Acct 3110- Section 1 6. Gains are: a) Inflows from selling a product or service to a customer b) Increases in equity resulting from transfers of assets to the company from owners. c) Increases in equity from peripheral transactions of an entity d) None of these is correct. 7. Which of the following is not an advantage of accrual accounting? a. Spreads out the influence of one-time events that affect multiple reporting periods b. Highlights cash effects of operations c. Captures long-run performance d. Recognizes assets and liabilities associated with receivables and payables 8. In Salemart's April 30, 2016, balance sheet, a note receivable was reported as a noncurrent asset and the related accrued interest for eight months was reported as a current asset. Which of the following descriptions would fit Sale classification? mart's receivable 1) Both principal and interest amounts are due on August 31, 2016, and August 31, 2017. 2) Principal is due August 31, 2017, and interest is due August 31, 2016, and August 31, 2017 3) Principal and interest are due December 31, 2016. 4) Both principal and interest amounts are due on December 31, 2016, and December 31, 2017. 9. Which of the following represents a change in accounting principle? a. Using a journal entry to correct a misstatement in current-year financial statements b. Changing inventory costing method from LIFO to average cost method c. Modifying the amount of bad debt expense in accounts receivables as new information o customer insolvency is obtained d. Correcting a material error in financial statements that have already been released to investors 10. The principal benefit of separately reporting discontinued operations is to enhance: a) Predictive ability of future profitability b) Consistency in reporting. c) Intraperiod continuity. d) Comprehensive reporting