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28 Cards in this Set
- Front
- Back
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Financing activities involve 1) lending money 2) acquiring investments 3) Issuing debt 4) acquiring long-lived assets |
3) Issuing debt |
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Cheesecake Factory Company purchased equipment for $40,000 on January 1, 2013 and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 5-year life and a $2,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2015 will be 1) $5,760 2) $9,120 3) $9,600 4) $5,472 |
1) $5,760 |
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Wolowitz Dress Shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The dress shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be earned? 1) December 5 2) December 10 3) November 30 4) December 1 |
3) November 30 |
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The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that 1) they are both governmental agencies 2) the SEC is a private organization of accountants 3) the SEC often mandates guidelines when no accounting principles exist 4) the SEC and FASB rarely cooperate in developing standards |
3) the SEC often mandates guidelines when no accounting principles exist. |
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The custodian of a company asset should 1) have access to the accounting records for that asset 2) be someone outside the company 3) not have access to the accounting records for that asset 4) be an accountant |
3) not have access to the accounting records for that asset. |
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The conceptual framework developed by the Financial Accounting Standards Board 1) was approved by a vote of all accountants 2) are rules that all accountants must follow 3) is viewed as providing a constitution for setting accounting standards for financial reporting 4) is legally binding on all accountants |
3) is viewed as providing a constitution for setting accounting standards for financial reporting |
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Interest may be included in the acquisition cost of a plant asset 1) during the construction period of a self-constructed asset 2) if the asset is purchased on credit 3) if the asset acquisition is financed by a long-term note payable 4) if it is a part of a lump-sum purchase |
1) during the construction period of a self-constructed asset |
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Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is 1) $240,000 2) $310,000 3) $250,000 4) $230,000 |
3) $250,000 |
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If CalTech Company issues 1,000 shares of $5 par value common stock for $70,000, the account 1) Common stock will be credited for $5,000 2) Paid-in Capital in Excess of Par Value will be credited for $5,000 3) Paid-in Capital in Excess of Par Value will be credited for $70,000 4) Cash will be debited for $65,000 |
1) Common Stock will be credited for $5,000 |
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The factor which determines whether or not goods should be included in a physical count of inventory is 1) physical possession 2) legal title 3) management's judgment 4) whether or not the purchase price has been paid |
2) legal title |
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Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using 1) LIFO will have the highest ending inventory 2) FIFO will have the highest cost of goods sold 3) FIFO will have the highest ending inventory 4) LIFO will have the lowest cost of goods sold |
3) FIFO will have the highest ending inventory |
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Research and development costs are reported 1) as an intangible asset in the balance sheet 2) as an operating expense on the income statement 3) as part of inventory on the balance sheet 4) as a loss on the income statement |
2) as an operating expense on the income statement |
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Under a consignment arrangement, the 1) consignor has ownership until goods are sold to the customer 2) consignor has ownership until goods are shipped to the consignee 3) consignee has ownership when the goods are in the consignee's posession 4) consigned goods are included in the inventory of the consignee |
1) consignor has ownership until goods are sold to a customer |
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At January 31, 2013, the balance in Leslie Winkle Inc.'s supplies account was $250. During February, Winkle purchased supplies of $300 and used supplies of $400. At the end of February, the balance in the supplies account should be 1) $250 debit 2) $350 credit 3) $950 debit 4) $150 debit |
4) $150 debit |
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Freight costs paid by a seller on merchandise sold to customers will cause an increase 1) in the selling expense of the buyer 2) in operating expenses for the seller 3) to the cost of goods sold of the seller 4) to the contra-revenue account of the seller |
2) in operating expenses for the seller |
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If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting 1) Legal Expense 2) an Intangible Loss account 3) the Patent account 4) a revenue expediture account |
3) the Patent account |
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She Blinded Me with Science Inc., had a balance in the Accounts Receivable account of $ 780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $8,000,000. The average collection period of the receivables in terms of days was 1) 30 days 2) 365 days 3) 10 days 4) 37 days
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4) 37 days |
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She Blinded Me with Science, Inc. had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $8,000,000. The average collection period of the receivables in terms of days were 1) 30 days 2) 365 days 3) 10 days 4) 37 days |
4) 37 days |
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The Income Summary account is an important account that is used 1) during interim periods 2) in preparing adjusting entries 3) annually in preparing closing entries 4) annually in preparing correcting entries |
3) annually in preparing closing entries |
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Kripke Coal company invests $16 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. in the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year? 1) $800,000 2) $80,000 3) $320,000 4) Cannot be determined form the information provided. |
1) $800,000 |
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A business organized as a corporation 1) requires that stockholders be personally liable for the debts of the business 2) terminates when one of its original stockholders dies 3) is owned by its stockholders 4) is not a seperate legal entity in most states |
3) is owned by its stockholders |
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The relationship between current liabilities and current assets is 1) useful in determining income 2) useful in evaluating a company's liquidity 3) called the matching principle 4) useful in determining the amount of a company's long-term debt |
2) useful in evaluating a company's liquidity |
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A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the 1) market value of the asset sold 2) book value of the asset sold 3) accumulated depreciation on the asset sold 4) salvage value of the asset sold |
2) book value of the asset sold |
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When an account becomes uncollectible and must be written off, 1) Allowance for Doubtful Accounts should be credited 2) Accounts Receivable should be credited 3) Bad Debts Expense should be credited 4) Sales should be debited |
2) Accounts Receivable should be credited |
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An aging of a company's accounts receivable indicates that $9,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a 1) credit to Allowance for Doubtful Account for $9,000 2) debit to Bad Debts Expense for $7,900 3) debit to Allowance for Doubtful Accounts for $7,900 4) debit to Bad Debts Expense for $9,000 |
2) debit to Bad Debts Expense for $7,900 |
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Under the lower-of-cost-or-market basis in valuing inventory, market is defined as 1) current replacement cost 2) selling price 3) historical cost plus 10% 4) selling price less markup |
1) current replacement cost |
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An overriding criterion in evaluating the accounting information to be presented is 1) fairness 2) legality 3) management's goals 4) decision usefulness |
4) decision usefulness |
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Priya Inc. purchased land for $90,000 cas. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old busilding on the land before construction of a new bus |
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