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    Cash vs accrual basis; cash flows for new equipment purchase

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    1. ________ would result in an increase in income under the cash basis but not an increase in income under the accrual basis.
    a)The credit sale of inventory at a sales price in excess of the inventory's cost
    b)The cash collection from a credit customer
    c)The cash sale of inventory at a sales price in excess of the inventory's cost
    d)The return of defective inventory purchased on account to a supplier where a full credit was given

    2. The cash paid to purchase equipment is included in the ________ section of a statement of cash flows.
    a)net cash
    b)financing
    c)investing
    d)operating.

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    https://brainmass.com/business/cash-management/cash-accrual-basis-cash-flows-equipment-purchase-205761

    Solution Preview

    1. b) The cash collection from a credit customer

    Under the cash system income will be recorded when ...

    Solution Summary

    The solution explains some multiple choice questions relating to cash vs accrual basis and cash flows for new equipment purchase.

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