At the end of an accounting period, each expense that has been incurred but not yet paid should be recorded as
Answer(s): C
Expenses should be recognized in the period in which they are incurred. In order to be consistent with the matching principle, an adjusting entry must be made to record the expense, regardless of whether it has been paid.
Which of the following is/are true about held-to-maturity securities?
Marketable securities classified as "Held-to-maturity" are financial securities purchased with the intent (and ability) to hold until maturity. They are therefore categorized as non-current assets in all periods except the one in which they are about to mature. They are reported on the balance sheet at theamortized historical cost and income on the securities, including amortization of premium or discount, is part of the operating income.
Which of the following would be classified a cash inflow from investing activities?
All responses qualify as cash inflows from investing activities.
Under an inflationary, LIFO environment with stable inventories, which of the following is true compared to FIFO?Working Capital Taxes Current Ratio
Answer(s): A
With rising prices and stable inventories, the COGS is higher under LIFO than under FIFO, thus lower net income and lower taxes. Ending inventory is valued lower under LIFO than under FIFO and hence, a lower current asset value and lower working capital and current ratio.
Long-term obligations that are or will become callable by the creditor because of the debtor's violation of a provision of the debt agreement at the balance sheet date should be classified as
Current liabilities include obligations that must be liquidated within 1 year as well as obligations that are or will be callable by the creditor within 1 year because of a violation of a debt covenant. An exception exists, however, if the creditor has waived or subsequently lost the right to demand repayment for more than 1 year from the balance sheet date.
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