ACCT 220 | Chapter 2

Which item is the "Reporting only those things that can be measured in dollars?" A. Faithful representation B. Monetary unit assumption C. Going concern assumption D. Full disclosure principle

B. Monetary unit assumption

Current assets under IFRS are listed generally: A. by importance. B. in the reverse order of their expected conversion to cash. C. by longevity. D. alphabetically.

B. in the reverse order of their expected conversion to cash.

For 2017 Stoneland Corporation reported net income $26,000; net sales $400,000; and average shares outstanding 6,000. There were preferred stock dividends of $2,000. What was the 2017 earnings per share? a. $4.00 b. $0.06 c. $16.67 d. $66.67

a. $4.00

Patents and copyrights are: A. Current assets. B. Intangible assets. C. Long-term investments. D. Property, plant, and equipment.

B. Intangible assets

Cash, and other resources that are reasonably expected to be realized in cash or sold or consumed in the business within one year or the operating cycle, are called: A. Current assets. B. Intangible assets. C. Long-term investments. D. Property, plant, and equipment.

A. Current assets

Which item is "The quality of information that indicates the information makes a difference in a decision?" A. Relevance B. Faithful representation C. Comparability D. Materiality

A. Relevance

An intangible asset: A. derives its value from the rights and privileges it provides the owner. B. is worthless because it has no physical substance. C. is converted into a tangible asset during the operating cycle. D. cannot be classified on the balance sheet because it lacks physical substance.

A. derives its value from the rights and privileges it provides the owner.

Which item is "The desire to minimize errors and bias in financial statements?" A. Relevance B. Faithful representation C. Consistency D. Full disclosure principle

B. Faithful representation

Which item is "A company's use of the same accounting principles and methods from year to year?" A. Comparability B. Consistency C. Economic entity assumption D. Periodicity assumption

B. Consistency

Which of the following is not a long-term liability? A. Bonds payable. B. Current maturities of long-term debt. C. Long-term notes payable. D. Mortgages payable.

B. Current maturities of long-term debt.

Which item is the "Tracing accounting events to particular companies?" A. Monetary unit assumption B. Economic entity assumption C. Periodicity assumption D. Full disclosure principle

B. Economic entity assumption

From top to bottom, which series below is in the standard order for the asset section of the balance sheet (i.e. each succeeding item is less liquid than the previous)? A. Cash, Prepaid insurance, Accounts receivable, Inventory B. Inventory, Accounts receivable, Inventory, Equipment C. Cash, Accounts receivable, Inventory, Prepaid insurance D. Inventory, Accounts receivable, Equipment, Accumulated depreciation - Equipment E. Cash, Inventory, Accounts receivable, Prepaid insurance

C. Cash, Accounts receivable, Inventory, Prepaid insurance

Which item is the "Ability to easily evaluate one company's results relative to another's." A. Relevance B. Faithful representation C. Comparability D. Economic entity assumption

C. Comparability

Which item is "The practice of preparing financial statements at regular intervals?" A. Faithful representation B. Economic entity assumption C. Periodicity assumption D. Full disclosure principle

C. Periodicity assumption

On a classified balance sheet, companies usually list current assets A. in alphabetical order. B. with the largest dollar amounts first. C. in the order in which they are expected to be converted into cash. D. in the order of acquisition.

C. in the order in which they are expected to be converted into cash.

Which item is the "Belief that a company will continue to operate for the foreseeable future?" A. Faithful representation B. Economic entity assumption C. Periodicity assumption D. Going concern assumption

D. Going concern assumption

Which item is the "Belief that items should be reported on the balance sheet at the price that was paid to acquire the item?" A. Monetary unit assumption B. Economic entity assumption C. Going concern assumption D. Historical cost principle

D. Historical cost principle

Accrued expenses are expenses that have occurred but are not yet recorded through the normal processing of transactions. Since these expenses are not yet in the accountant's general ledger, they will not appear on the financial statementsunless an adjusting entry is entered prior to the preparation of the financial statements. Which of the following is not an accrued expense? A. Interest on loans, for which no lender invoice has yet been received B. Goods received and consumed or sold, for which no supplier invoice has yet been received C. Services received, for which no supplier invoice has yet been received D. Taxes incurred, for which an obligation to pay has been established by the filing of a tax return. E. Wages incurred, for which payment to employees has not yet been made.

D. Taxes incurred, for which an obligation to pay has been established by the filing of a tax return.

In a classified balance sheet, assets are usually classified as: A. current assets; long-term assets; property, plant, and equipment; and intangible assets. B. current assets; long-term investments; property, plant, and equipment; and common stocks. C. current assets; long-term investments; tangible assets; and intangible assets. D. current assets; long-term investments; property, plant, and equipment; and intangible assets.

D. current assets; long-term investments; property, plant, and equipment; and intangible assets.

A current asset is: A. the last asset purchased by a business. B. an asset which is currently being used to produce a product or service. C. usually found as a separate classification in the income statement. D. expected to be converted to cash or used in the business within a relatively short period of time.

D. expected to be converted to cash or used in the business within a relatively short period of time.

Which item is "The reporting of all information that would make a difference to financial statement users?" A. Relevance B. Comparability C. Economic entity assumption D. Periodicity assumption E. Full disclosure principle

E. Full disclosure principle

Which item is "The judgment concerning whether an ITEM is large enough to matter to decision-makers?" A. Relevance B. Comparability C. Consistency D. Historical cost principle E. Materiality

E. Materiality

Which items below include no classification errors? (NA)=Not on balance sheet; (CA)=Current asset; (LTI)=Long-term investments; (PPE)=Property, plant and equipment; (IA)=Intangible assets; (CL)=Current liabilities; (LTL)=Long-term liabilities; and (SE)=Stockholders' equity. A. Salaries and wages payable (CL); Service revenue (NA); and Interest payable (LTL) B. Goodwill (LTI); Depreciation expense (NA); Mortgage payable-due in three years (LTL) C. Investment in real estate (LTI); Equipment (PPE); Accumulated depreciation (NA) D. Debt investments-short term (CL); Retained earnings (SE); Goodwill (LTI) E. Unearned service revenue (CL); Service revenue (NA); Accumulated depreciation (PPE)

E. Unearned service revenue (CL); Service revenue (NA); Accumulated depreciation (PPE)

Generally accepted accounting principles are: a. a set of standards and rules that are recognized as a general guide for financial reporting. b. usually established by the Internal Revenue Service. c. the guidelines used to resolve ethical dilemmas. d. fundamental truths that can be derived from the laws of nature.

a. a set of standards and rules that are recognized as a general guide for financial reporting.

Companies that use IFRS: a) may report all their assets on the statement of financial position at fair value. b) may offset assets against liabilities and show net assets and net liabilities on their statements of financial position, rather than the underlying detailed line items. c) may report non-current assets before current assets on the statement of financial position. d) do not have any guidelines as to what should be reported on the statement of financial position.

c) may report non-current assets before current assets on the statement of financial position.

What is the primary criterion by which accounting information can be judged? a. Consistency. b. Predictive value. c. Usefulness for decision making. d. Comparability.

c. Usefulness for decision making.