Explain the differences between the cash and accrual basis of accounting and how the adjusting process fits in
The cash basis of accounting assumes revenues are recognized when cash is received and expenses are recognized when cash is paid. The accrual basis assumes revenues are recognized when earned and expenses are recognized when incurred. The two approaches differ in the timing of when revenues and expenses are recognized on the income statement. The adjusting process is used for the accrual basis, but is unnecessary for the cash basis of accounting.
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As a result of a stock split,
a. an entry must be made showing the effect on stockholders' equity. b. the market price of the outstanding stock will increase because a split is evidence of a profitable company. c. the par value of the stock is changed in the reverse proportion as the stock split. d. the stockholders have a higher proportionate ownership of the company.
Which of the following media options would be the LEAST costly for Second Avenue's promotional efforts?
A) periodic advertising in a local newspaper that follows a pulsing schedule B) daily advertisements on a cable television station C) daily commercials during the local evening news D) a billboard placed on the nearest interstate highway E) a billboard placed in a supercenter
Amortization is represented by
A) an increase in market value resulting from inflation. B) the reduction in market value resulting from usage. C) the periodic repayment of debt. D) an increase in market value resulting from population growth.
The Internal Revenue Service needs specific cause to order an audit of a company's tax records
a. True b. False Indicate whether the statement is true or false