Question

QUESTION 32

1. Expenses and revenues are recorded in the accounting records when actual money is exchanged (not credit) in which type of system?

   		Finance
   		Cash
   		Accrual
   		Banking

3 points   

QUESTION 33

1. Which of the following statements is FALSE?

   		NAICS and SIC codes are essentially the same thing
   		NAICS and SIC codes classify businesses to collect, analyze and publish statistical data related to the US economy
   		SIC codes are no longer used in the US
   		NAICS codes were jointly created by the US, Canada, and Mexico

3 points   

QUESTION 34

1. Which of the following ratios compares total debt to total owners’ equity to evaluate the ability to meet long-term obligations

   		Return on Sales
   		Accounts payable turnover
   		Current ratio
   		Debt to equity ratio

Answer 1

1. Option (b) is correct

Under cash basis / system of accounting, expenses and revenues are recorded when the actual cash payment or receipt is made. So, in cash basis, prior years' revenue may be recognized in the current year, if it is received in current year or future years' expenses (prepaid expenses) are recognized in current year.

2. Option (c) is the answer

SIC codes are currently being used in some government agencies and departments. Securitries and exchange commission uses SIC codes.

3. Option (d) is correct

Debt to equity ratio compares total debt to total equity to evaluate the ability to meet long term obligations. Debt to equity ratio can be calculated by:

Debt to equity ratio = Total debt or liabilities / Total stockholder's equity