
__ Income taxes – Debit (DR)
__ Gains from investments -Credits (CR)
__ Cash flows from operations – Not Applicable (NA)

ekkarill92 answered 1 year ago
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