Question 1

Morgan Shipping held cash of $1 million throughout 2017 when the general price level decreased by over 30 percent. Morgan Shipping:

Accepted Answer

A) has more than $1 million of purchasing power at the end of the period. 
B) has less than $1 million purchasing power at the end of the period. 
C) must recognize the gain due to general price level increases in its income statement. 
D) has the same $1 million purchasing power at the end of the period as at the beginning of the period. 
A) has more than $1 million of purchasing power at the end of the period. 
B) has less than $1 million purchasing power at the end of the period. 
C) must recognize the gain due to general price level increases in its income statement. 
D) has the same $1 million purchasing power at the end of the period as at the beginning of the period. A

Question 2

What is the fiscal period assumption and why is it used?

Accepted Answer

The fiscal period assumption states that the operating life of an economic entity must be divided into time periods over which performance measures can be developed and applied. If a company ignores the fiscal period assumption, and recognizes all revenue and all expenses only over the life of the business, the numbers would be enormous and the true meaning would be lost. With no fiscal period breakdown of time, a company would not be able to provide information to users to make decisions.

Question 3

Recognition of increases in purchasing power of monetary units is inconsistent with the:

Accepted Answer

A) economic entity assumption. 
B) going concern assumption. 
C) consistency principle. 
D) stable dollar assumption. 
A) economic entity assumption. 
B) going concern assumption. 
C) consistency principle. 
D) stable dollar assumption. D

Question 4

Which one of the following assumptions is violated when a company pays for its CEO's personal groceries using the company's bank account?

Accepted Answer

A) Stable dollar 
B) Economic entity 
C) Going concern 
D) Ethical principle of accounting 
A) Stable dollar 
B) Economic entity 
C) Going concern 
D) Ethical principle of accounting

Question 5

Which one of the following is violated when a firm measures property, plant, and equipment at its estimated selling price?

Accepted Answer

A) Objectivity 
B) Economic entity assumption 
C) Materiality 
D) Input markets 
A) Objectivity 
B) Economic entity assumption 
C) Materiality 
D) Input markets

Question 6

Name the four basic assumptions of financial accounting. Indicate why these assumptions, as a group, are important.

Accepted Answer

The basic assumptions of financial accou

Question 7

-Karr Construction built a levee for the state of Mississippi over a three-year period. The contracted price for the levee was $3,000,000. The costs incurred by Karr and the payments from the state over the three year period are as follows:
$\begin{array}{|l|c|c|c|r|}
\hline & \mathbf{2 0 1 7} & \mathbf{2 0 1 8} & \mathbf{2 0 1 9} & \text { Total } \
\hline \begin{array}{l}
\text { Costs incurred by } \
\text { Karr }
\end{array} & \$ 600,000 & \$ 800,000 & \$ 200,000 & \$ 1,600,000 \
\hline \begin{array}{l}
\text { Payments from } \
\text { Mississippi }
\end{array} & \$ 1,200,000 & \$ 800,000 & \$ 1,000,000 & \$ 3,000,000 \
\hline
\end{array}$
If revenue is recognized in proportion to the costs incurred by Karr, how much net income is reported in 2019?

Accepted Answer

A) $1,200,000 
B) $800,000 
C) $600,000 
D) $175,000 
A) $1,200,000 
B) $800,000 
C) $600,000 
D) $175,000

Question 8

The fiscal period assumption states that the operating life of an economic entity:

Accepted Answer

A) is generally for a period of one year. 
B) can be any period management decides it to be. 
C) must be an entity separately distinct from its owners. 
D) can be divided into time periods over which measures of performance and financial position can be developed and applied. 
A) is generally for a period of one year. 
B) can be any period management decides it to be. 
C) must be an entity separately distinct from its owners. 
D) can be divided into time periods over which measures of performance and financial position can be developed and applied.

Question 9

Expensing the cost of a pencil holder that cost $1.25 instead of capitalizing it as a plant asset and depreciating it over its estimated useful life of 10 years:

Accepted Answer

A) violates the economic entity assumption. 
B) violates GAAP since pencil holders are important assets. 
C) is justified because of materiality. 
D) is appropriate because of the stable dollar assumption. 
A) violates the economic entity assumption. 
B) violates GAAP since pencil holders are important assets. 
C) is justified because of materiality. 
D) is appropriate because of the stable dollar assumption.

Question 10

On October 1, 2018, $24,000 of annual magazine subscriptions were sold by Kitchen Design Magazines. The subscribed magazines are delivered on the first day of each month beginning on October 1, 2018. The total cost of the subscribed magazines is $9,000, equal to $750 per month. Determine the amount of revenue and the cost of the magazines to be recognized during 2018.

Accepted Answer

Revenue for 2018 is the amount

Question 11

Seinfeld Company has land with an original cost of $70,000 and a fair market value of $81,000. Seinfeld has considered selling its business next year and listing the land with a realtor for $100,000. At what amount would land be measured on the December 31, 2018 balance sheet?

Accepted Answer

A) $100,000 
B) $81,000 
C) $15,000 
D) $70,000 
A) $100,000 
B) $81,000 
C) $15,000 
D) $70,000

Question 12

The valuation basis used to measure equipment and other plant assets on the balance sheet is:

Accepted Answer

A) the dollar amount for which the assets can be sold. 
B) the cash expected to be received in the future. 
C) the original cost adjusted for depreciation. 
D) the assets' net realizable value. 
A) the dollar amount for which the assets can be sold. 
B) the cash expected to be received in the future. 
C) the original cost adjusted for depreciation. 
D) the assets' net realizable value.

Question 13

Equipment with an original cost of $165,000 has a fair market value of $195,000 and accumulated depreciation of $45,000 on December 31, 2018. What amount would the December 31, 2018 balance sheet show as the equipment's net book value?

Accepted Answer

$165,000 -

Question 14

Victor Corporation purchased a packaging machine on January 1, 2018 for $12,000. The machine is expected to be used for 3 years, and the company believes an equal portion of the cost should be allocated to each accounting period. How much expense should Victor recognize during 2018? What concept is illustrated?

Accepted Answer

$12,000 / 3 = $4,000

Question 15

Joseph Corporation purchased an extruding machine on January 1, 2016 for $30,000. The machine is expected to be used for 5 years, and the company believes an equal portion of the cost should be allocated to each accounting period. Based on this information, what is the net book value of the machine on January 1, 2018?

Accepted Answer

A) $6,000 
B) $18,000 
C) $12,000 
D) $30,000 
A) $6,000 
B) $18,000 
C) $12,000 
D) $30,000

Question 16

The valuation basis used to measure long-term liabilities is:

Accepted Answer

A) present value. 
B) replacement cost. 
C) fair market value. 
D) historical cost. 
A) present value. 
B) replacement cost. 
C) fair market value. 
D) historical cost.

Question 17

Karr Construction built a levee for the state of Mississippi over a three-year period. The contracted price for the levee was $3,000,000. The costs incurred by Karr and the payments from the state over the three year period are as follows:
$\begin{array}{|l|c|c|c|r|}
\hline & \mathbf{2 0 1 7} & \mathbf{2 0 1 8} & \mathbf{2 0 1 9} & \text { Total } \
\hline \begin{array}{l}
\text { Costs incurred by } \
\text { Karr }
\end{array} & \$ 600,000 & \$ 800,000 & \$ 200,000 & \$ 1,600,000 \
\hline \begin{array}{l}
\text { Payments from } \
\text { Mississippi }
\end{array} & \$ 1,200,000 & \$ 800,000 & \$ 1,000,000 & \$ 3,000,000 \
\hline
\end{array}$
If revenue is recognized when payments are received, which of the following present the net income amounts reported in 2017, 2018, and 2019, respectively?

Accepted Answer

A) $1,200,000; $800,000; $1,000,000 
B) $600,000; $0; $800,000 
C) $800,000; $800,000; $800,000 
D) $600,000; $400,000; $200,000 
A) $1,200,000; $800,000; $1,000,000 
B) $600,000; $0; $800,000 
C) $800,000; $800,000; $800,000 
D) $600,000; $400,000; $200,000

Question 18

When is present value be used on the financial statements? Give an example in your explanation.

Accepted Answer

Present value is used on the financial s

Question 19

Match between columns
                        Premises: Economic entity assumption
Stable dollar assumption
Going concern assumption
Fiscal period assumption

Accepted Answer

The Answer of The economic life of an entity can is...

Question 20

Accounts receivable have a face value of $10,000 and a present value of $9,000 on December 31, 2018. At what amount would the accounts receivable be measured on the December 31, 2018 balance sheet?

Accepted Answer

The answer of Accounts receivable have a face value of...

Morgan Shipping held cash of $1 million throughout 2017 when the general price level decreased by over 30 percent. Morgan Shipping:

What is the fiscal period assumption and why is it used?

Recognition of increases in purchasing power of monetary units is inconsistent with the:

Which one of the following assumptions is violated when a company pays for its CEO's personal groceries using the company's bank account?

Which one of the following is violated when a firm measures property, plant, and equipment at its estimated selling price?

Name the four basic assumptions of financial accounting. Indicate why these assumptions, as a group, are important.

The fiscal period assumption states that the operating life of an economic entity:

Expensing the cost of a pencil holder that cost $1.25 instead of capitalizing it as a plant asset and depreciating it over its estimated useful life of 10 years:

Seinfeld Company has land with an original cost of $70,000 and a fair market value of $81,000. Seinfeld has considered selling its business next year and listing the land with a realtor for $100,000. At what amount would land be measured on the December 31, 2018 balance sheet?

The valuation basis used to measure equipment and other plant assets on the balance sheet is:

Equipment with an original cost of $165,000 has a fair market value of $195,000 and accumulated depreciation of $45,000 on December 31, 2018. What amount would the December 31, 2018 balance sheet show as the equipment's net book value?

The valuation basis used to measure long-term liabilities is:

When is present value be used on the financial statements? Give an example in your explanation.

Accounts receivable have a face value of $10,000 and a present value of $9,000 on December 31, 2018. At what amount would the accounts receivable be measured on the December 31, 2018 balance sheet?

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Introduction to Liabilities: Economic Consequences, Current Liabilities, and Contingencies

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

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Exam 3: The Measurement Fundamentals of Financial Accounting

Morgan Shipping held cash of $1 million throughout 2017 when the general price level decreased by over 30 percent. Morgan Shipping:

What is the fiscal period assumption and why is it used?

Recognition of increases in purchasing power of monetary units is inconsistent with the:

Which one of the following assumptions is violated when a company pays for its CEO's personal groceries using the company's bank account?

Which one of the following is violated when a firm measures property, plant, and equipment at its estimated selling price?

Name the four basic assumptions of financial accounting. Indicate why these assumptions, as a group, are important.

The fiscal period assumption states that the operating life of an economic entity:

Expensing the cost of a pencil holder that cost $1.25 instead of capitalizing it as a plant asset and depreciating it over its estimated useful life of 10 years:

Seinfeld Company has land with an original cost of $70,000 and a fair market value of $81,000. Seinfeld has considered selling its business next year and listing the land with a realtor for $100,000. At what amount would land be measured on the December 31, 2018 balance sheet?

The valuation basis used to measure equipment and other plant assets on the balance sheet is:

Equipment with an original cost of $165,000 has a fair market value of $195,000 and accumulated depreciation of $45,000 on December 31, 2018. What amount would the December 31, 2018 balance sheet show as the equipment's net book value?

The valuation basis used to measure long-term liabilities is:

When is present value be used on the financial statements? Give an example in your explanation.

Accounts receivable have a face value of $10,000 and a present value of $9,000 on December 31, 2018. At what amount would the accounts receivable be measured on the December 31, 2018 balance sheet?

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Introduction to Liabilities: Economic Consequences, Current Liabilities, and Contingencies

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

Filters