Session:4 Accrual Accounting Process
Problems
Principles of Finance | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance
1. Padma’s Pools Inc. paid $500 for office supplies. What was the impact of this transaction on Padma’s cash
flow?
2. Sally’s BigBox Store issued 1,000 shares of common stock with par value of $10 each and market value of
$16 each in exchange for a new building. What was the impact of this transaction on Sally’s cash flow?
3. Jose sells $500 worth of merchandise to a client on June 1. He delivers the product and invoices the
customer on June 10. The customer pays Jose on July 9. What is Jose’s revenue for June and July,
respectively, under the cash and accrual methods of accounting?
126 4 • Review Questions
Access for free at openstax.org
4. Jamal’s Car Repair purchases a new piece of equipment with a 10-year useful life for $10,000. What is the
impact to Jamal’s net income in the year of purchase if he expenses the equipment? If he capitalizes it
using straight-line depreciation?
5. Mariela’s Shop had revenues of $10,000 and expenses of $6,000 and has cash on hand of $5,000. What is
Mariela’s net income or net loss?
flow?
2. Sally’s BigBox Store issued 1,000 shares of common stock with par value of $10 each and market value of
$16 each in exchange for a new building. What was the impact of this transaction on Sally’s cash flow?
3. Jose sells $500 worth of merchandise to a client on June 1. He delivers the product and invoices the
customer on June 10. The customer pays Jose on July 9. What is Jose’s revenue for June and July,
respectively, under the cash and accrual methods of accounting?
126 4 • Review Questions
Access for free at openstax.org
4. Jamal’s Car Repair purchases a new piece of equipment with a 10-year useful life for $10,000. What is the
impact to Jamal’s net income in the year of purchase if he expenses the equipment? If he capitalizes it
using straight-line depreciation?
5. Mariela’s Shop had revenues of $10,000 and expenses of $6,000 and has cash on hand of $5,000. What is
Mariela’s net income or net loss?