We Have Used Transaction Analysis and the Accounting Equation to Record

question 148

Multiple Choice

We have used transaction analysis and the accounting equation to record several transactions for a company.The transactions are now recorded on a multi-column spreadsheet of the assets,liabilities,and stockholders' equity of the company.If you wanted to prepare a statement of cash flows with this spreadsheet,which column would you use?

• A)Cash column
• B)Accounts Receivable column
• C)Retained Earnings column
• D)Revenue column

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Definitions:

Balance Sheet

A consolidated financial record that captures the essence of a company's assets, owed sums, and equity of its shareholders at an established point in time.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Deferred Gross Profit

Income that is earned but not yet realized, often used in installment sales to represent profit to be recognized in future accounting periods.

Unearned Franchise Fees

Fees received from franchisees that cannot be recognized as revenue until certain obligations are fulfilled by the franchisor, categorized as a liability on the balance sheet.