Which of the Following Entries Would Be Recorded by a Company

question 148

Multiple Choice

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 1,000 & \\
• \hline \text { Accounts Receivable } & & 1,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Salaries Expense } & 1,000 & \\
• \hline \text { Salaries Payable } & & 1,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Prepaid Rent } & 1,000 & \\
• \hline \text { Cash } & & 1,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Rent Expense } & 1,000 & \\
• \hline \text { Cash } & & 1,000 \\
• \hline
• \end{array}\]

Interpret the significance of noncontrolling interest in consolidation and its representation in financial statements.

Understand how to calculate the consolidated net income for a parent and its subsidiary.

Analyze the effects of intra-entity transactions on the consolidated statement of cash flows.

Distinguish between basic and diluted earnings per share in a consolidated context.

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Definitions:

Sales Returns

Goods returned by customers to the seller for a refund or credit, often due to defects or dissatisfaction.

Allowances

Amounts deducted from gross revenue or expenses, accounting for items like returns, damaged goods, or discounts.

Operating Cycles

The period it takes for a company to purchase inventory, sell it, and convert the sale into cash.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.