Multiple Choice Answers

For EFG Co., the transaction “Payment to creditors” would __________.
a. Increase the assets
b. Decrease the assets
c. Have no effect on the assets

Accounts Receivable had a net decrease of $10,000 for the year. How does this impact the cash flows from operations?
a. Increases it by $20,000
b. No impact
c. Decreases it by $10,000
d. Increases it by $10,000

In accrual accounting, when revenues are earned and recorded, all expenses incurred in generating the revenues must also be recorded.

True
False

Received $4,000 in payments from clients for services billed in a previous month. Which accounts will be affected and by what amounts under the accrual basis of accounting?

a. Cash will increase by $4,000 and accounts receivable decrease by $4,000
b. Cash will increase by $4,000 and revenues will increase $4,000
c. Accounts receivable will increase by $4,000 and revenue will increase by $4,000
d. Accounts receivable will increase by $4,000 and cash will increase by $4,000

A list of assets, liabilities, and owners’ equity as of a specific date is a(n) __________.
a. Income statement
b. Balance sheet
c. Statement of cash flows
d. Retained earnings statement