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

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1. b) The cash collection from a credit customer

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

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