Practice

The Jackson family buys an old Victorian house from the Walker family

GDP is not affected because nothing new is produced.

Which of the following is a characteristic of a periodic inventory system?

Inventory purchases are debited to a Purchases account.

Which of the following is a realistic assumption of the straight-line method of depreciation?

The asset's economic usefulness is the same each year

Which of the following is a reason why the specific identification method may be considered ideal for assigning costs to inventory and cost of goods sold?

The cost flow matches the physical flow.

In a perpetual inventory system, the inventory account

is debited for purchases and credited when the goods are sold and the cost is transferred to cost of goods sold

A Cash Over and Short account

is debited when the petty cash fund proves out short

For the composite method, the composite

life is the total depreciable cost divided by the total annual depreciation.

The journal entries for a bank reconciliation

may include a debit to Office Expense for bank service charges.

The notes to the financial statements should include information about acquired intangible assets, and aggregate amortization expense for how many succeeding years?

5 years

What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

As assets but separate from other receivables

What is the relationship between current liabilities and a company's operating cycle?

Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less).

Which of the following does not allow a company to exclude a short-term obligation from current liabilities?

Management indicated that they are going to refinance the obligation.

Under what condition is an employer required to accrue a liability for sick pay?

Sick pay benefits vest.

When preparing a bank reconciliation, bank credits are

added to the balance per books

Which of the following items should be included as part of accounts receivable reported on the balance sheet?

allowance for doubtful accounts

A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should

be accrued during the period when earned.

Your parents pay an accountant to file their tax returns.

consumption

When an asset is sold in the middle of the fiscal year,

depreciation should be updated through the date of the sale.

Depreciation is normally computed on the basis of the nearest

full month and to the nearest dollar

A principal objection to the straight-line method of depreciation is that it

ignores variations in the rate of asset use

Which of the following is included in inventory costs?

product costs

The major difference between the service life of an asset and its physical life is that

service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.

Valuation of inventories requires the determination of all of the following except

the cost of goods held on consignment from other companies

Which of the following statements about involuntary conversions is false?

the gain or loss from an involuntary conversion should not be recognized when the enterprise reinvests in replacement assets

The term "depreciable base," or "depreciation base," as it is used in accounting, refers to

the total amount to be charged (debited) to expense over an asset's useful life.

In accounting for compensated absences, the difference between vested rights and accumulated rights is that:

vested rights are not contingent upon an employee's future service.