Question

29. Assume you have just two accounts in a common combination of the accounts in a journal entry is journal entry. The least likely or least increase expense, decrease asset b. decrease stockholders' equity, decrease expense c. increase expense, increase liability d. increase revenue, decrease liability a. 30. The concept of "conservatism" is best illustrated by Enron implementing "mark-to-market" accounting using the most aggressive revenue recognition policies possible C. a company using the cash basis instead of the accrual basis d. when the value of inventory decreases, the inventory account is reduced; when the value of inventory increases, the inventory account is not affected a. b 31. Which statement about Enron is true? the financial statements were misstated by a small amount b. the corporate culture rewarded integrity c. the annual performance process encouraged unetthical behavior d. the bankruptcy did not affect many people a. 32. In July, ABC Company purchased $500,000 of inventory and paid for 70% of this with cash. The remaining balance was put inventory sold in July on accounts payable. The cost of the was $425,000. How will the accrual basis income statement and the cash basis statement be affected? Accrual Basis Cash Basis subtract $425,000 subtract $500,000 subtract $350,000 subtract $425,000 subtract $425,000 subtract $350,000 subtract $425,000 subtract $350,000 a. b. C. d.

Answer 1

29.

a. Statement is CORRECT

increase in expense results in decrease in asset.

for example if ADVERTISING EXPENSE IS PAID. IT WILL RESULT IN DECREASE IN CASH ASSET.

.b statement is Incorrect

Decrease in stock holder equity is result of decrease in income.

decrease in stockholder equity is due to decrease in retained earnings which is result of increase in expense.

c.correct

increase in expense will result in increase in liability.

example. Utility expense payable.

it will increase expense and utility bills payable liability.

d. correct

if unearned revenue shown as liability is earned.

it will be credited to revenue (increase revenue) and liability will be reduced.