For Each Assertion About Cash Listed Below, Give an Example

question 10

Essay

For each assertion about cash listed below, give an example of a test of transactions for (1)cash receipts and (2)cash disbursements.
a. Classification.
b. Occurrence.
c. Authorization.
d. Completeness.

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Definitions:

Indirect Method

The indirect method is a widely used approach for preparing the cash flow statement, where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Accounts Payable

Obligations or debts owed by a company to its creditors or suppliers for goods and services received but not yet paid for.

Net Income

The amount of money that remains after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions and changes in working capital.