Define and Explain Significant Noncash Investing and Financing Activities and the Method

question 111

Essay

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

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Definitions:

Adjusting Entries

Entries made in the accounting records at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.

Accruals

Adjusting entries for either accrued revenues or accrued expenses.

Deferrals

Adjusting entries for either prepaid expenses or unearned revenues.

Asset's Cost

The original financial value of an asset, including purchase price and any expenses incurred to get the asset ready for use.