Multiple Questions Answers

1. A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual basis of accounting?
1- Net increase in assets of $40,000 and a net increase in liabilities of $40,000
2-Net increase in assets and liabilities of $50,000
3-Net increase in assets of $50,000 and a net decrease in liabilities of $40,000
4-Net increase in assets of $60,000 and a net decrease in liabilities of $40,000

 


2. Updating accrual accounting records prior to preparing financial statements is called 1 the closing process.
2 converting to cash basis accounting.
3 the adjustment process.
4 going concern adjustments.


3. Accrued expenses are ordinarily reported on the balance sheet as
1 assets.
2 liabilities.
3 fixed assets.
4 prepaid expenses.

 


4. ABN Company sold goods, receiving $10,000 in cash and $25,000 on credit. How much revenue should it record under the accrual basis of accounting? 1-$10,000
2- $25,000
3-$35,000
4-None at this time

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    • 1. A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual …

    • 1. A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual …