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Chapter 2: Measurement Concepts: Recording Business Transactions




Question;46. When;a company receives a product previously ordered, a recordable transaction has;occurred.;True False;47. When;a business hires a new employee, a recordable transaction has occurred.;True False;48. A;transaction should be recorded when title to merchandise passes from the;supplier to the purchaser and creates an obligation to pay.;True False;49. Purchase;requests and purchase orders are economic events, and as such they affect a;company?s financial position, and are recognized in the accounting;records.;True False;50. When;a company pays an employee for work performed, it is considered an economic;event that is recorded as a transaction.;True False;51. A;purchase should usually not be recognized (recorded) before the title is;transferred because, until that point, the vendor has not fulfilled its;contractual obligation and the buyer has no liability.;True False;52. The;timing of cash flows is critical to a company?s ability to maintain adequate;liquidity so that it can pay its bills on time.;True False;53. All;sales transactions generate immediate cash.;True False;54. In;order to manage a company?s liquidity, managers and other users of financial;information must understand the difference between transactions that generate;immediate cash and those that do not.;True False;55. One;way a company can manage its expenditures is to rely on its creditors to give;it time to pay for purchases.;True False;56. All;expenses incurred by a business are paid immediately in cash.;True False;57. Purchasing;office supplies on account is an example of one way a company can take;advantage of deferring a cash payment.;True False


Paper#55133 | Written in 18-Jul-2015

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