Unformatted text preview: equation is Revenue minus Expense = Liabilities . 9. All of the assets that are owned by a business are reported on its balance sheet. Consider the following transactions that occurred during an accounting period. a) Borrow $500 at 10% interest per accounting period. The bank expects you to pay only interest and to do so in the next accounting period. b) Purchase 50 T-shirts @ $5 each; pay in cash. c) Sell 35 T-shirts @ $ 10 each; receive payment in cash. 10. According to the Accrual method, the Company’s profits would be: (a) ($ 150) (b) $ 100 (c) $ 50 (d) $ 175 11. Using the Cash-basis method of accounting, the Company’s profits “from operations” would be: (a) ($ 650) (b) ($ 100) (c) $ 225 (d) $ 725 12. The Company’s “cash flow” for the period is: (a) $ 50 (b) $ 150 (c) $ 425 (d) $ 550...
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This note was uploaded on 05/04/2010 for the course ECON econ 4 taught by Professor Willoughby during the Spring '09 term at UCSD.
- Spring '09