Financial Acct

 External decision makers would not look primarily to financial accounting information to assist them in making decisions on:

Capital budgeting.

Porite Company recognizes revenue in the period in which it records account receivable for the related sales, rather than in the period in which the account receivable is collected in cash.
Porite's practice is an example of:

Accrual accounting.

Confirmatory value is central to the concept of “relevance” of accounting information because

It allows investors to verify or change their prior assessments of a company’s performance.

ABC company has not prepared and issued financial statements for three years. Which one of the four accounting assumptions is violated?

Periodicity

The debits and credits from the journal entries are posted to the general ledger accounts only for:

all journal entries.

 The adjusting entry required when amounts previously recorded as deferred revenues are recognized includes:

A debit to a liability.

The balance sheet reports

Assets and equities at a point in time.

Current assets include cash and all other assets expected to become cash or be consumed:

Within one year or one operating cycle, whichever is longer.

17. Which of the following items should be disclosed in the summary of significant accounting policies note?

Depreciation method

Which of the following statements is TRUE?

Income statement summarizes the profit-generating activities during a reporting period

Which of the following item is not included in operating income?

interest revenue

The Claxton Company manufactures children's toys and also has a division that makes automobile parts. Due to a change in its strategic focus, the company sold the automobile parts division. The division qualifies as a component of the entity according to GAAP. How should Claxton report the sale in its income statement?

Report the income or loss from operations of the division in discontinued operations plus gain (loss) from the sale of the component, net of tax.

 Payment on long-term debt

 Cash provided/used by financing activities.

Collection of accounts receivable

 Cash provided/used by operating activities.

 Purchase of equipment

Cash provided/used by investing activities.

 Issuance of stock to acquire land debit land credit common stock

Not a cash flow.

Recognized accrued expenses  debit

 Not a cash flow.