FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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**Question: Identifying Incorrect Statements About Financial Reporting**

Below are statements regarding the reporting of receivables and other financial items. One of these statements is NOT true. Read each statement carefully to determine which one is incorrect:

a. Disclosures related to receivables are reported on the financial statement notes.
b. Current assets are normally reported in order of their liquidity.
c. All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section.
d. Cash and cash equivalents are the first items reported under current assets.

**Explanation:** 

- **Option a:** This statement is true. Disclosures related to receivables, including important details and additional information, are indeed reported in the notes accompanying financial statements.
  
- **Option b:** This statement is true. Current assets are typically listed in order of liquidity, meaning the ease with which they can be converted to cash. This usually starts with cash and cash equivalents and proceeds to accounts receivable, inventory, etc.
  
- **Option c:** This statement is true. Receivables expected to be realized in cash beyond a standard operating cycle (often 365 days) are classified as non-current assets.
  
- **Option d:** This statement is true. Cash and cash equivalents are typically the first items listed under current assets due to their high liquidity.

Identify the statement that is NOT true based on the discussion above.
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Transcribed Image Text:**Question: Identifying Incorrect Statements About Financial Reporting** Below are statements regarding the reporting of receivables and other financial items. One of these statements is NOT true. Read each statement carefully to determine which one is incorrect: a. Disclosures related to receivables are reported on the financial statement notes. b. Current assets are normally reported in order of their liquidity. c. All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section. d. Cash and cash equivalents are the first items reported under current assets. **Explanation:** - **Option a:** This statement is true. Disclosures related to receivables, including important details and additional information, are indeed reported in the notes accompanying financial statements. - **Option b:** This statement is true. Current assets are typically listed in order of liquidity, meaning the ease with which they can be converted to cash. This usually starts with cash and cash equivalents and proceeds to accounts receivable, inventory, etc. - **Option c:** This statement is true. Receivables expected to be realized in cash beyond a standard operating cycle (often 365 days) are classified as non-current assets. - **Option d:** This statement is true. Cash and cash equivalents are typically the first items listed under current assets due to their high liquidity. Identify the statement that is NOT true based on the discussion above.
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