accounting conceptual

Under the allowance method, the entry to write off a $5,800 uncollectible account includes a:

A. Credit to Allowance for Doubtful Accounts for $5,800 B. Credit to Accounts Receivable for $5,800 C. Debit to Bad Debt Expense for $5,800 D. Debit to Accounts Receivable for $5,800

During 2015, the accounts receivable turnover rate for Adaptive Equipment increased from 10 to 15 times per year. Which one of the following statements is the most likely explanation for the change?

A. The company's credit department has followed up with customers whose account balances are past due in order to generate quicker collections. B. The company has decreased sales to its most credit worthy customers C. The company has increased the amount of time customers have to pay their accounts before they are past due. D. The company has extended credit to more risky customers in order to increase sales.

A company purchased a copyright for $60,000 at the beginning of 2012 which it believes has an expected useful life of 15 years. Fortunately, the patent has a legal life of 20 years. How much amortization expense should be recorded in 2012?

a. $0 (Copyrights are not amortized) b. $4,000 c. $3,000 d. $60,000

Which of the following accounts are normally reported as current liabilities on a classified balance sheet?

a. Accounts Payable and Prepaid Insurance b. Interest Payable and Interest Receivable c. Income Taxes Payable and Accounts Payable d. Capital Stock and Accounts Payable

Which of the following best describes the term "current assets"?

a. Assets expected to be converted into cash within one year or one operating cycle, whichever is longer. b. The amount of claim that the owners have in the business in the current year. c. The amount of total profits earned by a business since it began operations plus all other resources. d. The cumulative profits earned by a business less any dividends distributed in the current period.

What is the effect on the accounting equation when a company recognizes income as earned that had previously been received in advance from customers?

a. Assets increase b. Net income increases c. Liabilities increase d. Revenues decrease

Which financial statement would you analyze to assess a firm's liquidity for the next year?

a. Balance Sheet b. Statement of Retained Earnings c. Income Statement d. Statement of Public Accounting

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

a. Liabilities decrease and Stockholders' equity increases. b. Assets increase and Stockholders' equity increases. c. Assets decrease and liabilities decrease. d. Assets increase and liabilities decrease.

On November 1, 2015, a company paid $12,000 rent in advance. The rent per month is $1,000. Assuming the company's accounting period ends on December 31, 2015, what will be reported on the financial statements?

a. Prepaid Rent of $12,000 on its balance sheet at December 31, 2015 b. Prepaid Rent of $10,000 on its balance sheet at December 31, 2015 c. Rent Expense of $3,000 on its 2015 income statement d. Rent Revenue of $10,000 on its 2015 income statement

What does the phrase, "Revenue is recognized when earned" mean?

a. Revenue is recorded in the accounting records and reported on the income statement when goods are sold and delivered to a customer. b. Revenue is recorded in the accounting records and reported on the income statement when the cash is received from the customer. c. Revenue is recorded in the accounting records when the goods are sold to a customer, and reported on the income statement when the cash payment is received from the customer. d. Revenue is recorded in the accounting records when the goods are received from a supplier, and reported on the income statement when sold to the customer.

Incorrectly capitalizing an expense on the balance sheet and not reported it on the income statement will have the following impact

a. The company's net income is overstated b. The Company's assets will be overstated c. This could never happen. People are like Professor Becker and never make mistakes d. No impact, since it is reflected somewhere on the books

Which of the following is not a requirement of a company's top managers under the Sarbanes-Oxley Act?

a. They must give an opinion about the effectiveness of the company's internal control over financial reporting. b. They must certify that they are primarily responsible for the company's internal controls over financial reporting. c. They must certify that the company's financial statements are fairly presented. d. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions.

Having one employee prepare company checks and sign those checks relates to which internal control activity?

a. a violation of proper segregation of duties b. a violation of adequate documents and records c. a good example of checks on recorded amounts d. a good example of clearly defined authority and responsibility

Generally accepted accounting principles (GAAP) require that research and development costs to develop a new product be

a. capitalized in the patents account. b. expensed in the period incurred. c. capitalized in the research and development costs account. d. amortized over the expected economic life of the new product

In which form of organization are the owners' potential at risk for double taxation?

a. cooperative b. corporation c. partnership d. proprietorship

Internal control systems provide assurance in each of the following areas except

a. effectiveness and efficiency of the company's operations. b. compliance with applicable laws and regulations. c. consolidation of departments within the accounting function. d. reliability of financial reporting.

Accumulated Depreciation

a. increases with a credit. b. decreases with a credit. c. increases with a debit. d. is a adjunct account.

. Current accounting standards indicate that the costs of intangible assets with an indefinite life, such as goodwill, should

a. not be amortized, but should be reviewed annually for impairment. b. be reported on the statement of retained earnings in the year in which acquired. c. be amortized over a reasonable period of time not to exceed 40 years. d. be debited to an expense account entirely in the year in which acquired.

Depreciation is a process by which

a. replacement funds are accumulated for plant and equipment. b. the decline in market value of plant and equipment is determined and recorded. c. the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset. d. the difference between current market value and historical cost of plant and equipment.

All of the following would be considered internal control weaknesses except

a. the practice of shipping goods to customers right before year-end even though the customers had not ordered them. b. the person who opens the mail also makes the journal entry to record any customer payments received in the mail. c. it takes two days to get a check written because of the approvals required. d. no physical inventory is ever taken to confirm the amount of inventory recorded in the accounting records.

- What is the effect on the accounting equation when a company recognizes an expense as incurred that had previously been paid in advance to customers?

assets decrease net income increases liabilities increase revenues decrease