Chapter 3 - Operating Decisions

Question 0

Unearned or Deferred Revenue

Answer 0

When a customer pays in advance for goods or services

a liability account

Question 1

Revenue

Answer 1

Increases in assets or settlements of liabilities from ongoing operation

Question 2

Expenditure

Answer 2

Any outflow of cash for any purpose, whether to buy equipment, pay off bank loan, or pay employees their wages

Not all cash expenditures are expenses.

Question 3

Expenses

Answer 3

Outflows or the using up of assets or increases in liabilities from ONGOING OPERATIONS incurred to generate revenue during the period.

Question 4

Depreciation Expense

Answer 4

When a company uses buildings and equipment to generate revenues, a part of the cost of these assets is reported as an expense.

(this is an operating expense)