Question 1
Your answer is correct.
Which of the following will be of interest to investors in
decision-making?
Assessing the companyâs ability to collect debts.
Assessing managementâs ability to protect and enhance the
capital providersâ investments.
Both assessing the companyâs ability to generate net cash
inflows and assessing managementâs ability to protect and enhance the capital
providerâs investments.
Assessing the companyâs ability to generate net cash
inflows.
Question 2
Your answer is correct.
What is the relationship between the Securities and Exchange
Commission and accounting standard setting in the United States?
The SEC has a mandate to establish accounting standards for
enterprises under its jurisdiction.
The SEC requires all companies listed on an exchange to
submit their financial statements to the SEC.
The SEC coordinates with the AICPA in establishing
accounting standards.
The SEC reviews financial statements for compliance.
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Question 3
Your answer is correct.
Characteristics of generally accepted accounting principles
include all of the following except
standards are considered useful by the profession.
each principle is approved by the SEC.
authoritative accounting that the rule-making body has
established as a principle of reporting.
practice has become universally accepted over time.
Question 4
Your answer is correct.
The role of the Securities and Exchange Commission in the
formulation of accounting principles can be best described as
consistently secondary.
sometimes primary and sometimes secondary.
non-existent.
consistently primary.
Question 5
Your answer is correct.
FASB Technical Bulletins
are similar to FASB Interpretations in that they establish
enforceable standards under the AICPA’s Code of Professional Ethics.
are issued monthly by the FASB to deal with current topics.
are not expected to have a significant impact on financial
reporting in general and provide guidance when it does not conflict with any
broad fundamental accounting principle.
were recently discontinued by the FASB because they dealt
with specialized topics having little impact on financial reporting in general.
Question 6
Your answer is correct.
The following are part of the “due process” system
used by the FASB in the evolution of a typical FASB Accounting Standards
Updates:
1. Exposure Draft
2. FASB Accounting Standards Updates
3. Preliminary Views
The chronological order in which these items are released is
as follows:
1, 2, 3.
1, 3, 2.
2, 3, 1.
3, 1, 2.
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Question 7
Your answer is correct.
Accounting research studies issued by the AICPA
Statements of financial standards issued by the FASB
APB Opinions
Accounting interpretations issued by the FASB
Question 8
Your answer is correct.Which of the following publications does not qualify as a statement of generally accepted accounting principles?
Which of the following is not considered a component of
generally accepted accounting principles?
Articles published in CPA journals.
Widely recognized industry practices.
AICPA Accounting Interpretations.
FASB Implementation Guides.
Question 9
Your answer is correct.
Significant accounting publications are listed below. Match
the publications with their sources or sponsors.
Publications Sources/Sponsors
1. Accounting
Research Bulletins (1953-1959)
2. Accounting
Standards Updates
3. Statements
of Position (SOPs)
4. Statements
of Financial Accounting Concepts
5. Opinions
(1962-1973)
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Question 10
Your answer is correct.
The underlying theme of the conceptual framework is
decision usefulness.
comparability.
understandability.
faithful representation.
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Question 11
Your answer is correct.
If the LIFO inventory method was used last period, it should
be used for the current and following periods because of
comparability.
timeliness.
materiality.
verifiability.
Question 12
Your answer is correct.
What is the following is a characteristic describing the
primary quality of relevance?
Predictive value.
Verifiability.
Understandability.
Materiality.
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Question 13
Your answer is correct.
Which of the following is a primary quality of useful
accounting information?
Consistency
Conservatism
Faithful representation
Comparability
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Question 14
Your answer is correct.
Which of the following is an ingredient of faithful
representation?
Confirmatory value.
Predictive value.
Materiality.
Neutrality.
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Question 15
Your answer is correct.
Accounting information is considered to be relevant when it
is capable of making a difference in a decision.
can be depended on to represent the economic conditions and
events that it is intended to represent.
is understandable by reasonably informed users of accounting
information.
is verifiable and neutral.
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Question 16
Your answer is correct.
According to Statement of Financial Accounting Concepts No. 2,
completeness is an ingredient of the fundamental quality of
Relevance Faithful
Representation
Yes Yes
Yes No
No Yes
No No
Question 17
Your answer is correct.
According to Statement of Financial Accounting Concepts No.
2, predictive value is an ingredient of the fundamental quality of
Relevance Faithful
Representation
Yes Yes
No No
No Yes
Yes No
Question 17
Your answer is correct.
According to Statement of Financial Accounting Concepts No.
2, predictive value is an ingredient of the fundamental quality of
Relevance Faithful
Representation
Yes Yes
No No
No Yes
Yes No
Question 18
Your answer is correct.
Information about different companies and about different
periods of the same company can be prepared and presented in a similar manner.
Comparability and consistency are related to which of these objectives?
Comparability Consistency
Periods Periods
Companies Companies
Companies Periods
Periods Companies
Question 19
Your answer is correct.
The calculation of comprehensive income includes which of
the following?
Operating Income Distributions
to Owners
No No
Yes Yes
Yes No
No Yes
Question 20
Your answer is correct.
According to the FASB conceptual framework, which of the
following elements describes transactions or events that affect a company
during a period of time?
Expenses.
Equity.
Liabilities.
Assets.
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Question 21
Your answer is correct.
Which basic element of financial statements arises from
peripheral or incidental transactions?
Assets.
Expenses.
Liabilities.
Gains.
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Question 22
Your answer is correct.
Which basic assumption may not be followed when a firm in
bankruptcy reports financial results?
Going concern assumption.
Periodicity assumption.
Monetary unit assumption.
Economic entity assumption.
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Question 23
Your answer is correct.
Which of the following basic accounting assumptions is
threatened by the existence of severe inflation in the economy?
Monetary unit assumption.
Economic entity assumption.
Periodicity assumption.
Going-concern assumption.
Question 24
Your answer is correct.
Preparation of consolidated financial statements when a
parent-subsidiary relationship exists is an example of the
relevance characteristic.
economic entity assumption.
comparability characteristic.
neutrality characteristic.
Question 25
Your answer is correct.
Proponents of historical cost ordinarily maintain that in
comparison with all other valuation alternatives for general purpose financial
reporting, statements prepared using historical costs are more
verifiable.
indicative of the entity’s purchasing power.
conservative.
relevant.
Question 26
Your answer is correct.
Product costs include each of the following except
labor.
material.
officerâs salaries.
overhead.
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Question 27
Your answer is correct.
Which of the following serves as the justification for the
periodic recording of depreciation expense?
Immediate recognition of an expense
Minimization of income tax liability
Association of efforts (expense) with accomplishments
(revenue)
Systematic and rational allocation of cost over the periods
benefited
Question 28
Your answer is correct.
State the accounting assumption, principle, information
characteristic, or constraint that is most applicable in the following cases.
1. All
payments less than $25 are expensed as incurred. (Do not use conservatism.)
2. The
company employs the same inventory valuation method from period to period.
3. A
patent is capitalized and amortized over the periods benefited.
4. Assuming
that dollars today will buy as much as ten years ago.
5. Rent
paid in advance is recorded as prepaid rent.
6. Financial
statements are prepared each year.
7. All
significant post-balance sheet events are reported.
8. Personal
transactions of the proprietor are distinguished from business transactions.
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SHOW ANSWER
Question 29
Your answer is correct.
In the first stage of creating conceptual framework, the
IASB and the FASB agreed on the objective of financial reporting and a common
set of desired _________.
characteristics of GAAP
quantitative characteristics
qualitative characteristics
rule-based characteristics
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Question 30
Your answer is correct.
Phase D of convergence project addresses the _______.
monetary unit assumption
reporting entity
elements and recognition
periodicity assumption
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Question 31
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Your answer is correct.
Using the accural basis revenue on the
income statement was $125,390. Accounts receivable were $3,460 on January 1 and
$3,500 on December 31. Unearned revenue was $1,020 on January 1 and $1,670 on
December 31.
Calculate the revenue for the year on a cash basis.
Question 32, Part 1
The
following trial balance was taken from the books of Fisk Corporation on
December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay.
Account
Debit
Credit
Cash
$
8,800
Accounts Receivable
38,400
Notes Receivable
14,600
Allowance for Doubtful
Accounts
$
2,000
Inventory
44,400
Prepaid Insurance
4,900
Equipment
105,000
Accumulated
Depreciation–Equip.
15,000
Accounts Payable
12,000
Common Stock
40,000
Retained Earnings
60,910
Sales Revenue
272,300
Cost of Goods Sold
124,000
Salaries and Wages Expense
48,700
Rent Expense
13,410
Totals
$
402,210
$
402,210
At year end, the following items have not yet been recorded.
a.
Insurance expired during
the year, $ 1,820 .
b.
Estimated bad debts, 1 % of
gross sales.
c.
Depreciation on equipment,
10% per year on original cost.
d.
Interest at 5 % is
receivable on the note for one full year.
e.
Rent paid in advance at
December 31, $ 5,250 (originally charged to expense).
f.
Accrued salaries and wages
at December 31, $ 6,050 .
(a)
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Prepare the necessary adjusting entries.(Credit
account titles are automatically indented when the amount is entered. Do
not indent manually.)
Question 32, Part 2
The
following trial balance was taken from the books of Fisk Corporation on
December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay.
Account
Debit
Credit
Cash
$
8,800
Accounts Receivable
38,400
Notes Receivable
14,600
Allowance for Doubtful
Accounts
$
2,000
Inventory
44,400
Prepaid Insurance
4,900
Equipment
105,000
Accumulated
Depreciation–Equip.
15,000
Accounts Payable
12,000
Common Stock
40,000
Retained Earnings
60,910
Sales Revenue
272,300
Cost of Goods Sold
124,000
Salaries and Wages
Expense
48,700
Rent Expense
13,410
Totals
$
402,210
$
402,210
At year end, the following items have not yet been recorded.
a.
Insurance expired during
the year, $ 1,820 .
b.
Estimated bad debts, 1 %
of gross sales.
c.
Depreciation on
equipment, 10% per year on original cost.
d.
Interest at 5 % is
receivable on the note for one full year.
e.
Rent paid in advance at
December 31, $ 5,250 (originally charged to expense).
f.
Accrued salaries and
wages at December 31, $ 6,050 .
Prepare the necessary
closing entries.(Credit account titles are automatically indented when the
amount is entered. Do not indent manually.)
Question 33
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Your answer is correct.
The following information is available for Renn
Corporation’s first year of operations:
Payment for merchandise purchases
$354,800
Ending merchandise inventory
130,400
Accounts payable (balance at end of
year)
63,100
Collections from customers
275,800
The balance in accounts payable relates only to merchandise purchases. All
merchandise items were marked to sell at 35% above cost. What should be the
ending balance in accounts receivable, assuming all accounts are deemed
collectible?
Question 34, Part 1
Yates Company’s records provide the
following information concerning certain account balances and changes in
these account balances during the current year. Transaction information is
missing from each item below.
Prepare the entry to record the missing information for each account.
(Consider each independently.)
(a)
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Your answer is correct.
Accounts Receivable: Jan. 1, balance
$38,090, Dec. 31, balance $52,770, uncollectible accounts written off during
the year, $6,720; accounts receivable collected during the year, $141,560.
Prepare the entry to record sales revenue.(Credit account titles are automatically indented when the amount
is entered. Do not indent manually.)
Question 35
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Your answer is incorrect.
Presented below are changes in the account balances
of Wenn Company during the year, except for retained earnings.
Increase
(Decrease)
Increase
(Decrease)
Cash
$
28,380
Accounts payable
$
35,740
Accounts receivable (net)
(17,650
)
Bonds payable
(21,660
)
Inventory
52,410
Common stock
60,750
Plant assets (net)
46,860
Paid-in capital
15,650
The only entries in Retained Earnings were for net income and a dividend
declaration of $17,000.
Question 37, Part 1
Porter Corporation’s capital structure consists of
50,000 shares of common stock. At December 31, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay an analysis of the accounts
and discussions with company officials revealed the following information:
Sales revenue
$1,217,780
Earthquake loss (net of tax)
(extraordinary item)
58,940
Selling expenses
125,840
Cash
59,040
Accounts receivable
88,290
Common stock
200,000
Cost of goods sold
702,200
Accumulated depreciation-machinery
181,244
Dividend revenue
8,060
Unearned service revenue
4,660
Interest payable
1,160
Land
369,300
Patents
102,790
Retained earnings, January 1, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay
266,507
Interest expense
19,730
Administrative expenses
166,740
Dividends declared
24,640
Allowance for doubtful accounts
5,470
Notes payable (maturity 7/1/17)
208,120
Machinery
453,110
Materials
42,200
Accounts payable
56,420
The amount of income taxes applicable to ordinary income was $63,399, excluding
the tax effect of the earthquake loss which amounted to $25,260.
