Accounting 3321

ORDER OF ASSETS ON BS

cash and cash equivalents acc receivables inventory Prepaid Ex

Inventory for a wholesale or retail company includes which of the following?

finhished goods

If the SEC does not agree with a standard issued by the private sector, it can

force a change in the standard

True or false: Political pressure has deterred the FASB from issuing particular standard changes.

true

Risk refers to the Blank______ of an investment.

uncertainty

Which type of audit opinion indicates the financial statements are prepared in accordance with U.S. GAAP?

uniquialifed

A company paying rent in advance for the month of April records:

asset

Inflows and outflows of cash from transactions with creditors and owners are

financing

The type of analysis that examines the relationship of items on the financial statements of one year is called

vertical

1934 Securities and Exchange Act

Mandates reporting requirements for companies whose stock is publicly traded.

The accrual accounting model measures the entity's accomplishments and resource sacrifices during the period regardless of when BLANK is paid or recieved

cash

The FASB Accounting Standards Blank organizes all relevant accounting pronouncements in a searchable, online database (Enter only one word.).

codification

Differences in implementation and enforcement of IFRS across countries can impact the BLANK of finical statements

comparability

What concepts are contained in the FASB conceptual framework? (Select all that apply.)

concepts regarding types of events to be accounted for underlying concepts of accounting measurement concepts

In developing standards, the FASB considers the: (Select all that apply.)

economic transactions that standards will address views of key constituents

A code or moral system that provides criteria for evaluating right and wrong is referred to as

ethics

Under the accrual accounting model, the measure of resources sacrificed is called

expense

What are the requirements of all states to become a licensed certified public accountant? (Select all that apply.)

experience testing education

In 2007, the SEC eliminated the requirement for BLANK companies that issue stock in the United States to include in their financial statements a reconciliation of IFRS to U.S. GAAP. (Enter only one word.)

foreign

The IASB is dedicated to developing a set of high-quality, understandable, and enforceable BLANK acc standards

global

Which of the following are external users of financial information? (Select all that apply.)

government agencies suppliers investors creditors

Blank and Blank are willing to provide capital to a corporation only if they expect to receive more cash in return at some time in the future.

investors and creditors

Which of the following fields are considered a profession that has its own code of professional ethics? (Select all that apply.)

law, acc and medicine

Jody's expenses exceed revenues for the period. Jody has a net BLANK

loss

It is the responsibility of blANK apply Generally Accepted Accounting Principles in preparation of the company's financial statements. (Enter only one word.)

management

Criticisms of the objectives-oriented approach for accounting standards are (Select all that apply.)

n absence of rules may lead to intentional misuse of a standard. professional judgment may result in different treatments of similar transactions.

The Emerging Issues Task Force (EITF) was formed to resolve BLANK ______ financial accounting issues within the framework of existing GAAP.

narrowly deisgsn

The difference between revenue and expenses when revenue is greater is called

net income

Before issuing an Accounting Standards Update, the FASB undertakes a series of information-gathering steps including (Select all that apply.)

open hearings written comments deliberations

The Accounting Standards Codification is organized into

topics and subtopics

On October 1, Year 1, Swift Corporation received $1,200 from customers for services to be performed evenly over the next 12 months. Swift recorded the original transaction in a balance sheet account. The adjusting journal entry on December 31, Year 1, will include which of the following entries?

300

On January 1, Poodle Company purchases equipment for $120,000. The equipment is expected to have a useful life of 4 years and will have no value a the end of that period. Poodle allocates the cost equally over the period of use so the depreciation expense that must be recognized for the year is

30K

Which formats are acceptable for reporting comprehensive income? (Select all that apply.)

A single, continuous statement of comprehensive income Two separate but consecutive statements

The conceptual framework includes what types of information?

A system of objectives and fundamentals intended to lead to consistent accounting standards.

The full-disclosure principle requires that financial statements report which of the following?

All material relevant information.

What is the difference between an account payable and a note payable?

An account payable is usually due in 30-60 days.

acc equation

Assets = Liabilities + Stockholders' Equity

The first body to set accounting standards in the U.S. was the

CAP

Matching cost of goods sold with the revenues generated during the period is an example of which approach to expense recognition?

Cause-and-effect relationship.

The first private accounting standard setting body in the United States was the

Committee on Accounting Procedure. CAP s

What is included in a company's paid in capital? (Select all that apply.)

Common stock Additional paid-in capita

Longine Co. accrues 1 week of salaries at the end of November. The adjusting journal entry to record this accrual will include which of the following?

Credit to salary payable. Debit to salary expense.

Which of the following are characteristics of an operating segment? (Select all that apply.)

Discrete financial information is available. Its operating results are regularly reviewed by the chief operating decision maker. It engages in business to earn revenues and incur expenses.

Sustainability Disclosures include (Select all that apply.)

Governance Social Environmental

Which of the following describes a difference between a balance sheet prepared using U.S. GAAP and IFRS accounting standards?

IFRS balance sheets often report noncurrent items first, although the format is not prescribed.

Identify which transaction would result in the following journal entry: debit to Cash for $60,000 and credit to Common stock for $60,000.

Issue stock to investors

What is the criterion to classify an investment as a cash equivalent versus a short-term investment?

It is a highly liquid investment with a maturity date of 3 months or less from date of purchase.

A liability has which of the following characteristics? (Select all that apply.)

It is due to a past transaction or event. It is a present obligation. It is a probable future sacrifice of an economic benef

What information does the times interest earned ratio provide to investors or creditors?

It provides the creditor with an indication of the ability of the debtor to pay the interest on its debts.

The Management Discussion and Analysis section of the financial statements includes a perspective on which of the following? (Select all that apply.)

Operations Liquidity Capital resources

Which of the following are required segment disclosures? (Select all that apply.)

Reconciliation of total segment revenues with entity revenue General information about the segment

The legal authority to set accounting and reporting standards for companies whose securities are publicly traded lies with the

SEC

How are current liabilities satisfied? (Select all that apply.)

The creation of other current liabilities. The use of current assets.

Which of the following items are included in the professional opinions given in the auditor's report? (Select all that apply.)

The fairness of the financial statements. The effectiveness of internal control.

Which of the following are key differences between U.S. GAAP and IFRS in the presentation of a balance sheet? (Select all that apply.)

The order in which assets and liabilities are presented The title of the statement

Which of the following statements most accurately describes the purposes of the closing entries?

To establish zero balances in the income statement and dividend accounts and to transfer net income and dividends into retained earnings

The conceptual framework does not prescribe which of the following?

US GAAP

Which of the following should be classified as current liabilities? (Select all that apply.)

accrued warranties unearned revenues income taxes payable

A transfer of something of value to obtain or increase ownership interests in a business is called

accumulated other comprehensive income.

Accounting information meets the qualitative characteristic of consistency if it is measured and reported the same way

across diff reporting periods

The current versus noncurrent classification applies to what in the financial statements?

assets and liabilities

In a periodic inventory system, cost of goods sold is debited for the cost of inventory sold

at the end of the acc period

The financial statement that displays a firm's financial position on a particular date is the

balance sheet

Which of the following items is classified as cash?

bank drafts

portrays the equality between the total economic resources of a company and the total claims to those resources by creditors and owners.

basic acc equation

Which of the following are noncurrent assets? (Select all that apply.)

building intangible assets land

What accounting model produces a measure called net operating cash flow?

cash basis

What basis of accounting measures the difference between cash receipts and cash payments from transactions related to providing goods and services to customers during a reporting period?

cash basis

Prepayments occur when:

cash flow precedes expense or revenue recognition

The "Accounting Constitution", a coherent system of interrelated objectives and fundamentals that lead to consistent standards and that prescribe the nature, function, and limits of financial accounting and reporting is referred to as the

conceptual framework

Comparative financial statements refer to financial statements that are accompanied by the

corresponding financial statement of the preceding year.

Drake Corp. received $5,000 from customers for goods sold on account in the previous month. The journal entry for this transaction will include a

credit to accs receivable

Beck Company borrowed $50,000 from the bank and signed a note. The journal entry Beck makes to record this transaction includes (Select all that apply.)

credit to notes payable $50,000 debit to cash for $50,000

A ratio used to measure liquidity is the

current ratio

On September 1, Newman Company received $1,200 of revenue in advance from customers for work to be performed evenly over the next 12 months. The transaction was recorded in an income statement account. What is the adjusting journal entry required on December 31?

deb rev 800

On May 1, Year 1, Garcia Company paid $1,200 for 12 months of rent and recorded the transaction in an income statement account. The adjusting journal entry required on December 31, Year 1, will require a

debit to prepaid rent $400. credit rent expense $400

The expense accounts are closed with (Select all that apply.)

debit to retained earnings credit entry to expenses

A trial balance proves:

debits balances equal credit balances

Which of the following is a ratio used to evaluate a company's solvency?

debt to equity

An adjusting entry to record depreciation expense for the period will

decrease

The risk that a company will not be able to pay its obligations when they come due is referred to as

default

A customer pays in advance for services to be performed in a future period. In which account should the transaction be recorded?

deffered rev

The FASB's standard setting process begins when the board adds a project to its technical agenda. Organize the remaining steps in the FASB's accounting standard setting process in correct order.

deliberates, issues exposure , analayses , the board

The statement of shareholders' equity discloses the changes in the shareholder equity accounts during the period from: (Select all that apply.)

distributions to owners net income investments by owners other comprehensive income

Decreases in equity of a particular enterprise resulting from transfers to owners is called

distributions to owners.

If a company uses the temporary account dividends then when a dividend is paid to shareholders:

dividends is debited

Shareholders' equity arises primarily from amounts invested by shareholders and amounts

earned by the corp

The two sources of shareholders' equity are amounts

earned by the corporation paid in from shareholders

Favorable financial leverage occurs when a company

earns a return on borrowed funds that exceeds the cost of borrowing.

event is any event that directly affects the financial position of the company. (Enter one word per blank)

economic

Carradine Company prepares an adjusting journal entry to accrue salaries at year-end. What effect will this entry have on the financial statements?

ex will increase

Expense recognition often matches and that arise from the same transaction.

expense / revenue

When a company spends large amounts on research and development to obtain a patent on its own, the research and development cost is

expense A INCURRED

Financial accounting is chiefly concerned with providing information to various WHAT users

external

When there is agreement between a measure or description of an item and the phenomenon it purports to represent, the item possesses the fundamental characteristic of

faithful rep

True or false: The FASB Codification project revised and updated U.S. accounting standards with international accounting standards.

false

Assuming that a business will operate indefinitely is referred to as the BLANK assumption.

going concern

The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the

inc statment

External users of a company's financial information include (Select all that apply.)

labor unions. banks. credit-rating agencies.

Which of the following is a probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events?

liability

Measuring assets at what value helps financial statement users predict a company's future cash flows?

net realizable value

Multiple Choice Question The purpose of the statement of comprehensive income is to report current period changes in equity that arose from

non owner transa

The components of the income statement are usually classified as: (Select all that apply.)

non-operating items operating items

The time period necessary to convert cash to raw materials, convert raw materials into finished products, sell the products, and collect on the account receivable is referred to as the

operating

The risk that a company may not effectively manage its business and might impair its ability to earn profits is known as

operational

On the last day of the period, a journal entry is made to record the amount of interest that has been accrued but not

paid

Shareholders' equity is composed of which of the following accounts? (Select all that apply.)

paid-in capital retained earnings

The method for determining if an item is material and requires separate disclosure relies on

professional judgment

Proponents of objectives-based standards assert that

professional judgment minimizes sidestepping of rules

Which of the following are required segment disclosures? (Select all that apply.)

profit or loss assets

The main focus of accounting information is to

provide useful information for decision making.

Which document is required to provide information on executive and director compensation?

proxy

Which document is required to provide information on executive and director compensation?

proxy statement

______ ratio provides a more rigorous indication of liquidity than does the

quick , current

The process of admitting or recording an item into the basic financial statements is referred to as

recognition

When an adjusting entry is made to record depreciation expense, the effect on the balance sheet is to

reduce total assets.

Adjusting journal entries are needed to record (Select all that apply.)

reveneu earned but not yet received expense incurred but not paid

Which of the following are temporary accounts? (Select all that apply.)

revenue salary expense

Which accounts require a credit to increase the account? (Select all that apply.)

revenue and commmon stock

An emphasis is placed on proper income statement item recognition under what approach under US GAAP?

revenue and expenses

The following accounts are closed with a credit entry (Select all that apply.)

salaries expense depreciation expense cost of goods sold

Those liabilities that will be satisfied within 1 year or the operating cycle, whichever is longer, are referred to as liabilities.

sale of long-term investment sale of building

Which financial statement shows the sources of the changes in the various permanent equity accounts?

statment of stockholders equi

A BLANK event is a significant development that occurs after a company's fiscal year-end but before the financial statements are issued or available to be issued

subsequent

Reports that communicate the environmental, social, and governance factors of an organization's activities are called:

sustainability

The justification for a company initially recording prepaid rent in either an income statement or balance sheet account is that

the accounts are adjusted at year-end to reflect the correct balances.

A summary of significant accounting policies includes information regarding

the choice of accounting policies.

Consistent with the realization principle, historically, revenue was recognized if two conditions were satisfied. These were:

the earnings process was virtually complete collectibility of related assets was reasonably assured

In practice, determining whether an item is material and requires separate disclosure or recognition is based on

the relative amount of the item.

In the two statement approach: (Select all that apply.)

there is a separate income statement the separate statement of comprehensive income begins with net income the income statement is immediately followed by a separate statement of comprehensive income

True or false: Both profit-oriented companies and not-for-profit companies are providers of financial information.

true

Which of the following items are classified as operating items on the income statement? (Select all that apply.)

utility expense employee salary expense

When the cost of an item can be traced to objective evidence of a transaction, such as a sales receipt, canceled check, and bank statement, the information has the quality of

verifiatbly

The type of analysis that examines the relationships of items as a percent of total sales or as a percent of total assets is considered what type of analysis?

vertical

Glasser Corp. sold goods on account. The journal entry to record this transaction includes (Select all that apply.)

✓ debit accounts receivable credit inventory debit cost of goods sold credit revenue

The organization that develops global accounting standards is the

International Accounting Standards Board.

What is the distinguishing feature of a profession?

Its members accept responsibility for the interests of those it serves.

The primary focus of the qualitative characteristics of accounting information is:

descion usefulness

The FASB and IASB will continue to work together to converge where possible, but BLANK between IFRS and U.S. GAAP will likely remain.

differences

The purpose of the Private Company Council (PCC) is to advise the Blank______ about its current projects that affect private companies.

fasb

True or false: Investors expect that if an investment has greater risk, it should also pay a higher return.

true

What information regarding an entity's future cash flows are investors and lenders interested in? (Select all that apply.)

uncertainty amount timing

On January 1, Noonan Company purchases equipment for $100,000. The equipment is expected to have a useful life of 5 years and will have no value at the end of that period. Noonan allocates the cost equally over the period of use so the depreciation expense that must be recognized for the year is

20K

On January 1 of the current year, Lafferty signs a contract to rent a building for $1,000 per month for the next three years. On that date, Lafferty pays $36,000 for rent. On January 1 when payment is made, what is the amount of the prepaid rent that should be classified as a noncurrent asset?

24K

On January 1, Jennifer purchases common stock of Gamma Corporation for $100,000. During the year, Gamma Corporation stock pays a dividend of $3,000. At the end of the year, Jennifer sells the Gamma stock for $104,000. What is the return on investment of the Gamma stock?

3,000 + 4000 divided by 100000intial loan

On September 1, Year 1, Great Lakes Equipment receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Great Lakes Equipment should recognize on the income statement for the year ending December Year 1?

4 k

On January 1, an investor purchases shares of stock in a company for $10,000 cash. At the end of the year, the investor receives $400 in dividends and sells their ownership for $10,600. What is the return on investment?

400 dividends + 600 divided by intial loan

On September 1, Year 1, Great Lakes Equipment receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Great Lakes Equipment should recognize on the income statement for the year ending December Year 1?

4K

On January 1, Year 1, Renquist Corp. borrowed $100,000 by signing a 5-year note payable with annual interest of 8%. The terms of the contract require Renquist to repay the principal over 5 years with a payment of $20,000 made at the end of each year. On December 31, Year 1, Renquist made the first payment plus interest. On January 1, Year 2, what portion of the note should be classified as noncurrent liabilities?

60K

On June 1, Year 1 Oxian Corp. receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is the amount of revenue that Oxian should recognize on the December 31 income statement for Year 1?

7K

Lassiter Corp. uses the periodic inventory method. During the year, Lassiter purchases $10,000 of inventory. Ending inventory is $6,000. Cost of goods sold is $12,000. Beginning inventory was:

8,000

If a company's long-term investments are not material in amount, where should they be disclosed on the balance sheet?

ASSETS

As of July 1, 2009, the single source of nongovernmental U.S. GAAP is found in the

Accounting Standards Codification.

Which of the following are common arguments against the creation of a single set of global accounting standards? (Select all that apply.)

Accounting under IFRS will appear more uniform than it actually is Implementation and enforcement of IFRS varies among nations Maintaining competition between accounting standard-setting bodies improves quality

The organization responsible for the Code of Professional Conduct for certified public accountants is the

American Institute of Certified Public Accountants

Which of the following are required disclosures for related-party transactions? (Select all that apply.)

Amounts due to or from related parties. Nature of the relationship.

An accrued liability represents which of the following?

An expense that has been incurred but will be paid in a future peri

If a company elects the fair value option for a financial asset or financial liability, how are the changes in fair value reported in the financial statements?

As gains or losses on the income statement.

Bear Corp. has $100,000 cash in the bank restricted to repay a note payable that matures in 2 years. How should this $100,000 be reported?

As restricted cash in the long-term section of the balance sheet.

Expense recognition is implemented by which of the following ways? (Select all that apply.)

Associating expenses and revenues in a specific period of time. Cause-and-effect relationship. In the period incurred. Systematic and rational allocation.

Which of the following is the correct formula to calculate cost of goods sold?

Beginning inventory + purchases - ending inventory

Which of the following are economic events? (Select all that apply.)

Borrowing $10,000 from the bank. The payment of employee salaries for the week.

Which of the following is a likely example of a related-party transaction?

Borrowing or lending money at unusually low interest rates.

List the private accounting standard setting bodies in chronological order beginning with the oldest organization.

CAP , F , A

What is the testing requirement for a licensed certified public accountant?

CPA

The AICPA has its own Code of Professional Conduct that prescribes ethical conduct specific to what members?

CPAs

On July 1, Davis Corporation receives $10,000 for rent in advance from a tenant. Which of the following are correct for Davis to record? (Select all that apply.)

Debit cash $10,000 Credit deferred rent revenue $10,00

Focus Corp. pays $12,000 for 2 years of rent. What is the journal entry to record this transaction?

Debit prepaid rent $12,000; credit cash $12,000.

Longine Co. accrues 1 week of salaries at the end of November. The adjusting journal entry to record this accrual will include which of the following?

Debit to salary expense. Credit to salary payable.

Which of the following would be a likely advantage of a single set of accounting standards?

Enhanced financial statement comparability

The type of system that integrates the information of departments and functions of a company into a single computer system is called a(n)

Enterprise Resource Planning (ERP) system.

Which of the following are subsequent events that must be disclosed in the notes to the financial statements? (Select all that apply.)

Event that affects a loss contingency. Issuance of debt securities. Sale of a business.

True or false: Investments are assets used directly in the operations of the business.

F

True or false: Shareholders' equity includes only retained earnings and the accounts associated with retained earnings.

F

True or false: The primary function of financial accounting is to provide useful financial information to users who are internal to the business.

F

was established to set U.S. accounting standards and is the current standard setting body. (Use acronym.)

FASB

The citation used to reference generally accepted accounting principles is

FASB ASC.

What are the advantages of one global accounting framework? (Select all that apply.)

Facilitate access to capital. Improve comparability.

True or false: Retained earnings equals net income plus distributions to shareholders.

False

The International Accounting Standards Committee (IASC) reorganized in 2001 to create a new standard-setting body called the International Accounting Standards Board (IASB). The IASB issues global accounting standards called

International Financial Reporting Standards

The International Accounting Standards Committee issued International Accounting Standards (IAS), whereas the International Accounting Standards Board currently issues

International Financial Reporting Standards.

Which of the following are characteristics of an operating segment? (Select all that apply.)

Its operating results are regularly reviewed by the chief operating decision maker. Discrete financial information is available. It engages in business to earn revenues and incur expenses.

What additional factors should be considered when assessing current ratio and liquidity? (Select all that apply.)

Line of credit or borrowing ability. Portion of current assets made up of non-cash assets. Portion of current assets made up of cash.

An analysis provided by the company's management is included in the

Management Discussion and Analysis.

Who is responsible for the information in the annual report?

Management of the company.

Select the four criteria used to determine if an item is recognized in the financial statements according to SFAC 5.

Measurability Reliability Relevance Definition

Which of the following investments would be classified as a cash equivalent? (Select all that apply.)

Money market funds U.S. Treasury bills with a maturity of 90 days

Which approach to standard setting emphasizes the use of professional judgment when choosing how to account for a transaction?

Objectives-oriented

Which transaction would require the following journal entry: debit Inventory for $60,000 and credit Accounts payable for $60,000?

Purchase inventory on account.

Which of the following are examples of prepaid expenses? (Select all that apply.)

Rent paid in advance. Prepaid insurance.

stockholder

Retained earnings Common stock

1933 Securities Act

Sets forth accounting and disclosure requirements for initial public offerings of securities.

Why is accounting standard setting a political process? (Select all that apply.)

Standards can have significant effects on companies, investors, and creditors. Changes in standards can result in a substantial redistribution of wealth within our economy.

Consistent with IAS 1, the statement that reports an organization's assets, liabilities and shareholders' equity is titled

Statement of financial position

Which of the following is a financial statement provided to investors?

Statement of shareholders' equity

Which organization is currently the national professional organization for certified professional public accountants?

The AICPA

The FASB's standard setting process begins when the board adds a project to its technical agenda. Identify the final step in this process.

The Board issues an Accounting Standards Update.

What does it mean if information is cost effective?

The benefits of providing financial information exceed the costs of doing so.

Which of the following assertions is correct regarding balance sheets prepared under IFRS and U.S. GAAP.

There are more similarities than differences between the statements

Revenue recognition previously was based on the "realization principle." What were the two general criteria required by the realization principle that had to be satisfied before a company could record revenue?

There is reasonable certainty as to collectibility of the asset to be received. The earnings process is complete or virtually complete.

Which of the following describe long-term liabilities? (Select all that apply.)

They do not require the use of current assets. They do not require the creation of current liabilities for paymen

Which of the following ratios are used to evaluate a company's ability to pay long-term debts? (Select all that apply.)

Times interest earned ratio Debt to equity ratio

What is the purpose of the auditor?

To help ensure management has appropriately applied GAAP in preparing the financial statements.

Which of the following situations would require an explanatory paragraph even though the auditors' report is unqualified? (Select all that apply.)

Uncertainty regarding a contingency for which a loss is material in amount. A significant matter concerning the financial statements and a related-party transaction.

Accumulated depreciation is (Select all that apply.)

a balance sheet account a contra asset account

The purpose of the balance sheet is to report

a company's financial position on a specific date.

result from the sale of goods or services on credit. (Enter one word per blank.)

acc receivable

Which of the following is an example of an estimate?

accounting for bad debts accounting for depreciation

Which accounts most likely use a subsidiary ledger? (Select all that apply.)

accounts receivable accounts payable

An obligation to pay a supplier within 30 days should be recorded in payable, whereas a signed promise to pay cash at some point in the future should be recorded as payabl

accounts, notes

The AICPA is the national professional organization for certified professional public BLANK

accoutnants

Which of the following models is best in helping predict future cash flows?

accrural acc

Flounder Corp. sold $12,000 of goods on account. The entry to record this transaction would include a debit to

accs receivable

The financial reporting model used by the majority of profit-oriented companies is

accural

Quick assets divided by current liabilities is which ratio?

acid test ratio

Entries made at the end of the accounting period before the financial statements are prepared are called

adjust

The account balances shown in the adjustedBlank 1Blank 1 adjusted , Correct Unavailable trial balance include adjusting entries

adjusted

Which of the following items is prepared at the end of the accounting period immediately before the financial statements are prepared?

adjusted trial balance

Entries made at the end of the accounting period before the financial statements are prepared are called

adjusting

Which of the following opinions is necessary when the auditor finds exceptions that are so material that the financial statements may be misleading?

adverse

Accruals occur when cash flow comes: (Select all that apply.)

after revenue recognition after expense recognition

The historical cost of an asset is the

amount of consideration given for the asset at initial acquisition.

Place the steps in the accounting process in the correct order.

analyse , recor , post from the journal, prepare unadjusted

The primary purpose of a source document is to assist in

analyzing a transaction

A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events is a(n)

asset

Martindale Company purchases supplies in June. As of June 30, Martindale had not used any of the supplies. How should the supplies be disclosed on the June 30 financial statements?

asset

When rent is paid in advance, it is properly recorded on the balance sheet as

asset

Which approach to accounting measures balance sheet accounts and then recognizes revenues, expenses, gains, and losses by accounting for changes in balance sheet accounts?

asset/liability

Jarvis Company signs a note payable for $10,000 and receives the funds. This transaction will increase the account and increase the note payable account.(Enter only one

assets

Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events are referred to as

assets

Prepaid expenses are the cost of acquired in one accounting period and in a future period. (Enter one word per blank

assets , expense

Which of the following are cash outflows from operating activities? (Select all that apply.)

ayment of salaries payment of suppliers

Prepaid expenses are costs of assets acquired in an accounting period:

before they will be expensed

Which of the following serves to relay important information about a transaction to the accountant? (Select all that apply.) Multiple select question. bills from suppliers

bills from suppliers sales invoices cash register tapes

A company's total assets minus its total liabilities as shown on the balance sheet is known as the

book value

Which of the following are inflows of cash from financing activities? (Select all that apply.)

borrowing on note payable issue of stock to investors

Samuel Corporation purchased a building for $500,000. To record this transaction (Select all that apply.)

building is debited $500,000 cash is credited $500,000

Which of the following items are included in property, plant, and equipment? (Select all that apply.)

buildings land natural resources

What account is debited when cash is collected from customers for a previous sale on account?

cash

Money on hand and in banks that is available for use in the operations of the business is shown in the

cash acc on the balance sheet

Borrowing $50,000 from the bank and signing a note payable causes: (Select all that apply.)

cash to increase notes payable to increase

Revenues are inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's

central

Which item is classified as an operating activity on the statement of cash flows?

collection from customers

Which of the following are permanent accounts? (Select all that apply.)

common stock , cash and equipment

Accounting information is if similar items are treated the same way among various companies highlighting similarities and differences between events and conditions.

comparable

The change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources is called

comprehensive income.

The 1933 and 1934 Acts were designed to restore investor BLANK

confidence

What component of financial information helps investors analyze their prior assessments regarding a company's cash flow generating ability?

confirmatory value

Before they can be recognized, favorable items tend to require more verification than unfavorable items. Accountants refer to this as

conserv

Before they can be recognized, favorable items tend to require more verification than unfavorable items. Accountants refer to this as

conservatism

The qualitative characteristic of using the same accounting method each period over time refers to the concept of

consistency

Cost effectiveness is a(n) on the accounting choices a company makes.

constraint

The approach determines fair value by estimating the amount that would be required to buy or construct an asset of similar quality and conditi

cost

approach determines fair value by estimating the amount that would be required to buy or construct an asset of similar quality and condition.

cost

Which approach to measuring fair value determines fair value by estimating the amount that would be required to buy or construct an asset of similar quality and condition?

cost approach

cause-and-effect relationship specefit time period Without regard to related revenue in the period incurred

cost of goods sold Monthly salary payments to an office employee Advertising expenditures

Green Pro accrues interest at year-end on a note receivable. The adjusting journal entry to record the accrual will include a

cred to interest vallue

To record the issuance of common stock at par value, (Select all that apply.)

credi c omm stock, debit cash

The normal balance of the contra asset accumulated depreciation account is a(n)

credit

To record the issuance of common stock at par value, (Select all that apply.)

credit common stock debit cash

On July 1, Davis Corporation receives $10,000 for rent in advance from a tenant. Which of the following are correct for Davis to record? (Select all that apply.)

credit deffered rent revenue 10K Debit cash 10K

An alternative approach to recording unearned revenue would be to Blank______ when cash is collected from a customer in advance of providing goods and services.

credit sales rev

Crater Corp. uses a separate dividend account to record dividends declared. When a dividend is declared and paid, the journal entry will include (Select all that apply.)

credit to cash debit to dividends

The adjusting entry to record deferred revenue originally recorded as sales revenue includes: (Select all that apply.)

credit to deferred revenue debit to sales revenue

On October 1, Callison accepts a 5-year interest bearing note receivable for $1,000. The note bears interest of 12%. Both principal and interest are received at maturity. The journal entry required on December 31, Year 1, to accrue interest will include (Select all that apply.)

credit to interest revenue $30 debit to interest receivable $30.

On April 1, Larken Corp. pays $36,000 for 3 years of rent. The transaction is appropriately recorded as prepaid rent. The adjusting entry on December 31, of the same year, will require a (Select all that apply.)

credit to prepaid rent debit to rent expense

On November 1, Year 1, Thomasson paid rent on its building for 2 years in the amount of $12,000. When the transaction was initially recorded, the full $12,000 was recorded as an expense using an alternative approach to record the prepayment. The adjusting journal entry on December 31, Year 1 requires a

credit to rent expense $11,000.

Ragland Corp. purchases supplies on account for $1,000 and appropriately records the transaction in an asset account. A count of inventory at year-end indicates that $300 of supplies are remaining. The adjusting journal entry required at year-end includes (Select all that apply.)

credit to supplies on hand $700 debit to supplies expense $700.

BLANK include cash and other items that will be converted to cash or consumed within the coming year. (Enter only one word.)

current asset

Cash and other assets that are reasonably expected to be converted to cash or consumed within 1 year or the current operating cycle are classified as

current assets

______ are those that are cash, will be converted into cash, or will be used up within 1 year or the operating cycle, whichever is longer.

current assets

Schoene Company reports its inventory at replacement cost. This is an application of the measurement attribute of

current cost

The cost that would be incurred to purchase or reproduce an asset is referred to as

current cost

The formula for the acid-test or quick ratio is quick assets divided by

current liabilities

In a balance sheet, how are assets classified?

currrent and noncurrent

To increase the accumulated depreciation account, you would Blank______ the account, and to increase depreciation expense, you would Blank______ the account.

cxredit, deboit

A chronological record of all economic events affecting a firm are recorded in a(n)

cycle

To accrue interest earned on a note receivable that has not yet been collected, Blank______ interest receivable and Blank______ interest revenue

deb , cre

Klondike Inc. sold goods to customers for $5,000 cash. The cost of the goods was $3,000. The journal entries to record this transaction include (Select all that apply.)

deb cash 5000 credit to inv 3000 credit to sales 5000 debit to costs 3000

Kendall Corp. purchased equipment for $100,000 by paying $20,000 in cash and signing a note payable for $80,000. The journal entry to record this transaction would include a

deb to equip 100,000

Supplies expense is Blank______ and supplies is Blank______ for the amount of supplies used during the period that were originally recorded as an asset when purchased. Multiple choice question. debit

debit , credit

The journal entry to record the issuance of 100 shares of $5 par value common stock for $500 would include which of the following?

debit cash 500

Juergen is preparing the closing journal entries for the year. To close the revenue accounts, Juergen should (Select all that apply.)

debit revenue credit retained earning

Lemon Creek Industries purchased a building for $280,000. The journal entry to record this transaction would include a

debit to building $280,000.

Kendall Corp. purchased equipment for $100,000 by paying $20,000 in cash and signing a note payable for $80,000. The journal entry to record this transaction would include a

debit to equipment $100,000.

Ferguson Corp. purchased inventory on account for $20,000. The entry to record this transaction would include (Select all that apply.)

debit to inventory $20,000. credit to accounts payable $20,000.

Brunson Company pays employees $4,000 for work performed in the current month. The journal entry to record the transaction will include a

debit to salary expense.

Logan Corp. purchases supplies on account and appropriately records the transaction in an asset account. The adjusting journal entry at year-end when accounting for supplies used will require a (Select all that apply.)

debit to supplies expense credit to supplies

The adjusting journal entry required when deferred revenue is recognized includes a

debit toa lability

To accrue utilities expense at year-end that has not been paid,

debit utilities expense and credit utilities payable

he totals on a trial balance reveal whether the total assetsBlank 1Blank 1 assets , Incorrect Unavailable equal the total

debits , credits

Londa Corporation pays employees $3,000 for the month. What is the effect on the balance sheet equation? (Select all that apply.)

decrease owners' equity decrease assets

Paying employees for services rendered during the current month Blank______ assets and Blank______ shareholders' equity.

decreases , decreases

Decreases in equity of a particular enterprise resulting from transfers to owners are called BLANK to owners

dis

Decreases in equity of a particular enterprise resulting from transfers to owners are called

distributions to owners

When a company declares a dividend, the temporary Blank______ account is often debited. Multiple choice question.

dividend

The requirement that the economic activities of a business owner should be separated from the activities of the business is an example of which accounting assumption?

economic entity

Measurement is the process of associating numerical amounts to the reported in financial statements.

elements

The residual interest in the assets of an entity that remains after deducting its liabilities is referred to as what?

equity

A situation that requires an adjusting entry that is not a prepayment or an accrual entry is

est bad debts

Outflows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations are referred to as

expenses

The price that would be received to sell assets or paid to transfer a liability in an orderly transaction between market participants at the measurement date is the

fair value

Which of the following are acceptable measurement attributes for certain financial statement items? (Select all that apply.)

fair value net realizable value present value of future cash flows historical cost

The FASB recently issued a standard that requires companies recognize revenue (Select all that apply.)

for the amount the company expects to be entitled to receive at a point in time or over a period of time when goods or services are transferred to customers

Faithful representation requires information to have which of the following characteristics? (Select all that apply.)

free from material error neutrality completeness

Any information useful to decision makers should be provided in the financial statements, subject to the cost effectiveness constraint. This describes which accounting principle?

full disclousure

What is the principle that requires that financial statements provide all material relevant information concerning the entity?

full-disclousure

Unearned revenue represents cash received from a customer for goods or services to be provided in a(n)

future period

Which accounts are temporary accounts? (Select all that apply.)

gain on sale of equipment depreciation expense

An account is maintained for each financial statement element, whereas a(n) contains all of the accounts of the entity. (

general ledger

______ is a collection of accounts that tracks the increases and decreases in a company's financial position elements.

general ledger

A general journal entry should contain which of the following? (Select all that apply.)

he date. Supporting explanations. The accounts and amounts debited and credited.

The type of analysis that uses ratio analysis or trend analysis of financial statements across multiple years is called

horizontal

Measuring assets and liabilities based on their original transaction value is an example of

hostorical cost

Which of the following are considered illegal acts? (Select all that apply.)

illegal contributions bribes kickbacks

Under the two statement approach, a statement of comprehensive income is

imm after inc statement

Neumann Corporation prefers to present a separate income statement. Neumann can satisfy the requirements for reporting comprehensive income by presenting comprehensive income

immediately following the income statement

Bigelow Company purchases supplies on account. What are the effects on the balance sheet equation? (Select all that apply.)

in assets and liabi

An asset 1Blank 1 increases , Correct Unavailable by debit entries, and 2Blank 2 decrease , Correct Unavailable by credit entries.

inc decre

Bigelow Company purchases supplies on account. What are the effects on the balance sheet equation? (Select all that apply.)

inc liabilities and assets

approach for measuring fair value estimates value by estimating future amounts of earnings or cash flows and then mathematically converting these amounts to a single present value.

income

What approach to measuring fair value estimates future amounts of earnings or cash flows and then mathematically converts these amounts to a single present value?

income approach

Ace Cleaning Services performs cleaning services for $2,000 cash. What are the effects on the balance sheet equation for Ace Cleaning Services? (Select all that apply.)

increase cash increase owners' equity

An individual invests $10,000 to open a new business. What is the effect on assets?

increase in assets

The balance sheet impact of accruing salaries expense is to:

increase liab

A T-account has space at the top for the account title and two sides for recording

increases and decreases

Which account is used to record the accrual of interest on a note receivable?

int receiv

The times interest earned ratio can be calculated as (net income + interest expense + tax expense) divided by

interest

consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale. (Enter only one word.)

inventory

Which of the following items are included in the numerator for the current ratio but are excluded from the numerator of the quick or acid-test ratio? (Select all that apply.)

inventory prepaid assets

When inventory is sold in a perpetual inventory system (Select all that apply.)

inventory is credited sales revenue credited cogs debited

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests is a(n) by owners.

investment

Assets not used directly in the operations of the business are called what?

investments

Cash set aside for future plant expansion and a 3 year note receivable are both examples of what on a company's balance sheet?

investments

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests is a(n)

investments

Which of the following items should be classified as investments on the balance sheet? (Select all that apply.)

investments in stock of another company note receivable due in 3 years cash restricted to purchase building

The criteria used to determine if a liability should be classified as long-term is

it will not be satisfied within 12 months or the operating cycle, whichever is longer.

Which of the following are classified as long-term liabilities? (Select all that apply.)

lease obligations of more than 1 year bonds payable

Which of the following items requires supplemental disclosures in the notes to the financial statements? (Select all that apply.)

leases pension plans long-term debt

What level of the fair value hierarchy includes quoted market prices in active markets for identical assets and liabilities?

level 1

What level of the fair value hierarchy includes unobservable inputs that reflect the entity's own assumptions?

level 3

A company borrows funds for a project. If the interest rate charged for the borrowed funds is less than the rate of return on the project, this is referred to as favorable financial

leversge

Obligations to other entities are classified as BLANK on balance sheet

liabilities

Deferred revenue should be classified as a(n) on the balance sheet.

liability

which of the following is a probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events?

liability

Deferred revenue is a(n):

liability on the BS

The readiness of a company to pay its short-term debts as they come due is referred to as

liquid

he current ratio and the quick ratio are used to measure liquidityBlank 1Blank 1 liquidity , Correct Unavailable of a company indicating the ability to pay current obligation

liquidity

The application of conservatism leads to: (Select all that apply.)

losses being recognized quicker than gains assets tending to be biased downwards

Fill in the Blank Question Fill in the blank question. Responsibility for the financial statements and other information found in the annual report lies with . (Enter only one word.)

management

U.S. GAAP uses a approach to determine reportable operating segments.

management

An investment should be classified as current on the balance sheet if (Select all that apply.)

management has the intent and ability to liquidate it in the near term. it will be sold within 12 months.

Assets minus liabilities, measured according to GAAP, is not likely to be representative of the value of the entity.

market

The fair value approach that uses current information from recent transactions or exchanges in active trading on stock exchanges is the approach.

market approach

Which approach to measuring fair value uses information from actively traded stock on the New York Stock Exchange?

market approach

The revenue/expense approach focuses on the income statement because it relies on which accounting principles? (Select all that apply.)

matching revenue recognition

What type of measurement model does U.S. GAAP currently employ? (choose only one answer)

mixed attribute

The assumption that financial statement elements should be measured in terms of the United States dollar for U.S. financial reporting is referred to as the nit assumption.

monetary

Conservatism is inconsistent with which characteristic of accounting information?

neutrality

Rice Company purchases a building for $500,000, which will be used as a production facility. How should the building be classified on the balance sheet?

noncurrent asset

Which of the following items should be disclosed in other long-term assets on the balance sheet? (Select all that apply.)

noncurrent investments that are not material long-term prepaid expenses

Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and circumstances from what type of sources?

nonwoner

When a receivable is supported by a formal agreement that specifies payment terms, it is called a

notes receivable

The general formula used to calculate interest accrued on a note payable is principal x rate x

number of months outstanding in the current year/12.

An advantage of historical cost measurement is that it is

objective and verifiable.

Inflows and outflows of cash related to transactions that impact net income are

opera activities

BLANK cycle refers to the period of time necessary to convert cash to raw materials, raw materials to a finished product, the finished product to receivables, and then receivables back to cash. (Enter only one word.)

operating

How are items classified on the income statement?

operating and nonoperating

The risk that relates to how effectively a company manages its business and its ability to earn profits is referred to as

operational

Stockholders' equity consists of Blank______, which is the amount contributed, and Blank______, which is generated from profitable operations (i.e., from revenues being greater than expenses).

paid in capital , retained earnings

The accounts common stock and paid-in capital in excess of par are classified as

paid-in capital.

Times interest earned ratio measures a company's ability to

pay

Which of the following items are classified as financing activities on the statement of cash flows? (Select all that apply.)

pay dividend issue stock

Which of the following are cash outflows from operating activities? (Select all that apply.)

payment of salaries payment of suppliers

Which item is classified as an operating activity on the statement of cash flows?

payments of salaries

Which of the following are classified as long-term liabilities? (Select all that apply.)

pension obligations lease obligations longer than 1 year notes due in more than 1 year

______ inventory system is used, adjusting entries are made to the purchases, inventory, and cost of goods sold accounts at the end of the period.

periodic

The purchases account is debited to record purchases of inventory in a:

periodic inv system

Which assumption allows the life of the company to be divided into artificial time periods to provide timely information?

periodicity

Which of the following are among the basic assumptions underlying U.S. GAAP? (Select all that apply.)

periodicity economic entity monetary unit going concern

The process of transferring debit and credit information from the journal to the ledger is called:

posting

According to the conceptual framework, for accounting information to be relevant, what qualities must it possess? (Select all that apply.)

predictive value confirmatory value

Place the steps at the end of the accounting period in the correct order.

prep un trial rec adju prep adj prep fin close t

Cost of assets acquired in one accounting period and expensed in a future accounting period are

prepaid expenses

Place the steps at the end of the accounting period in the correct order.

prepare fin state, prepare unadjusted trial prepare adjusted balance prepare financial st close temp acc

The measurement attribute based on future cash flows and the objective of approximating fair value in valuing an asset or liability is

present value

The objective in valuing an asset or liability using value is to approximate its fair value

present value

The primary purpose of financial reporting is to provide useful information for decision making to

providers of capital

Which of the following opinions is used when an auditor has an exception to the standard opinion but there is not sufficient seriousness to invalidate the financial statements as a whole?

qualified

To enhance timeliness, the SEC requires its registrants to submit financial information how frequently? (Select all that apply)

quarterly , annualy

Which of the following is in the numerator of the quick ratio?

quick assets

Analysts evaluate the performance and risk of the firm using relationships between two financial statement numbers, such as earnings per share of stock, or debt to assets. What type of analysis uses these relationships?

ratio analysis

Revenue recognition was previously based on the principle, which required that two criteria be satisfied before revenue can be recognized: The earnings process is complete or virtually complete and there is reasonable certainty as to collectibility.

realization

The previous requirement for revenue recognition, which dictated that the earnings process must be virtually complete and the collectiblity of the related assets reasonably assured was referred to as the

realization principle

Which transaction or event required the journal entry: debit Interest expense for $250 and credit Interest payable for $250?

recird interest at the end of a period

The process of admitting information into the financial statements is referred to as

recognition

One of the purposes of adjusting entries is to

recognize all revenues earned during the period.

Borrowing or lending money at an interest rate significantly different from the market interest rate is a likely example of a(n) transaction.

relatde party

Which of the following items are required disclosures in the notes to financial statements? (Select all that apply.)

related third-party transactions significant accounting policies description of subsequent events

Predictive value and confirmatory value are components of which primary qualitative characteristic?

relevance

A prepayment may be recorded in prepaid rent, a balance sheet account. The alternative method to record the prepayment is to debit the

rent expense

Which of the following items should not be included in cash and cash equivalents in the balance sheet?

restricted cash

The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as

retained earnings

Which of the following make up shareholders' equity of a corporation? (Select all that apply.)

retained earnings , paid i n capital

In an expanded accounting equation, revenues and expenses are an expanded part of

retained earnings , stock equ

To record an adjusting entry when deferred revenue is recognized:

revenue is credited deferred revenue is debited

Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations are referred to as

revenues

expenses are matched to from the same transaction.

revenues

Adjusting entries help a company accurately measure (Select all that apply.)

revenues and expenses for the period. the company's financial performance.

Which of the following are required U.S. GAAP disclosures for geographic areas? (Select all that apply.)

revenues from external customers long-lived assets

Which transaction would require the following journal entry: debit Accounts receivable for $3,500; credit Sales revenue for $3,500; debit Cost of goods sold for $2,000 and credit Inventory for $2,000?

sale on acc

Which accounts should be closed at the end of the period? (Select all that apply.)

sales dividends salary expense

The FASB requires that companies that engage in more than one significant business must provide supplemental information concerning individual operating

segment

When a company has distinct business units, it is necessary to provide

segment

Companies that operate in more than one significant business must provide which of the following?

segment info

Investments in stock and debt securities of other corporations are included as Blank______ if the company has the ability and intent to sell them within the next 12 months.

short term investments

Current assets include which of the following? (Select all that apply.)

short term investments cash

Classifying items on the balance sheet as current and noncurrent assists financial statement users in assessing what aspects about a company?

solvency and liquidity

Sales invoices, bills from suppliers, and cash register tapes that relay information to the accountant are referred to as sourcesBlank 1Blank 1 sources , Correct Unavailable documents.

source doc

The financial statement that reports the changes in a company's cash balance during the period is the:

statement of cash flows

Which statement reports the changes in shareholders' equity during the period that were not a result of transactions by owners.

statement of comp income

An account that is used for instructional purposes instead of drawing a formal general ledger account is referred to as a(n)

t account

A liability has which of the following characteristics? (Select all that apply.)

t is due to a past transaction or event. It is a present obligation. It is a probable future sacrifice of an economic benefit

Which of the following are characteristics of plant, property, and equipment? (Select all that apply.)

tangible used long-term in production

Which of the following are accrued liabilities? (Select all that apply.)

taxes payable utilities payablei Interest payable warranty liabilities salaries payable

Closing entries move the balances from the Blank______ accounts into the Retained Earnings account.

temporary

During the course of an audit, the auditor is required to evaluate

the company's ability to continue for a reasonable time as a going concern.

Cohen Company purchases a new building with a long-term notes payable. In the notes to the financial statements, it must disclose the following: (Select all that apply.)

the interest rate on the loan -the maturity date of the loan -the payment terms of the loan

Faithful representation exists when

there is agreement between a measure or description and the phenomenon it purports to represent.

Assets are classified as long-term if:

they are expected to be converted to cash or consumed in more than one operating cycle

The periodicity assumption relates to which qualitative characteristic?

timeliness

The qualitative characteristic wherein information is available early enough allowing it to be useful for a decision describes the concept of

timely

The statement of comprehensive income reports the changes in shareholders' equity during the period that:

were not a result of transactions with owners

Goodwill is shown on the balance sheet

when one company acquires another company for a price above the fair value of the assets acquired.

Recent events suggest that full convergence Blank______ be achieved in the foreseeable future.

will not

A liability is classified as current if it is due

within 1 year or the current operating cycle, whichever is longer.

A popular measure of a company's ability to pay its short-term debt that is measured as current assets minus current liabilities is

working capital

Beck Company borrowed $50,000 from the bank and signed a note. The journal entry Beck makes to record this transaction includes (Select all that apply.)

✓ credit to notes payable $50,000 debit to cash for $50,000

An essential assumption underlying GAAP is that all economic events can be identified with what?

An economic entity

Which of the following are required disclosures for related-party transactions? (Select all that apply.)

Description of transaction. Dollar amount of transaction. Nature of the relationship.

Which of the following are required SEC disclosures? (Select all that apply.)

Director compensation Executive compensation Executive stock option information

Which of the following is a subsequent event that must be disclosed in the notes to the financial statements?

The issuance of debt or equity securities.

Which type of audit opinion indicates the financial statements are prepared in accordance with U.S. GAAP?

Unqualified

Simply put, are the economic resources of a company. (Enter only

assets

The financial statement that presents the financial position of the company on a particular date is the

balance sheet

Accrued liabilities are costs incurred in an accounting period:

before cash pay

The Sarbanes-Oxley Act increases accountability of who?

corporate executives

Closing the sales revenue account requires a to sales revenue. (E

debit

Which of following is true regarding a trial balance?

debit smust b equal to credits

An accrual expense is recorded by:

debiting an expense and crediting a payable

The Financial Accounting Foundation provides oversight, appoints members, and raises funds to support the:

fasb

Reporting assets at net realizable value helps predict:

future cash flows

A technology company incurs costs to research and develop a new hand-held device and obtain a patent. This activity is an example of a(n)

internally developed intangible asset.

On the balance sheet, current assets are listed in the order of their what?

liquidity

______ firm will include finished goods, work in process, and raw materials as part of their inventory.

manufacturing

To calculate interest the following information is needed:

principal period of time interest rate

Repetitive transactions such as sales or purchases are usually recorded in a(n)

special journal

An event that has a dual effect on the accounting equation is referred to as a(n)

transaction

A recently issued FASB standard requires that companies recognize revenue when goods or services are to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

transferred

Prepayments are: (Select all that apply.)

trasnac in which cash flows precedes revenue and expense recog

AN BLANK audit opinion occurs when there is an exception to the standard opinion but not of sufficient seriousness to invalidate the whole of the financial statements.

unqualified

Which of the following are characteristics of plant, property, and equipment? (Select all that apply.)

used long-term in production tangible

The Private Company Council (PCC) determines whether changes to existing GAAP are necessary to meet the needs of

users of private company financial statements

A consensus among different individuals appraising the value of land describes which qualitative accounting characteristic?

verifiability

Beginning inventory was $50,000. Inventory purchased during the year cost $75,000. Inventory on hand at year-end was $40,000. Cost of goods sold was

85000

On July 1, Davis Corporation pays $10,000 for August rent. Which of the following are correct? (Select all that apply.)

Davis debits prepaid rent $10,000 Davis credits cash $10,000

The journal entry to record the issuance of 100 shares of $5 par value common stock for $500 would include which of the following?

Debit cash $500.

Which of the following are included in the summary of significant accounting policies included in the notes to the financial statements? (Select all that apply.)

Items included in cash and cash equivalents. Choice between LIFO and FIFO. Method of depreciation.

Which of the following items are considered cash equivalents? (Select all that apply.)

Money market funds that are quickly converted to cash. U.S. Treasury bills due in 2 months. Commercial paper due in 1 month.

A corporation's shareholders will receive cash from their investment in which of the following ways?

Periodic dividends

What is the primary function of financial accounting?

Provide useful information to users external to the business.

Which of the following are examples of prepayments?

Purchasing supplies that will be used later

True or false: Resource inflows and outflows may not correspond to cash inflows and outflows.

T

According to SFAC 5, the four criteria that must be met for an item to be recognized in the basic financial statements are

The item meets the definition of an element. the information about the item is relevant to decision making. the information about the item is reliable. the item has relevant attributes that are measurable.

What transaction results in a debit to cash and a credit to deferred rent revenue?

The receipt of rent in advance.

Accruals involve transactions where the cash outflow or inflow takes place in a period

after

The financial statement that provides information about liquidity and long-term solvency is the

balance sheet

When a company pays rent in advance, prepaid rent is Blank______ and cash is

debited and credited

Economic events cause changes in the:

financial position of a company

The process of associating numerical amounts to the elements in the financial statements is called

measurement

Adjusting entries are recorded:

when the financial statements are prepared

Purchasing supplies on account Blank______ the supplies account and Blank______ accounts payable.

INcrease and increase

he contra account used to record depreciation is depreciation.

accumulated

Which financial statement presents the financial position of the company on a particular date?

balance sheet

Investments are reported as investments when the company has both the intent and ability to sell within one year

current

The overriding objective in the hierarchy of qualitative characteristics of financial reporting information is

desicion usefulness

Which of the following items qualify for the fair value option? (Select all that apply.)

financial assets financial liabilities

obligations of a company

liability

The going concern assumption is critical to the measurement of assets because if a business were going to cease operations, its assets would be measured at their

liquidation values.

What type of measurement model does U.S. GAAP currently employ?

mixed attribute

Which of the following represents an expense paid in advance that creates benefits used in the future?

prepaid expense

losing entries move the balances from the Blank______ accounts into the Retained Earnings account.

temp

Which of the following provides an underlying structure for the development of accounting standards?

the conceptual framework

A common method of analysis is to express a relationship between the two financial statement items, such as net income divided by sales, and compare this relationship with previous years. This comparison is referred to as verticalBlank 1Blank 1 vertical , Correct Unavailable analysis.

vertical

Which accounting standard setting body replaced the Accounting Principles Board in 1973?

Financial Accounting Standards Board

The International Accounting Standards Committee provides oversight, appoints members, and raises funds to support the:

IASB

The organization responsible for the Code of Professional Conduct for accountants providing auditing services to their own organizations is the

Institute of Internal Auditors

True or false: In the United States, sole proprietorships and partnerships outnumber corporations.

T

The accrual accounting model is best able to achieve the goal of predicting BLANK cash flows

future

Which of the following are providers of financial information? (Select all that apply.)

households companies schools

The Emerging Issues Task Force (EITF) was formed to

identify potential problem areas and provide a timely response to issues.

Accrual income attempts to measure the resource inflows and outflows generated by the company's BLANK during the reporting period

operations

Auditors examine financial statements to express a professional, independent BLANK on the financial statements.

opinion

The most recent issue in implementing the fair value accounting standard is

pressure to reduce the extent to which fair value changes are reported in net income.

Which of the following types of companies may currently utilize IFRS for financial reporting in the U.S.?

Foreign companies that issue stock in the U.S.

The acronym GASB refers to the

Governmental Accounting Standards Board.

Which are the financial statements most frequently provided to external users? (Select all that apply.)

balance sheet income statement statement of cash flows statement of shareholders' equity

Answer Mode Multiple Select QuestionYour Answer correct The involvement of accounting professionals and management in accounting scandals resulted in Congress passing the Sarbanes-Oxley Act. What is the purpose of the Sarbanes-Oxley Act? (Select all that apply.)

provide penalties for violators. Require accountability of corporate executives. Addresses conflicts of interests. Regulate auditors.

The hierarchy of qualitative characteristics of financial information require that, in order to be useful for decision making, information should possess the fundamental characteristics of

relevance and faithful rep

The accrual accounting model's measure of resources provided by business operations is called

revenues

What are the most important factors for an investor to consider when choosing an investment? (Select all that apply.)

risk and rate of return

The IASB's main objective is to develop a single set of global accounting BlANK that are high-quality, understandable, and enforceable. (Enter one word per blank).

standards