Question 1

Which of the following is the justification of reporting certain assets at historical cost?

Accepted Answer

A)  Executory 
B)  Reliability 
C)  Relevance 
D)  Accrual

Question 2

Operating expenses include interest expense related to a company's financing activities.

Accepted Answer

A) True 
 B)False

Question 3

Identify the effects of the following transactions in the table below:

Accepted Answer

The answer of Identify the effects of the following transactions...

Question 4

With few exceptions, why do we report most assets at their original acquisition price (historical cost) and not at current market value?

Accepted Answer

The answer of With few exceptions, why do we report...

Question 5

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H.
-Value of company logo

Accepted Answer

A)  Current assets 
B)  Long-term investments 
C)  Long-term assets 
D)  Intangible assets 
E)  Current liabilities 
F)Noncurrent liabilities 
G) Equity 
H) Not appear on the balance sheet

Question 6

Accrual accounting recognizes revenues only when cash is received and expenses only when cash is paid.

Accepted Answer

A) True 
 B)False

Question 7

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H.
-Mortgage payable

Accepted Answer

A)  Current assets 
B)  Long-term investments 
C)  Long-term assets 
D)  Intangible assets 
E)  Current liabilities 
F)Noncurrent liabilities 
G) Equity 
H) Not appear on the balance sheet

Question 8

Assets such as inventory and property, plant, and equipment are reported on the balance sheet at their current market value.

Accepted Answer

A) True 
 B)False

Question 9

An income statement does not include which of the following?

Accepted Answer

A)  Operating expenses 
B)  Cost of goods sold 
C)  Retained earnings 
D)  Sales

Question 10

Which of the following will properly record the payment of a one-year insurance policy?

Accepted Answer

A)  Increase assets and increase retained earnings 
B)  Increase liabilities and decrease retained earnings 
C)  Increase and decrease assets 
D)  Decrease assets and decrease liabilities

Question 11

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H.
-Income taxes payable in 30 days

Accepted Answer

A)  Current assets 
B)  Long-term investments 
C)  Long-term assets 
D)  Intangible assets 
E)  Current liabilities F. Noncurrent liabilities G. Equity H. Not appear on the balance sheet

Question 12

Which of the following is one effect of a purchase of $1,000 of inventory on credit?

Accepted Answer

A)  It would increase liabilities by $1,000 
B)  It would decrease retained earnings by $1,000 
C)  It would decrease liabilities by $1,000 
D)  It would decrease cash asset $5,000

Question 13

If Umbrella Company paid $2,000 cash dividends to its shareholders, retained earnings would be reduced by $2,000.

Accepted Answer

A) True 
 B)False

Exam 2: Constructing Financial Statements

Which of the following is the justification of reporting certain assets at historical cost?

Operating expenses include interest expense related to a company's financing activities.

Identify the effects of the following transactions in the table below:

With few exceptions, why do we report most assets at their original acquisition price (historical cost) and not at current market value?

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H. -Value of company logo

Accrual accounting recognizes revenues only when cash is received and expenses only when cash is paid.

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H. -Mortgage payable

Assets such as inventory and property, plant, and equipment are reported on the balance sheet at their current market value.

An income statement does not include which of the following?

Which of the following will properly record the payment of a one-year insurance policy?

Select from choices of its balance sheet classification. If the item should not appear on the balance sheet, select H. -Income taxes payable in 30 days

Which of the following is one effect of a purchase of $1,000 of inventory on credit?

If Umbrella Company paid $2,000 cash dividends to its shareholders, retained earnings would be reduced by $2,000.