Accounts and Preparing Financial Statements QUESTIONS 1. The cash basis of accounting reports revenues when cash is received while the accrual basis reports revenues when they are earned. The cash basis reports expenses when cash is paid while the accrual basis reports expenses when they are incurred (and matched with revenues they generated). 2. The accrual basis of accounting generally provides a better indication of company performance and financial condition than does the cash basis.
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pay-off Qantas’ decision to pay its debt earlier than scheduled is quite advantageous. The company can save money from paying monthly interest and free up cash flow from having to pay back loan every month – especially if the company has a lot of expenses to cover (Almeida‚ 2013). Moreover it also improves the company’s credit score – the use of historical data and statistical techniques to evaluate the credit risk of a potential applicant (Bridges‚ n.d.‚ p.2). With the improved credit score‚ Qantas
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A.PREPAID EXPENSES This is an expense that is already paid but not incurred. This is exactly the opposite of accrued expense. There are two methods or approaches that can be used in recording prepayments‚ namely: Expense Method and Asset Method. a. Expense Method- under this method or approach‚ an expense ................account is debited upon payment of the prepaid expense. ................This method is also called “nominal approach” because ................an expense is an Income Statement
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statement of comprehensive income… Paragraph 88 states that an entity shall recognize all items of income and expense in a period in profit or loss unless IFRS requires or permits otherwise. Paragraph 97 states that when items of income or expense are material‚ an entity shall disclose their nature and amount separately. And paragraph 99 states that an entity shall present an analysis of expenses recognized in profit or loss using a classification based on either their nature or their function within
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Received $850 cash for services in April 16. Paid $400 cash for repair supplies purchased 2/9/11 February 28‚ 2011 * Office supplies on hand at month end- $150 * Rent expense for February – refer to transaction #2 above * Insurance expense for February – refer to transaction #3 above * Depreciation expense on vehicle for February – refer to transaction #12 * Repair supplies on hand - $80 *Acct. No. Assets 101 Cash 102 Accounts Receivable 103 Prepaid Rent 104 Prepaid Insurance
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the income after taxes and dividing it by the owner’s equity. I would be aiming for a higher return. Business Income Statement pits the revenue against the operating expenses. It spells out every single expense division or department‚ but groups the revenue in one main category. It basically summarizes the firm’s revenues and expenses for each accounting period. It will show if anything is leaning to far in one direction; if things aren’t balanced out well. I would use the working capital financial
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Intengible Assets (patent) | $ 125‚000 | | | | Cash | $ 375‚000 | | | | Shareholder’s Equity | | $ 500‚000 | | | Establishmnet of Chemalite‚ Inc. | | | 1/15/2003 | 2 | Incorporation Expenses | $ 7‚500 | | | | Cash | | $ 7‚500 | | | Expenses like legal fees‚ charter costs...etc | | | 6/15/2003 | 3 | PP&E | $ 62‚500 | | | | Cash | | $ 62‚500 |
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Direct materials used $ 909‚850 Direct labor 675‚480 Factory overhead Depreciation expense—Factory equipment 33‚550 Factory supervision 102‚600 Factory supplies used 7‚350 Factory utilities 33‚000 Indirect labor 56‚875 Miscellaneous production costs 8‚425 Rent expense—Factory building 76‚800 Maintenance expense—Factory equipment 35‚400 Total factory overhead costs 354‚000 Total manufacturing costs
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indirect methods Evaluate the comments that follow as being True or False. If the comment is false‚ briefly explain why. a. Both the direct and indirect methods will produce the same cash flow from operating activities. True b. Depreciation expense is added back to net income when the indirect method is used. True c. One
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Review When starting the company‚ three owners contributed €50000 cash and a software which was valued €10000. During the year‚ the company collected money from its clients monthly and thus maintained the cash flow. Meanwhile‚ several types of expenses were incurred throughout the year with different payment agreements or periods. Besides a lease settlement for office accommodation‚ the company made an initial investment for refurbishment‚ new fixtures‚ office furniture‚ computer and photocopying
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