ACCT 301-1A (SIUE)

What account would never be a current liability account? -Accured payroll -Dividends payable -Prepaid rent - subscriptions collected in advance from customers

-prepaid rent (Current asset)

Red Onion Restaurant would classify a six-month prepaid insurance policy as:

A current asset

Hughes aircraft sold a four-passenger airplane for $380,000 receiving a $50,000 down payment and a 12% note for the balance. The journal entry to record this sale would include a:

A debit to notes receivable

Comprehensive income is the change in equity from: A. Owner transactions B. Non-owner Transactions C. Owner or non-owner transactions D. Capital Transactions

B. Non-owner transactions

Liquidity refers to: A. the amount of cash on hand at a given time B. the readiness of an asset to be converted to cash C.The period until cash is used and refinancing becomes necessary D. Financial Leverage

B: The readiness of an asset to be converted to cash

Which of the following groups is not among the users for whom financial statements are prepared? A. Customers B. Suppliers C. Employees D. All of the Above are users of financial statements

D. All the Above

XYZ corporation receives $100,000 from investor for issuing them shares of its stock. What is the journal entry?

Debit-Cash Credit- Common Stock

Incurring an expense for advertising on account would be recorded by:

Debiting an expense

incurring an expense for advertising on account would be recorded by?

Debiting an expense

T/F Accruals occur when the cash flow precedes either revenue or expense recognition

False

T/F Intangible assets usually are reported in the balance sheet of current assets

False

T/F The adjusted trial balance contains only permanent accounts

False

T/F Gains, but not losses, from discontinued operations must be separately reported on the income statement

False -Both get reported separately

T/F Liquidity refers to the riskiness of a company with regard to the amount of liabilities in its capital structure

False It's the readiness of an asset to be converted to cash

T/F After an unadjusted trial balance is prepared, the next step in the accounting processing cycle is the preparation of financial statements.

False Next is the adjusting journal entries

Each o the following would be reported as item of other comprehensive income except: A. Foreign currency translation gains B. Unrealized gains on investments accounted for as securities available for sale C. Deferred gains from derivatives D. Gains from the sale of equipment

Gains from the sale of equipment

GAAP is an abbreviation for:

Generally Accepted Accounting Principles

which of the following is not true about EPS

It must be reported on operating income.

Non-Current assets include?

Land held for a possible future plant site

Of the following, the most important objective for financial reporting is to provide useful information for:

Making decisions

The conceptual framework's qualitative characteristic of faithful representation includes:

Neutrality

The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:

Plus net income, minus dividends

The distinction between operation and non-operating income relates to:

Principal activities of the reporting entity

Adjusting journal entries are required to comply with the realization and matching principles

True

All current assets are either cash or assets that will be converted into cash or consumed within 12 months or the operating cycle, whichever is longer.

True

T/F All current assets are either cash or assets that will be converted into cash or consumed within 12 months or the operating cycle, whichever is longer

True

T/F Comprehensive income reports an expanded verison of income to include certain types of gains and losses not included in traditional income statements

True

T/F Earnings quality refers to the ability of reported earning (income) to predict future earning

True

T/F Owner's Equity can be expressed as assets minus liabilities

True

T/F The criteria for determining which items comprise cash equivalents often is disclosed in the summary of significant accounting policies

True

T/F The primary function of financial accounting is to provide relevant financial information to parties external of the business enterprises

True

T/F The purpose of the conceptual framework is to provide a structure and framework for a consistent set of GAAP

True

T/F an adjusted trial balance contains some temporary accounts

True

T/F the post closing trial balance contains only permanent accounts

True

How many trial balance are made during the year?

Unadjusted, adjusted, post closing

Popson Inc. incurred a material loss which was not unusual in character but was clearly an infrequent occurrence. This loss should be reported as

a item within income from continuing operations

Rent collected in advance is

a liability account on the balance sheet

How can comprehensive income reporting be accomplished

a single, continuous statement of comprehensive income in two separate, but consecutive statements

An example of a contra account is:

accumulated depreciation

The purpose of closing entries is to transfer

balances in temporary accounts to a permanent account

A firms comprehensive income always

could be greater than or less than net income

Cost of Goods Sold

is an expense account

The distinction between operating and non-operating income relates to:

primary activities of the reporting entity

Accrued Expense

results from services received before payment

Enhancing qualitative characteristics of accounting information include

Comparability and timeliness

A constraint on qualitative characteristics of accounting information is:

Cost-effectiveness

Cardinal Corporation receives $150,000 from investors in exchange for shares of its stock. Cardinal's journal entry to record this transaction would include a

Credit to Common Stock

Current Ratio Formula

Current Ratio = Current Assets / Current Liabilities