3 1 multiple choice questions 1 what is a 39 cash 39 cycle a a cycle of transactions 4306364

3 1 multiple choice questions 1 what is a 39 cash 39 cycle a a cycle of transactions 4306364

3.1   Multiple Choice Questions

1) What is a 'cash' cycle?

A) A cycle of transactions that converts cash inflows to cash outflows, or vice versa.

B) A cycle where there is receipt of funding from investors, those funds are used to generate returns from investments and operations, and then the funds are returned to investors.

C) A cycle where a property is purchased that has long-term future benefits for the enterprise, which ultimately results in cash inflows, and then the property is disposed of.

D) A cycle that involves the purchase of items such as inventory; production, sales, delivery of goods or provision of services; and receipts from customers.

2) What is the cash basis of accounting?

A) A method of accounting that records accounting transactions based on economic substance.

B) A method of accounting that requires accruals for amounts due or outstanding at year-end.

C) A method of accounting that records transactions only when cash is received or paid.

D) An entry that reflects events in a period different from their corresponding cash flow.

3) What is the accrual basis of accounting?

A) An accounting method that records transactions when they have an economic effect on the organization.

B) A method of accounting that does not require accruals for amounts due or outstanding at year-end.

C) An entry that reflects accounting events and transactions after the related cash flow.

D) An entry that reflects events in a period different from their corresponding cash flow.

4) What is an 'accrual'?

A) An entry to record deposits received from a customer for services to be provided next year.

B) An entry that reflects accounting events or transactions after the related cash flow.

C) An entry that reflects transactions in a period different from its corresponding cash flow.

D) An entry to record the payment of a supplier invoice for goods received last month.

5) Which of the following is not an example of a 'cash' cycle?

A) Receipt of funding from investors that is used to generate returns from investments and operations, and then returned to investors.

B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of.

C) Planning for product growth which results in investment opportunities that will create returns for investors.

D) Purchase of inventory, conversion into products that are delivered to customers, and receipts from customers.

6) What is a 'deferral'?

A) An entry to record payments received from customers that had been outstanding for 100 days.

B) An entry that reflects accounting events or transactions after the related cash flow.

C) An entry that reflects transactions in a period different from its corresponding cash flow.

D) An entry to record the receipt of inventory that will be paid in 60 days.

7) Which of the following is an example of the 'financing' cash cycle?

A) Receipt of funding from investors that is used to generate returns from investments and operations, and then returned to investors.

B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of.

C) Planning for product growth which results in investment opportunities that will create returns for investors.

D) Purchase of inventory, conversion into products that are delivered to customers, and receipts from customers.

8) Which of the following is an example of an 'investing' cash cycle?

A) Receipt of funding from investors that is used to generate returns from investments and operations, and then returned to investors.

B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of.

C) Planning for product growth which results in investment opportunities that will create returns for investors.

D) Purchase of inventory, conversion into products that are delivered to customers, and receipts from customers.

9) Which of the following is an example of an 'operating' cash cycle?

A) Receipt of funding from investors that is used to generate returns from investments and operations, and then returned to investors.

B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of.

C) Planning for product growth which results in investment opportunities that will create returns for investors.

D) Purchase of inventory, conversion into products that are delivered to customers, and receipts from customers.

10) Which statement is correct about accrual accounting?

A) Accounting estimates or professional judgment are not necessary with accrual accounting.

B) A true measure of economic or accounting income is possible with accrual accounting.

C) An accounting method that records transactions when they have an economic effect on the company.

D) A method of accounting that does not require accruals for amounts due or outstanding at year-end.

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