Question

QUESTION 29

1. Which of the following accounts would be closed at the end of the accounting period?

   		cash
   		sales revenue.
   		land.
   		accounts payable.

2.5 points   

QUESTION 30

1. Which of the following statements is incorrect about the statement of cash flows?

   		It may be prepared on the cash or accrual basis.
   		It provides information about cash inflows and cash outflows of a business entity during the period.
   		It provides information about operating, investing, and financing activities of a business entity.
   		It is a fourth basic financial statement.

2.5 points   

QUESTION 31

1. The accrual basis of accounting recognizes revenues when

   		performance obligations are satisfied, and expenses when the costs are incurred.
   		cash is received, and expenses when the costs are incurred.
   		cash is received, and expenses when cash is paid.
   		performance obligations are satisfied, and expenses when cash is paid.

Answer 1

Answer :

29. Option - A, Cash

Explanation : Cash account is closed at the end of the accounting period after making all adjustments of cash received and cash paid during the year.

30. Option - A, It may be prepared on the cash or accrual basis.

Explanation : The statement of cash flows are prepared on the basis of Direct or Indirect method and not on the basis of cash or accrual. It mainly differentiate between cash and non cash expenses.

31. Option - A, performance obligations are satisfied, and expenses when the costs are incurred.

Explanation : The accrual basis of accounting recognizes revenues when earned and not on the basis of cash received.