Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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What guidance does the Codification provide on the classification of current liabilities?
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One output of the accounting information system is the balance sheet. Transactions commonly associated with an organization's purchases and cash disbursements cycle are most likely to be reflected in which sections of balance sheet?
A
Current assets and current liabilities
B
Current assets and long-term liabilities
C
Long-term assets and current liabilities
D
Long-term assets and long-term liabilities
Assets and liablities are classified on the balance sheet into correct and long-term categories in order to
a. determine the value of the businessb. determine the cash flows of the businessc. yield information about liquidityd. distinguish them from extraordinary items
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- Which of the following assertions is relevant to whether the cash balances reflect the true underlying economic value of those assets? a. Existence/occurrence. b. Completeness. c. Rights and obligations. d. Valuation or allocation. e. All of the above.arrow_forwardExercise 1-2 The following items are included in the Cash general ledger account of SANTAN COMPANY as of Dec. 31, 2019: 1. Current account with MBTC 2. Current account with MBTC (overdraft) 3. Petty cash fund (with P350 unreplenished vouchers) 4. Change fund (originally set up by retaining P250 in each of the five cash registers) 5. Cash in bank established as sinking fund 6. Undeposited cash collections (including one check for P400 dated Jan. 2, 2020) 7. Cash deposited with a government agency as bidder's bonds 8. Cash advances for travelling salesmen 9. Cash in bank (under receivership) 10. Cash for meter deposit with a public utility (Meralco) Exercise 1-3 P100,000 20,000 1,000 1,230 40,000 REQUIRED: 1. At what amount should cash as a current asset appear in the balance sheet? 2. How will the other accounts be reported? accounts 5. Change fund 6. Promissory note from cashier with no due date 12,400 7. Currency and coins per count 8. Cash in bank (outstanding checks amounting to…arrow_forwardwhich of the following is an accounting concept which serves as the basis for revenue and expense recognition : A- the time period assumption b- the matching convention c- the cash basis of accounting d- the entity principalarrow_forward
- Distinguishing between current and non-current items on the balance sheet and presenting a subtotal for current assets and liabilities is referred to as: C . a liquidity-based balance sheetarrow_forwardDiscuss the recognition, measurement and disclosures for 'cash' as per accounting standardsarrow_forwardIn financial accounts, how are interfund transactions accounted for?arrow_forward
- Which of the following elements of financial statements is most closely related to companyperformance?a. assetsb. liabilitiesc. expensesarrow_forwardWhich of the following items is NOT classified as a financial asset? a. promissory notes b. forward exchange contracts c. inventory d. accounts receivablearrow_forwardWhich of the following statements about cash received prior to the recognition of revenue in the fi nancial statements is most accurate? Th e cash is recorded as: B . accrued revenue, a liability.arrow_forward
- Briefly describe the types of information concerningfinancial position, income, and cash flows that might beprovided (a) within the main body of the financial statements,(b) in the notes to the financial statements, or (c) assupplementary information.arrow_forwardWhich of the following is not one of the four basic financial statements?a. The balance sheetb. The audit reportc. The income statementd. The statement of cash flowsarrow_forwardWhat relationship exists between the position of an accountin the balance sheet equation and the rules for recordingincreases in that account?arrow_forward
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