Homework Tips
Topic 02
The Financial Accounting textbook is GREAT! However, when doing the homework, work
backwards. First, look at the exercises and problems that are covered in-class, and then
find the portions of the textbook, if needed, that help you complete the problems. As time
permits, you can then look through the remainder of the text in a relaxed fashion to obtain
broader exposure to accounting, beyond the homework.
Work with your group members as you complete the
homework problems!!!! This can save you LOTS of time.
These tips are NOT comprehensive, meaning that you may have difficulty with one or more
assigned homework items that are not covered by these tips. However, these tips do address
common areas of uncertainty or concern that have arisen in past classes.
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Problem 2-22 – Accrual net income vs. operating cash flow
Revenues and expenses are reported in an income statement when the revenue is earned or the
expense is incurred. This is not necessarily the same time that the cash is received or paid. For
example, imagine that I do a consulting project in December of this year but am not paid in cash
until the following January. The revenue from the consulting project is reported in the income
statement for December of this year. However, the operating cash inflow is not reported until I
receive the cash in the following January.
Problem 2-22 – Is “Interest Revenue” an operating activity?
Item (h) in Problem 2-22 discusses interest revenue and receiving cash as interest on an