AGBU CH3 Questions

Chloe Mathis Sept 4, 2023 AGBU 2389 03 Chapter 3 Questions 1. What factors affect the choice of accounting period for farmers and ranchers? When the farmers bought their land. When they plant their crops. When they run their livestock. 3. Is it possible to use double entry with a cash accounting system? If so, what are the advantages and disadvantages? Yes, one advantage would be that even though the cash is not accounted for you will have it recorded twice in your system. Another advantage is the profit and earned or lost can be calculated. One disadvantage is it is difficult to find errors if the wrong amount of money is recorded to begin with. 6. Place an X under the columns below to indicate whether each business event is a production, investment, or financing activity. Event Production Investment Financing Pay cash for tractor repairs x Borrow 40,000 for operating expenses x Pay interest on the loan x Charge 12,000 of feed x Equipment depreciates x Sell 35,000 of corn x Purchase pickup x Pay principal on a loan x
7. Explain the difference between an account payable and an account receivable. Accounts payable represents money that the business owes to the suppliers. Accounts receivable represents the money that is owed to your business by the customers. In simpler terms "Payable" is what the business is going to lose while "receivable" is what the company is going to make. 9. Why are the results from an accrual accounting system recommended over those from a cash system for use when making management decisions? Accrual shows better records of business performance because it shows when income and expenses happened. It goes by exact day and month. When looking through records it is easier to find what you are looking for.
Uploaded by ChloeMathis31 on