Question 1

In its simplest form, earnings per share for a company is calculated as

Accepted Answer

A)  gross profit divided by the number of shares of stock held by that company's stockholders. 
B)  net income divided by the number of shares of stock held by that company's stockholders. 
C)  net income divided by the number of shares of stock traded for that company on the stock exchange at the end of the company's fiscal year. 
D)  operating income divided by the number of shares of stock held by that company's stockholders. 
E)  operating income divided by the number of shares of stock that the company is allowed to sell. 
A)  gross profit divided by the number of shares of stock held by that company's stockholders. 
B)  net income divided by the number of shares of stock held by that company's stockholders. 
C)  net income divided by the number of shares of stock traded for that company on the stock exchange at the end of the company's fiscal year. 
D)  operating income divided by the number of shares of stock held by that company's stockholders. 
E)  operating income divided by the number of shares of stock that the company is allowed to sell. B

Question 2

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all.
-_____ Accounting data should portray, to the greatest extent possible, the true nature of a business's economic resources, obligations, and transactions.

Accepted Answer

A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability 
A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability L

Question 3

Each transaction of a business is initially recorded in a

Accepted Answer

A)  chart of accounts. 
B)  general journal. 
C)  general ledger. 
D)  set of financial statements. 
E)  none of the above 
A)  chart of accounts. 
B)  general journal. 
C)  general ledger. 
D)  set of financial statements. 
E)  none of the above B

Question 4

Cool Dudes, a chain of record stores, is expanding and has obtained loans from several major banks. Cool Dude should record all interest associated with the loans as

Accepted Answer

A)  operating revenues. 
B)  non-operating revenues. 
C)  operating expenses. 
D)  non-operating expenses. 
E)  cost of goods sold. 
A)  operating revenues. 
B)  non-operating revenues. 
C)  operating expenses. 
D)  non-operating expenses. 
E)  cost of goods sold.

Question 5

During 2010, a high-tech company spent $1,000,000 on research and development; however, no new products have been completed as of the end of the year. This amount will be shown in the company's financial statements as a(an)

Accepted Answer

A)  immediate expense under the expense recognition rules. 
B)  long-term intangible asset until a patentable item is produced. 
C)  inventory in the current asset category of the balance sheet. 
D)  long-term investment. 
E)  part of cost of goods sold on the income statement. 
A)  immediate expense under the expense recognition rules. 
B)  long-term intangible asset until a patentable item is produced. 
C)  inventory in the current asset category of the balance sheet. 
D)  long-term investment. 
E)  part of cost of goods sold on the income statement.

Question 6

The cash basis of accounting could allow substantial manipulation of an organization's profit.

Accepted Answer

A) True 
 B)False

Question 7

The going concern principle allows accountants to depreciate plant assets (except land) over their useful lives.

Accepted Answer

A) True 
 B)False

Question 8

When Deliteful Bites sells the gourmet food that it makes, the company should record a(an)

Accepted Answer

A)  accounts payable if cash was not collected at the point of sale. 
B)  unearned revenue if cash was not collected at the point of sale. 
C)  operating revenue regardless of whether cash was collected at the point of sale. 
D)  non-operating revenue if cash was not collected at the point of sale. 
E)  operating revenue only if cash was collected at the point of sale. 
A)  accounts payable if cash was not collected at the point of sale. 
B)  unearned revenue if cash was not collected at the point of sale. 
C)  operating revenue regardless of whether cash was collected at the point of sale. 
D)  non-operating revenue if cash was not collected at the point of sale. 
E)  operating revenue only if cash was collected at the point of sale.

Question 9

Which of the following statements is false?

Accepted Answer

A)  A business's operating cycle is the average time a company takes to buy inventory, sell that inventory, and collect cash from customers. 
B)  Operating cycles can be shorter or longer than one year. 
C)  A current asset is cash or any other asset that will be converted into cash, sold, or used up within the next year. 
D)  Cash and inventory are current assets. 
E)  Current assets are listed in descending order of liquidity. 
A)  A business's operating cycle is the average time a company takes to buy inventory, sell that inventory, and collect cash from customers. 
B)  Operating cycles can be shorter or longer than one year. 
C)  A current asset is cash or any other asset that will be converted into cash, sold, or used up within the next year. 
D)  Cash and inventory are current assets. 
E)  Current assets are listed in descending order of liquidity.

Question 10

The situation of accountants preparing meaningful financial reports for on-going businesses by dividing their lives into reporting intervals of equal length reflects the

Accepted Answer

A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rules. 
A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rules.

Question 11

If an item is not considered material, that item can be accounted for in the most expedient manner.

Accepted Answer

A) True 
 B)False

Question 12

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all.
-_____ Enables decision-makers to confirm or correct earlier expectiations.

Accepted Answer

A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability 
A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability

Question 13

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all.
-_____ A business will continue "long enough to use its longest-lived asset."

Accepted Answer

A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability 
A)  Accounting Period 
B)  Comparability 
C)  Expense Recognition Rules 
D)  Feedback Value 
E)  Full Disclosure
F) Going Concern
G) Historical Cost
H) Neutrality
I) Predictive Value
J) Relevance
K) Reliability
L) Representational Faithfulness
M) Revenue Recognition Rules
N) Verifiability

Question 14

Shelton Corp., a local manufacturer, reported the following information for 2010:
 
-
What is Shelton Co.'s operating income?

Accepted Answer

A)  $ 52,500 
B)  $ 75,000 
C)  $ 90,000 
D)  $187,500 
E)  $615,000 
A)  $ 52,500 
B)  $ 75,000 
C)  $ 90,000 
D)  $187,500 
E)  $615,000

Question 15

The most important qualitative characteristic that accounting information should possess is

Accepted Answer

A)  relevance. 
B)  reliability. 
C)  accuracy. 
D)  representation faithfulness. 
E)  decision usefulness. 
A)  relevance. 
B)  reliability. 
C)  accuracy. 
D)  representation faithfulness. 
E)  decision usefulness.

Question 16

Companies often invest in the stocks or bonds of another company so that they can receive a stream of income from that investment.

Accepted Answer

A) True 
 B)False

Question 17

On May 15, 2010, R Co. purchased land for $150,000. R Co. intends to build a new headquarters building on that land in 2015. On May 15, 2010, R Co. considers the land a(an)

Accepted Answer

A)  prepaid asset. 
B)  property, plant and equipment item. 
C)  expense. 
D)  short-term investment. 
E)  long-term investment. 
A)  prepaid asset. 
B)  property, plant and equipment item. 
C)  expense. 
D)  short-term investment. 
E)  long-term investment.

Question 18

The concept that mandates that businesses use a common unit in accounting for their transactions is the

Accepted Answer

A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule. 
A)  accounting period concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule.

Question 19

A trial balance is prepared at the end of the accounting period

Accepted Answer

A)  and lists all accounts contained in the chart of accounts. 
B)  and lists all general ledger accounts and their balances. 
C)  and, if debits equal credits, verifies that the accounting records are correct. 
D)  to determine that revenues and expenses are equal. 
E)  to determine that the balance sheet is in balance. 
A)  and lists all accounts contained in the chart of accounts. 
B)  and lists all general ledger accounts and their balances. 
C)  and, if debits equal credits, verifies that the accounting records are correct. 
D)  to determine that revenues and expenses are equal. 
E)  to determine that the balance sheet is in balance.

Question 20

Requiring the transactions of a business be accounted for separately from the personal transactions of its owners reflects the

Accepted Answer

A)  entity concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule. 
A)  entity concept. 
B)  historical cost principle. 
C)  unit of measurement concept. 
D)  going concern assumption. 
E)  revenue recognition rule.

In its simplest form, earnings per share for a company is calculated as

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Accounting data should portray, to the greatest extent possible, the true nature of a business's economic resources, obligations, and transactions.

Each transaction of a business is initially recorded in a

Cool Dudes, a chain of record stores, is expanding and has obtained loans from several major banks. Cool Dude should record all interest associated with the loans as

During 2010, a high-tech company spent $1,000,000 on research and development; however, no new products have been completed as of the end of the year. This amount will be shown in the company's financial statements as a(an)

The cash basis of accounting could allow substantial manipulation of an organization's profit.

The going concern principle allows accountants to depreciate plant assets (except land) over their useful lives.

When Deliteful Bites sells the gourmet food that it makes, the company should record a(an)

Which of the following statements is false?

The situation of accountants preparing meaningful financial reports for on-going businesses by dividing their lives into reporting intervals of equal length reflects the

If an item is not considered material, that item can be accounted for in the most expedient manner.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Enables decision-makers to confirm or correct earlier expectiations.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ A business will continue "long enough to use its longest-lived asset."

Shelton Corp., a local manufacturer, reported the following information for 2010: - What is Shelton Co.'s operating income?

The most important qualitative characteristic that accounting information should possess is

Companies often invest in the stocks or bonds of another company so that they can receive a stream of income from that investment.

On May 15, 2010, R Co. purchased land for $150,000. R Co. intends to build a new headquarters building on that land in 2015. On May 15, 2010, R Co. considers the land a(an)

The concept that mandates that businesses use a common unit in accounting for their transactions is the

A trial balance is prepared at the end of the accounting period

Requiring the transactions of a business be accounted for separately from the personal transactions of its owners reflects the

An Introduction to the Role of Accounting in the Business World

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Inventory

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters

Exam 2: Concepts and Elements Underlying Accounting

In its simplest form, earnings per share for a company is calculated as

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Accounting data should portray, to the greatest extent possible, the true nature of a business's economic resources, obligations, and transactions.

Each transaction of a business is initially recorded in a

Cool Dudes, a chain of record stores, is expanding and has obtained loans from several major banks. Cool Dude should record all interest associated with the loans as

During 2010, a high-tech company spent $1,000,000 on research and development; however, no new products have been completed as of the end of the year. This amount will be shown in the company's financial statements as a(an)

The cash basis of accounting could allow substantial manipulation of an organization's profit.

The going concern principle allows accountants to depreciate plant assets (except land) over their useful lives.

When Deliteful Bites sells the gourmet food that it makes, the company should record a(an)

Which of the following statements is false?

The situation of accountants preparing meaningful financial reports for on-going businesses by dividing their lives into reporting intervals of equal length reflects the

If an item is not considered material, that item can be accounted for in the most expedient manner.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Enables decision-makers to confirm or correct earlier expectiations.

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ A business will continue "long enough to use its longest-lived asset."

Shelton Corp., a local manufacturer, reported the following information for 2010: - What is Shelton Co.'s operating income?

The most important qualitative characteristic that accounting information should possess is

Companies often invest in the stocks or bonds of another company so that they can receive a stream of income from that investment.

On May 15, 2010, R Co. purchased land for $150,000. R Co. intends to build a new headquarters building on that land in 2015. On May 15, 2010, R Co. considers the land a(an)

The concept that mandates that businesses use a common unit in accounting for their transactions is the

A trial balance is prepared at the end of the accounting period

Requiring the transactions of a business be accounted for separately from the personal transactions of its owners reflects the

An Introduction to the Role of Accounting in the Business World

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Inventory

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters