When using the indirect method for preparing the statement of cash flows, all of the following will appear in the operating activities section except:
a. Increase in deferred tax.
b. Depreciation expense on leased assets.
c. Interest expense.
d. An increase in long-term liabilities.
d
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Discuss what is involved in creating test data
Identify which error will cause the trial balance to be out of balance.
A. A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash. B. An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash. C. A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable. D. A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense. E. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.
Assume that on February 25, a customer who owes Berry Sales Company $2,000 is declared bankrupt by a federal court. The entry that would be made to write off this account is:
A) Allowance for Uncollectible Accounts 2,000 Accounts Receivable/Customer Account 2,000 B) Accounts Receivable/Customer Account 2,000 Allowance for Uncollectible Accounts 2,000 C) Accounts Receivable 2,000 Notes Receivable 2,000 D) Cash 2,000 Accounts Receivable 2,000
If a company shifts its cost structure by decreasing fixed costs and increasing variable costs, it will lower both the level of risk and its potential for profits.
Answer the following statement true (T) or false (F)