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Operating Decisions and the Accounting System

4 important questions on Operating Decisions and the Accounting System

What is the operating cash cycle about?

It is the time it takes for a company to pay cash to suppliers, sell goods and services to customers, and collect cash from costumers (and pay cash to suppliers, and so on).

What does Cash Expenditures consist of?

Cash Expenditures consist of debt payments, Expenses, and asset purchases.

What is the income tax expense and how can we calculate it?

The income tax expense is the last expense listed on the income statement before determining net income. It is calculated as a percentage of pretax income determined by applying the tax rates of the federal, state, and foreign taxing authorities.

What is the revenue realisation principle?

It states that revenues are only recognized when (1) goods or services are delivered, (2) there is persuasive evidence of an arrangement for customer payment, (3) the price is fixed or determinable, and (4) collection is reasonably assured.

The question on the page originate from the summary of the following study material:

Financial Accounting, Custom Edition | 9781308572185

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