Test bank for financial reporting and analysis using financial accounting information 12th edition

Test Bank for Financial Reporting and Analysis Using Financial Accounting Information 12th EditionThe going concern assumption: 1.. allows for the statements to be prepared under genera

Test Bank for Financial Reporting and Analysis Using Financial Accounting Information 12th Edition

The going concern assumption:

1 a is applicable to all financial statements

2 b primarily involves periodic income measurement

3 c allows for the statements to be prepared under generally accepted

accounting principles

4 d requires that accounting procedures be the same from period to period

5 e none of the answers are correct

Charging off equipment that cost less than $20 would be an example of the application of:

5 e none of the answers are correct

The assumption that enables us to prepare periodic statements between the time that a business commences operations and the time it goes out of business is:

Valuing assets at their liquidation values is not consistent with:

1 a conservatism

2 b materiality

3 c going concern

4 d time period

5 e none of the answers are correct

The business being separate and distinct from the owners is an integral part

of the:

1 a time period assumption

2 b going concern assumption

3 c business entity assumption

4 d realization assumption

5 e none of the answers are correct

The principle that assumes the reader of the financial statements is not interested in the liquidation values is:

An accounting period that ends when operations are at a low ebb is:

1 a a calendar year

2 b a fiscal year

3 c the natural business year

4 d an operating year

5 e none of the answers are correct

The accounting principle that assumes that inflation will not take place or will

5 e none of the answers are correct

Valuing inventory at the lower of cost or market is an application of the:

1 a time period assumption

The realization principle leads accountants to usually recognize revenue at:

1 a the end of production

2 b during production

3 c the receipt of cash

4 d the point of sale

5 e none of the answers are correct

The comment that “items that are not material may be recorded in the

financial statements in the most economical and expedient manner possible”

5 e none of the answers are correct

The assumption that deals with when to recognize the costs that are

associated with the revenue that is being recognized is:

The most significant current source of generally accepted accounting

principles is the:

1 a New York Stock Exchange

2 b Accounting Principles Board

3 c Accounting Research Studies

4 d AICPA committee on Accounting Procedure

5 e Financial Accounting Standards Board

All but one of the following statements indicates a difference between the Financial Accounting Standards Board (FASB) and prior approaches Select the one that is not a difference

1 a The FASB is independent of the AICPA

2 b The size of the board is much smaller

3 c The FASB has broader representation

4 d The FASB is the primary board for the development of generally accepted accounting principles

5 e Members of the FASB serve on a full-time basis

The Accounting Principles Board issued Opinions between:

The Financial Accounting Standards Board has issued statements

5 e none of the answers are correct

Accountants face a problem of when to recognize revenue Which of the following methods of recognizing revenue is not used in practice?

1 a point of sale

2 b point of order acceptance

3 c end of production

4 d receipt of cash

5 e revenue recognized during production

The organization that has by federal law the responsibility to adopt auditing standards is the:

1 a New York Stock Exchange

2 b Public Company Accounting Oversight Board

3 c Accounting Principles Board

4 d Financial Accounting Standards Board

5 e AICPA Committee on Accounting Procedure

By law, the setting of accounting standards is the responsibility of the:

1 a AICPA Committee on Accounting Procedure

2 b New York Stock Exchange

3 c Accounting Principles Board

4 d Securities and Exchange Commission

5 e Financial Accounting Standards Board

The assumption that allows accountants to accept some inaccuracy, because

of incomplete information about the future, in exchange for more timely reporting is:

1 a Two members of the board must be CPAs

2 b In addition to appointing the five members of the PCAOB, the SEC is responsible for the oversight and enforcement authority over the Board

3 c The PCAOB consists of five members appointed by the SEC

4 d The PCAOB is to adopt auditing standards

5 e The PCAOB is to adopt accounting standards

Understating expenses is justified based on:

1 a time period assumption

2 b conservatism assumption

3 c materiality assumption

4 d matching assumption

5 e none of the answers are correct

At the end of the fiscal year, an adjusting entry is made that increases

salaries payable and increases salaries expense This entry is an application

of which accounting principle?

Which of these measurement attributes is not currently used in practice?

The following data relate to Swift Company for the year ended December 31,

2010 Swift Company uses the accrual basis Sales on credit $250,000 Cost of inventory sold on credit 170,000 Collections from customers 220,000

Purchase of inventory on credit 150,000 Payment for purchases 140,000

Selling expenses (accrual basis) 40,000 Payment for selling expenses 45,000 Which of the following amounts represents income for Swift Company for the year ended December 31, 2010?

The following data relate to Rocket Company for the year ended December 31,

2010 Rocket Company uses the cash basis Sales on credit $180,000 Cost of inventory sold on credit 130,000 Collections from customers 170,000

Purchase of inventory on credit 140,000 Payment for purchases 150,000

Selling expenses (accrual basis) 20,000 Payment for selling expenses 25,000 Which of the following amounts represents income for Rocket Company for the year ended December 31, 2010?

1 a $30,000

2 b $5,000 loss

3 c $40,000

4 d $45,000

5 e $50,000

The following data relate to Gorr Company for the year ended December 31,

2010 Gorr Company uses the accrual basis Sales for cash $200,000 Sales for credit 220,000 Cost of inventory sold 180,000 Collections from customers 300,000 Purchases of inventory on credit 190,000 Payment for purchases 180,000 Selling expenses (accrual basis) 50,000 Payment for selling expenses 60,000 Which of the following represents income for Gorr Company for the year ended December 31, 2010?

1 a $180,000

2 b $185,000

3 c $190,000

4 d $200,000

5 e none of the answers are correct

The following data relate to Falcon Company for the year ended December 31,

2010 Falcon Company uses the cash basis Sales for cash $180,000 Sales for credit 190,000 Cost of inventory sold 210,000 Collections from customers 350,000 Purchases of inventory on credit 200,000 Payment for purchases 220,000 Selling expenses (accrual basis) 60,000 Payment for selling expenses 70,000 Which of the following amounts represents income for Falcon Company for the year ended December 31, 2010?

Other than December, the most popular month for fiscal year-end is:

The most accurate way to account for the success or failure of an entity is to accumulate all transactions from the opening of business until the business eventually liquidates

1 True

2 False

An entity usually cannot reasonably account for the profits related to

inventory until that inventory is sold in the normal course of business

At the time of originally recording a transaction, historical cost also

represents the fair market value

1 True

2 False

It would always be conservative to value inventory at market

alternative accounting principles

Financial Accounting Concepts establish generally accepted accounting

principles

1 True

2 False

According to the second Financial Accounting Concept, those characteristics

of information that make it a desirable commodity can be viewed as a

hierarchy of qualities, with understandability and usefulness for decision making of most importance

The time period assumption indicates that the entity will remain in business for an indefinite period time

Relevance is a quality requiring that the information be timely and that it also have predictive value or feedback value or both

1 True

2 False

The SEC has the authority to determine generally accepted accounting

principles and to regulate the accounting profession

The cash basis recognizes revenue when cash is received and expenses when cash is paid

The Sarbanes-Oxley Act has had an insignificant effect on the relationship between the company and the internal auditor

1 True

2 False

Reporting under Sarbanes-Oxley revealed that very few companies had

material weaknesses in their controls and processes

Accounting Trends & Techniques is a compilation of data obtained by a survey

of 600 annual reports to stockholders undertaken for the purpose of

analyzing the accounting information disclosed in such reports

Accounting standards codification TM reorganizes the accounting

pronouncements into approximately 90 accounting topics

1 True

2 False

Accounting standards codification TM addresses U.S GAAP for nongovernmental entities

1 True

2 False