chapter 3

Question 1

operating activities

Answer 1

buying goods and services from suppliers and employees, and selling goods and services to customers and then collecting cash for them

Question 2

cash basis accounting

Answer 2

records revenues when cash is received and expenses when cash is paid

Question 3

accrual basis accounting

Answer 3

records revenues when they are earned and expenses when they’re incurred regardless of when cash is exchanged

Question 4

net profit margin equation

Answer 4

net income/revenues

Question 5

When are revenues recognized

Answer 5

revenue is recognized when it is earned, not when cash is recieved.