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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

Transcribed Image Text:Instructions: Classify each transaction whether they are operating, financing or
investing. After which, indicate the reason for classification.
Finally indicate the effect of the transactions to cash flows.
Transactions
Activity
Reason
Effect
Affects profit
Payment to supplier of goods
Operating
Decrease Cash
and loss
Payment to supplier of services
Receipt from goods sold
Receipt from service rendered
Payment to employees
Purchase of equipment
Purchase of fixtures
Purchase of patents
Purchase of copyrights
Purchase trademarks
Payment of interest
Proceeds from interests
Payment to owners
Receipts from owners
Pay
Proceeds from long-term debt
ent of income taxes
Payment of long-term
Proceeds from sale of vehicle
Proceeds from sale of patent
Proceeds from sale of trademarks
CS Scanned with CamScanner
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- Which of the following has a different effect on net profit than it does on cashflow? A.Cash sale to customer B.Payment for wages C.Payment for rent D.Depreciation of equipmentarrow_forwardUnder the accrual basis of accounting - if cash has been received before the revenue has been earned, which of the following journal entries should be recorded? A) Debit Cash, Credit Unearned Revenue. B) Debit Cash, Credit Sales Revenue. C) Debit Unearned Revenue, Credit Cash. D) Debit Cash, Credit Accounts Receivable.arrow_forwardRecording cost of goods sold is a/an A. cash entry B. deferral entry C. accrual entry D. adjusting entry E. paid bill entryarrow_forward
- Which one of the following statements about revenue is not correct?A. Revenue can result in increases in accounts receivableB. Revenue can result in increases in liabilitiesC. Revenue is earned whenever cash is received from a customerD. Revenue is earned when a service is provided to a customerarrow_forwardFASB suggest that revenues are considered to be earned: a. at the point of sale b. throughout the earnings process c. when the company is entitled to its benefits d. when cash is receivedarrow_forwardA business provider services to a customer on credit.Which of the following is correct: A.Assets increase and liabilities decrease at the time the cash is collected B.Assets increase and liabilities increase at the time of the sale C.Assets increase and the owner's equity increases at the time the cash is collected D.Assets increase and the owner's equity increases at the time of the salearrow_forward
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