Author Question: The owner's Capital account is found on the a. Trial Balance Credit column and Income Statement ... (Read 48 times)

jhjkgdfhk · **on:** Jul 6, 2018

The owner's Capital account is found on the
a. Trial Balance Credit column and Income Statement Debit column of a work sheet.
b. Trial Balance Credit column, Adjusted Trial Balance Credit column, and Balance Sheet Credit column of a work sheet.
c. Trial Balance Credit column, Adjustments Credit column, Adjusted Trial Balance Credit column, and Balance Sheet Credit column of a work sheet.
d. Trial Balance Debit column, Adjustments Debit column, Adjusted Trial Balance Credit column, and Income Statement Credit column of a work sheet.
e. Balance Sheet Debit column and nowhere else.

Question 2

Give examples and explain techniques of cash flow manipulations which may not constitute GAAP violations.

What will be an ideal response?

jordangronback · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

B

Answer to Question 2

Examples of cash flow manipulations, which may not constitute GAAP violations, include:
Stretching Out Payables. Perhaps the simplest means for a company to improve its operating cash flow is to slow down its payment to vendors. Although delaying vendor payments has traditionally been interpreted as a sign of cash flow strain, companies are now spinning this practice as a prudent cash-management strategy.
Financing of Payables. A more complex variation of stretching out payables is the financing of payables. This involves a company borrowing from a third-party financial institution to pay its vendors in the current period, with the intent of paying off the loan in the subsequent period. Of course, the effect is to delay the timing of cash outflows.
Securitization of Receivables. To accelerate cash inflows, a company can package its accounts receivable and transfer them to a financial institution. Under certain circumstances, GAAP allows the company to report the sale proceeds as an operating cash inflow.