Question 1

Verifiability means that the accounting information presented can be checked and confirmed for accuracy.

Accepted Answer

A) True 
 B)False

Question 2

Amounts owed to a business by customers are called

Accepted Answer

A)  cash. 
B)  short-term investments. 
C)  accounts payable. 
D)  accounts receivable. 
E)  revenue. 
A)  cash. 
B)  short-term investments. 
C)  accounts payable. 
D)  accounts receivable. 
E)  revenue.

Question 3

On Jan. 2, 2010, Sivan Corporation acquires a truck for $500,000. Cash of $400,000 is paid and a note payable for the remaining $100,000 was signed at acquisition. The truck is depreciated over a 10 year period at $50,000 per year. What is the historical cost recorded on the year-end 2013 balance sheet?

Accepted Answer

A)  $ 50,000 
B)  $150,000 
C)  $350,000 
D)  $400,000 
E)  $500,000 
A)  $ 50,000 
B)  $150,000 
C)  $350,000 
D)  $400,000 
E)  $500,000

Question 4

Businesses that allow their customers to charge their purchases on national credit cards usually collect the credit card charges, less a service fee, daily from the credit card companies.

Accepted Answer

A) True 
 B)False

Question 5

On January 1, 2010, Great White Corporation purchased an office building for $1,000,000. The building hasd an estimated salvage value of $100,000 and an estimated useful life of 15 years. Great White uses the straight-line method of depreciation.
Required:
a.	Compute depreciation expense on this asset for 2010.
b.	Compute depreciation expense on this asset for 2011.
c.	Compute accumulated depreciation on this asset at the end of 2013.
d.	Compute the building's book value at the end of 2013.

Accepted Answer

The answer of On January 1, 2010, Great White Corporation...

Question 6

On March 13, 2010, Strauss Department Store purchased five sweaters from Charter Manufacturers for $20 each. On April 1, 2010, Lela Landers purchased all of those sweaters from Strauss for $35 each. Strauss should recognize a

Accepted Answer

A)  $75 increase in revenue for the sale of the sweaters to Landers. 
B)  $100 increase in revenue for the sale of the sweaters to Landers. 
C)  $75 increase in cost of goods sold for the sale of sweaters to Landers. 
D)  $100 increase in cost of goods sold for its sale of sweaters to Landers. 
E)  $175 increase in cost of goods sold for its sale of sweaters to Landers. 
A)  $75 increase in revenue for the sale of the sweaters to Landers. 
B)  $100 increase in revenue for the sale of the sweaters to Landers. 
C)  $75 increase in cost of goods sold for the sale of sweaters to Landers. 
D)  $100 increase in cost of goods sold for its sale of sweaters to Landers. 
E)  $175 increase in cost of goods sold for its sale of sweaters to Landers.

Question 7

To qualify as useful to decision makers, accounting information should be understandable, relevant, and reliable.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about reliable accounting information is true?

Accepted Answer

A)  Reliable accounting information is timely and has predictive and feedback value. 
B)  Neutrality implies that accounting data should portray the true nature of a business's economic resources, obligations, and transactions. 
C)  A set of financial statements that contains only a balance sheet and an income statement would be considered representationally faithful. 
D)  Verifiability means that the accounting data could be duplicated by multiple people. 
E)  Reliable accounting information is completely free from errors. 
A)  Reliable accounting information is timely and has predictive and feedback value. 
B)  Neutrality implies that accounting data should portray the true nature of a business's economic resources, obligations, and transactions. 
C)  A set of financial statements that contains only a balance sheet and an income statement would be considered representationally faithful. 
D)  Verifiability means that the accounting data could be duplicated by multiple people. 
E)  Reliable accounting information is completely free from errors.

Question 9

When a company determines that there is an amount that it currently owes but has not yet recorded, that company will record a(an)

Accepted Answer

A)  prepaid asset acount. 
B)  current asset account. 
C)  intangible asset account. 
D)  accrued liability account. 
E)  equity account. 
A)  prepaid asset acount. 
B)  current asset account. 
C)  intangible asset account. 
D)  accrued liability account. 
E)  equity account.

Question 10

The accounting cycle refers to the time it takes a business to buy (or manufacture) inventory, sell that inventory, and collect the selling price of that inventory.

Accepted Answer

A) True 
 B)False

Question 11

In the U.S., the historical cost principle

Accepted Answer

A)  states that all assets be shown on the financial statements at the company's original cost. 
B)  allows assets to be shown on the financial statements at the most reliable financial value. 
C)  allows the balance sheet amount of stockholders' equity to reflect the organization's market value. 
D)  is not affected by the conservatism principle. 
E)  provides values that are more verifiable and less subject to estimation or opinion than current values. 
A)  states that all assets be shown on the financial statements at the company's original cost. 
B)  allows assets to be shown on the financial statements at the most reliable financial value. 
C)  allows the balance sheet amount of stockholders' equity to reflect the organization's market value. 
D)  is not affected by the conservatism principle. 
E)  provides values that are more verifiable and less subject to estimation or opinion than current values.

Question 12

Which of the following concepts is of highest importance in recording asset values in recessionary times?

Accepted Answer

A)  Unit of measurement 
B)  Historical cost 
C)  Going concern 
D)  Conservatism 
E)  Materiality 
A)  Unit of measurement 
B)  Historical cost 
C)  Going concern 
D)  Conservatism 
E)  Materiality

Question 13

Requiring a company to include all information necessary for a thorough understanding of a company's financial affairs in its financial statements or accompanying footnotes is an application of the

Accepted Answer

A)  entity concept. 
B)  historical cost principle. 
C)  matching principle. 
D)  going concern assumption. 
E)  full disclosure principle. 
A)  entity concept. 
B)  historical cost principle. 
C)  matching principle. 
D)  going concern assumption. 
E)  full disclosure principle.

Question 14

An asset's book value minus its accumulated depreciation is equal to its historical cost.

Accepted Answer

A) True 
 B)False

Question 15

In 2007, Alca Co. issued a long-term note payable that would come due on May 15, 2011. On its December 31, 2010 balance sheet, this note should be classified as a(an)

Accepted Answer

A)  long-term liability. 
B)  short-term liability. 
C)  intangible asset. 
D)  long-term investment. 
E)  expense. 
A)  long-term liability. 
B)  short-term liability. 
C)  intangible asset. 
D)  long-term investment. 
E)  expense.

Question 16

A trial balances is prepared at the end of each accounting period.

Accepted Answer

A) True 
 B)False

Question 17

Salaries paid to employees working at cash registers in a grocery store would be considered part of

Accepted Answer

A)  dividends. 
B)  operating expenses. 
C)  non-operating expenses. 
D)  cost of good sold. 
E)  none of the above 
A)  dividends. 
B)  operating expenses. 
C)  non-operating expenses. 
D)  cost of good sold. 
E)  none of the above

Question 18

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all.
-_____ Multiple persons can validate information.

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 19

Which of the following statements about the objectives of financial reporting is false?

Accepted Answer

A)  The financial reporting objectives indicate that accrual accounting provides the best information for decision makers and there is no need for information related to cash. 
B)  Financial reports should provide information that is useful in making investing, lending, and other economic decisions. 
C)  Financial reports should provide information that is useful to decision makers in predicting the future cash flows of businesses and future cash dividends from those businesses. 
D)  Financial reports should provide information about the assets and liabilities of businesses and the transactions and other events that have resulted in changes in those assets and liabilities. 
E)  Statements a and c are false. 
A)  The financial reporting objectives indicate that accrual accounting provides the best information for decision makers and there is no need for information related to cash. 
B)  Financial reports should provide information that is useful in making investing, lending, and other economic decisions. 
C)  Financial reports should provide information that is useful to decision makers in predicting the future cash flows of businesses and future cash dividends from those businesses. 
D)  Financial reports should provide information about the assets and liabilities of businesses and the transactions and other events that have resulted in changes in those assets and liabilities. 
E)  Statements a and c are false.

Question 20

The owners' interest in a corporation is represented by

Accepted Answer

A)  total assets. 
B)  long-term liabilities. 
C)  total stockholders' equity. 
D)  common stock. 
E)  revenues. 
A)  total assets. 
B)  long-term liabilities. 
C)  total stockholders' equity. 
D)  common stock. 
E)  revenues.

Verifiability means that the accounting information presented can be checked and confirmed for accuracy.

Amounts owed to a business by customers are called

Businesses that allow their customers to charge their purchases on national credit cards usually collect the credit card charges, less a service fee, daily from the credit card companies.

On March 13, 2010, Strauss Department Store purchased five sweaters from Charter Manufacturers for $20 each. On April 1, 2010, Lela Landers purchased all of those sweaters from Strauss for $35 each. Strauss should recognize a

To qualify as useful to decision makers, accounting information should be understandable, relevant, and reliable.

Which of the following statements about reliable accounting information is true?

When a company determines that there is an amount that it currently owes but has not yet recorded, that company will record a(an)

The accounting cycle refers to the time it takes a business to buy (or manufacture) inventory, sell that inventory, and collect the selling price of that inventory.

In the U.S., the historical cost principle

Which of the following concepts is of highest importance in recording asset values in recessionary times?

Requiring a company to include all information necessary for a thorough understanding of a company's financial affairs in its financial statements or accompanying footnotes is an application of the

An asset's book value minus its accumulated depreciation is equal to its historical cost.

In 2007, Alca Co. issued a long-term note payable that would come due on May 15, 2011. On its December 31, 2010 balance sheet, this note should be classified as a(an)

A trial balances is prepared at the end of each accounting period.

Salaries paid to employees working at cash registers in a grocery store would be considered part of

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Multiple persons can validate information.

Which of the following statements about the objectives of financial reporting is false?

The owners' interest in a corporation is represented by

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

Verifiability means that the accounting information presented can be checked and confirmed for accuracy.

Amounts owed to a business by customers are called

Businesses that allow their customers to charge their purchases on national credit cards usually collect the credit card charges, less a service fee, daily from the credit card companies.

On March 13, 2010, Strauss Department Store purchased five sweaters from Charter Manufacturers for $20 each. On April 1, 2010, Lela Landers purchased all of those sweaters from Strauss for $35 each. Strauss should recognize a

To qualify as useful to decision makers, accounting information should be understandable, relevant, and reliable.

Which of the following statements about reliable accounting information is true?

When a company determines that there is an amount that it currently owes but has not yet recorded, that company will record a(an)

The accounting cycle refers to the time it takes a business to buy (or manufacture) inventory, sell that inventory, and collect the selling price of that inventory.

In the U.S., the historical cost principle

Which of the following concepts is of highest importance in recording asset values in recessionary times?

Requiring a company to include all information necessary for a thorough understanding of a company's financial affairs in its financial statements or accompanying footnotes is an application of the

An asset's book value minus its accumulated depreciation is equal to its historical cost.

In 2007, Alca Co. issued a long-term note payable that would come due on May 15, 2011. On its December 31, 2010 balance sheet, this note should be classified as a(an)

A trial balances is prepared at the end of each accounting period.

Salaries paid to employees working at cash registers in a grocery store would be considered part of

Match each term listed below with the appropriate term. Terms may be used once, more than once, or not at all. -_____ Multiple persons can validate information.

Which of the following statements about the objectives of financial reporting is false?

The owners' interest in a corporation is represented by

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