It Is Necessary to Use a Purchases Account With

question 41

Multiple Choice

It is necessary to use a purchases account with:

• A) only the periodic count method.
• B) only the perpetual accounting control method.
• C) both the periodic count and the perpetual accounting control methods.
• D) either method,if the system designer has included it in the chart of accounts.

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Definitions:

Equipment

Assets used in the operations of a business that have a longer-term use, such as machinery, office furniture, and computers, which are subject to depreciation over their useful lives.

Free Cash Flow

Cash generated by a company after accounting for operating expenses and capital expenditures, available for investment or distribution.

Direct Method

An accounting method used to prepare the cash flow statement, which shows actual cash inflows and outflows from operating activities.

Operating Expenses

Expenditures that a business incurs through its normal business operations, such as rent, utilities, and salaries, excluding production costs.