Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A) The statement of cash flows should include changes in summary accounts,such as current assets and current liabilities,as well as changes in all individual accounts.
• B) If a firm sells equity to reduce long-term bonds,this is a capital financing transaction and does not appear on the statement of cash flows.However,if the firm sells equity in order to purchase assets,this transaction would be included in the statement of cash flows.
• C) Net income is normally the firm's primary operating cash flow,but changes in accounts payable,accounts receivable,inventories and accruals are also classified as operating cash flows.
• D) Each change on the balance sheet results from one of two types of transactions,either financing activities,such as issuing or retiring new stock or debt,or long-term investment,such as buying and selling assets.
• E) The change in the firm's liquidity position is measured by how much greater a firm's sources of funds are than its uses of funds.

Grasp the concept and recording implications of warranty expenses and associated journal entries.

Comprehend sales revenue recognition and the impact of collecting sales taxes on financial reporting.

Recognize the accounting treatment for subscriptions and the revenue recognition principle.

Understand the categorization and implications of employer payroll taxes and liabilities.

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Definitions:

Good X

A placeholder term that can refer to any commodity or product under consideration in an economic model or context.

Good Y

Typically refers to a variable representing a particular good or service in economic models.

Units

A standard measurement or quantity used to specify or measure, such as pieces, liters, or kilograms.

Utility Function

A mathematical representation of how different combinations of goods or services contribute to a consumer's satisfaction.