MULTIPLE CHOICE QUESTIONS 1. The statement of cash flows should help investors and creditors assess each of the following except the a. entity's ability to generate future income. b. entity's ability to pay dividends. c. reasons for the difference between net income and net cash provided by operating activities. d. cash investing and financing transactions during the period.
According to "Accrual" (2012),” Cash-basis accounting does not recognize promise to pay or expectations to receive money or service in the future, such as payables, receivables, and prepaid expenses”. Cash basis accounting is a simple and inexpensive method to implement and utilize. Small business owners without a strong accounting background often use cash basis accounting. Even though, both cash basis accounting and accrual basis accounting are approved accounting methods for tax purposes, only accrual basis accounting is generally accepted accounting principles (GAAP). Generally accepted accounting principles requires certain companies to use the accrual basis accounting to
The NCAA is the most visible and powerful national governing body in the United States. The NCAA is considered by the courts to be a private, voluntary membership organization. The NCAA is a structure that uses a representation form of governance. Members are free to join, or not join and there is no judicial authority from any particular state that delegates the power to regulate athletics to the NCAA. Although the NCAA has a heavy representation of public university officials in the NCAA structure, the rule making process conducted by the NCAA is not considered by the Supreme Court to be a joint action sufficient enough to consider the NCAA to be a state actor.
D) medium of exchange, unit of account, and store of value. Answer: D Topic: What is Money? Skill: Recognition* 2) Which of the following does NOT describe a function of money? A) a unit of account B) a hedge against inflation C) a medium of exchange D) a store of value Answer: B Topic: What is Money? Skill: Recognition 3) Which of the following is a primary function of money?
Muhammad Qureshi Jeff Nowakowski Phase II: Southwest Current Assets: Accounts Receivables a. Analyzing Receivables: There is limited information about the bad debt expense or the allowance for doubtful accounts on Southwest’s 10k. According to the 10k, accounts receivables are carried at cost and the allowance for doubtful accounts was immaterial so the company did not provide figures for the account. The largest source of accounts receivable for Southwest is credit cards companies. These receivables are associated with ticket sales for future travel and amounts from business partners involved in firm’s frequent flyer programs. The fact that Southwest was not required to disclose actual figures on their allowance for doubtful accounts and bad debt expense because of their immateriality indicates that the company does very well with collecting their receivables.
There are two approaches for presenting the operating activities direst method and indirect method. Direct method reports the components of cash flow from operating activities as gross receipts and gross payments. The indirect method starts with the net income from the income statement and then eliminates noncash items to arrive at net cash inflow and outflow from operating activities. Investing activities include (a) purchasing and disposing of investments and productive long-lived assets using cash, (b) lending money, and collecting the loans. Cash flow from investing activities is cash inflows and outflows related to the purchase and disposal of long-lived productive assets and investments in the securities of other companies.
The process of capital budgeting focuses on the incremental increase in cash flows associated with an investment decision or investment project. These cash flows are commonly analysed using a combination of analysis techniques such as Discounted Cash Flows, NPV, IRR and Profitability Index as well as Payback, Accounting Return on Investment and Discounted payback (Freeman and Hobbes, 1991, p37). In comparison with NPV, a most commonly used technique; real options consider multiple decision pathways, all of which aren’t necessarily apparent or available at the time of the initial decision. In essence, the NPV calculation does not value managements flexibility, so underestimates the value of a project. (Leslie & Michaels, 1997, p11) Examples of real options and the flexibilities they afford include • Option to abandon • Option to wait and see • Option to delay • Option to expand •
common valuation methods are: Historical Cost/Historical Proceeds Method. For an asset: the amount of cash, or its equivalent, paid to acquire the item, commonly adjusted for depreciation or other allocation. For a liability: the amount of cash, or its equivalent, received when the obligation was incurred—sometimes adjusted for amortization or other allocations. Current Market Value Method. The amount of cash, or its equivalent, that could be obtained by selling an asset in an orderly liquidation.
("The Principles of Commercial Accounting and Fund Accounting", 2011). Accrual vs. Cash Basis Accounting According to the readings, accrual base accounting is defined as in which businesses record, in the periods in which the actions occur, transactions that alter a company's financial statements, even if cash was not traded. In other words, it means that recorded or un-recorded, all dealings are taken and estimated into the overall balance. Cash Basis Accounting, in which an establishment accounts revenue only when it collects cash and an expense only when it pays out cash. This method means that accountants, only takes accountability of the physical cash that is exchanged.
There are a variety of ways to measure the standard of living for people living in a country. The most common ways to do so is by measuring the amount of GDP per capita but using only that statistic would not give an accurate measure of the current state, so there are are other statistics that can be taken into account when measuring standard of living and overall state of the economy. Another way would be to use the Human Development Index(HDI), the unemployment and inflation rates and alternative statistics such as life expectancy at birth or infant mortality rates. Each of these ways of measuring standard of living hold their faults, one prominent example would be one using GDP per capita. GDP per capita is just the total GDP of a country divided by its population, this does not actually tell you what people are living like and it assumes that everyone in the country is earning the same exact amount of money.