Answer:
This question is incomplete, here is the full question:
If Ron agrees to use “book and hold” to boost his current month’s sales and therefore the firm’s revenues, which document used by investors, bankers, and others, will reflect this fact?
a) Statement of cash flows
b) Balance sheet
c) Income statement
d) Accounting equation
The answer is d)
Explanation:
"Book and hold" is a controversial issue in accounting and financial reporting for quite some time, as it's outcome is the unreal inflating of sales and revenues. It relies on recognizing revenues generated at the point of sale - immediately, not waiting for the goods to be delivered to the customer.
The same can be done for decreasing expenses, making the amount spent look insignificant compared to the real spending. The practice of "booking and holding" has been considered unethical. However, having in mind the big impact "pretty" numbers in financial reports have on stakeholders, accountants and other relevant employees may feel the urge to use this method.
Since income is the indicator most influenced by this practice, the answer is income statement. The balance sheet reflects on the structure of assets, liabilities and stockholders' equity, while the statement of cash flows refers to outbound and inbound movement of cash, thus reflecting on the company's liquidity, not income. The accounting equation is not even a financial statement, so it is irrelevant for the question.
Accounting equation
Accounting, namely measurement, elaboration, and providing certainty about information that will help managers, investors, tax authorities and other decision-makers to make the allocation of decision resources in companies, organizations, and government agencies.
Basic Accounting Equation is a relationship between assets, debts, and capital of a company because every business transaction affects at least two company accounts.
The basic accounting equation also called the balance sheet equation, is the relationship between assets, liabilities, and owner's equity of a business. It is the basis for bookkeeping in pairs. For each transaction, total debt is equal to total credit. This can be stated even further.
The Basic Accounting Equation also has certain elements, which are as follows:
In business operations, it is possible to have income and expense transactions. Revenue is the increase in assets obtained through the sale of goods or services. While the burden is the decrease in the number of assets due to the sacrifice to obtain income. Revenue is to increase capital while expenses are to reduce capital.
Learn More
accounting definition https://brainly.com/question/14001843
element of accounting equation https://brainly.com/question/14001843
Details
Class: high school
Subject: Business
Keywords: Accounting, Accounting Equations
