Reference no: EM132249753

1. Which of the following is a disadvantage of using a cash-based accounting system?

It may be misleading with respect to understanding a company's actual cash position.

It can distort measure of the profitability of a business.

It needs greater bookkeeping requirements.

It is a more sophisticated approach to accounting.

It provides an accurate indication of the profitability of a business.

2. Which of the following is a benefit of using an accrual accounting system?

It accurately specifies a company's current cash position.

It is only appropriate for cash-based businesses.

It greatly reduces the demand on bookkeeping.

It can be used to affect tax bills.

It provides a more accurate indication of the profitability of a business.

3. Which of the following is the equation form of long-term assets?

cash + marketable securities + accounts receivable + prepaid expenses + inventory

investments + fixed assets - accumulated depreciation + intangible assets

notes payable + accounts payable + other items payable + dividends payable + the current portion of long-term debt

notes payable + accounts payable + other items payable - dividends payable + the current portion of long-term debt

long-term debt + pension fund liabilities + long-term lease obligations

4. Inventory embodies:

stocks and bonds that a business may hold in the hope that they would provide a greater return to the business rather than just letting cash "sit" in a bank account.

the amount of money due to a business from prior credit sales.

formal debts that will be paid to the company within a year.

payments made in advance of their actual occurrence.

tangible goods held by a business for the production of goods and services.