Orders are not entered onto the cash flow statement as cash receipts because you ________.

Question

BlackTom AI · Accepted Answer

In approaching this question, we focus on how cash flow statements treat cash receipts versus sales recorded for revenue.
Option 1: 'might get a cancellation' — While cancellations can occur, this reason does not address why cash flows are not recorded at the creation of the order. The timing issue for cash flow is separate from the risk of cancellation, so this statement misses the core principle.
Option 2: 'might get them confused with revenue on the income statement' — It is true that revenue recognition and cash receipts are distinct concepts, but the reason given here does not explain why cash flows are not entered at the time of order entry. The cash flow statement concerns actual cash movement, not misclassification risk, making this reasoning incomplete.
Option 3: 'will have a more accurate cash flow statement if you enter them once a month' — This option implies a schedule or aggregation benefit that does not reflect the fundamental rule about when cash is actually received. The accuracy depends on cash timing, not the frequency of entry in accounts receivable, so this is not the best justification.
Option 4: 'don't get the cash until the customer actually pays for the order' — This statement aligns with the core principle: cash flow statements record cash receipts when cash is collected, not simply when an order is placed or revenue is earned. It distinguishes between receivables and cash, explaining why orders are not treated as cash inflows until payment is received.
Taken together, the reasoning centers on the distinction between recognizing revenue or orders and recognizing actual cash inflows, which is the key to understanding cash flow statement treatment. The incorrect options each either address a secondary concern or rely on a misconception about timing or classification, rather than the fundamental cash receipt timing. The focus remains on cash collection as the trigger for cash flow reporting, rather than on contingent events or reporting frequency.

GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Orders are not entered onto the cash flow statement as cash receipts because you ________.

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GBUS*4330*W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser

Orders are not entered onto the cash flow statement as cash receipts because you ________.

查看解析

登录即可查看完整答案

类似问题

Referring to the Receipt Posting Journal printed in Step 23 of the Practical Exam, what is the amount of the receipt?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

更多留学生实用工具

希望你的学习变得更简单

GBUS4330W01 25 Fall GBUS 4330 Quiz 2 - Requires Respondus LockDown Browser