9th Edition

ISBN: 9781260255775

Author: SPICELAND, Nel

Publisher: MCG

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The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

Chapter 21, Problem 21.9BYP

Research Case 21–9

FASB codification; locate and extract relevant information and cite authoritative support for a financial reporting issue; cash flow classification

• LO21–4 through LO21–6

“This one’s got me stumped,” you say to no one in particular. “First day on the job; I’d better get it right.” It’s the classification of notes payable in the statement of cash flows that has you in doubt. Having received an “A” in Intermediate Accounting, you know that a note payable representing a bank loan is a financing activity, but this one is a note payable to your employer’s primary merchandise supplier. “I wonder if the accounting is the same.”

Required:

1. Obtain the relevant authoritative literature on cash flow classification using the FASB Accounting Standards Codification. You might gain access at the FASB website (www.fasb.org). What is the specific citation that specifies the classification of notes payable to suppliers?
2. Is accounting the same as for notes payable to banks? Explain.
3. Is accounting the same for both short-term and long-term notes payable to suppliers?

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Chapter 21, Problem 21.8BYP

Chapter 21, Problem 21.10BYP

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SPICELAND GEN CMB LL INTRM ACCTG; CNCT

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Solution Summary: The author explains that the Financial Accounting Standards Board (FASB) is an independent 7 member board, of accounting professionals overseeing the creation of financial statements.

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