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Thread: FREE CFA Level 1 sample questions everyday for December 2010 candidates

  1. #151
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    Q#30. If a company pays cash before it recognizes the associated expense it results in a/(an):

    A. Unearned revenue liability
    B. Accounts receivable asset
    C. Prepaid expense asset

    ANS PREPAID EXP ASSET

    BEG ACCNT ENTRY WILL -1 CREATE A ASSET PREPAID EXP, 2 -- CASH IS REDUCED
    END ENTRY ---1 DECREASE PREPAID ASSET , 2---RECORD EXPENSE.

  2. #152
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    Q#30) Ans is C.

  3. #153
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    Q # 30 Answer is C

  4. #154
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    Q#30 Answer: (C)
    If a company receives cash before it recognizes the associated revenue it results in a prepaid expense asset.


    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q#31. An accrued expense liability is most likely recognized when:

    A. An expense is recognized before cash payment.
    B. Cash is paid prior to expense recognition.
    C. Revenue is recognized prior to the receipt of cash.


    ================================================== =====================================

  5. #155
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    Q#31. Answer is A. If an expense is incurred before any actual cash payment is made we call it as an accrued expense liability or outstanding liability. Option B and C are meaningless when we talk about accrued exp liabilty.

    An accounting expense recognized in the books before it is paid for. It is a liability, and is usually current. These expenses are typically periodic and documented on a company's balance sheet due to the high probability that they will be collected.


    {Source - Investopedia}

  6. #156
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    Q # 31 Correct Answer is A

    B.... Prepaid Expense
    C... Acrue Revenue

    Correct me if im wrong

  7. #157
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    I agree with Vivek & Takalani...the answer to Q.31 is A.

  8. #158
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    Q#31 Answer: (A)
    An accrued expense liability is recognized when an expense is recognized prior to cash payment.


    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q#32. A company has a net income of $150, an increase in accounts receivable of $30, depreciation of $55 and a decrease in accounts payable of $25. Its operating cash flow is closest to:

    A. $200
    B. $150
    C. $95

    ================================================== =====================================

  9. #159
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    Answer to Q#32 is B.

  10. #160
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    Q#31. Ans is $150.Option B

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