question

The time frame associated with an income statement is:

answer

a past period of time.

question

The going concern concept refers to a presumption that:

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the entity will continue to operate in the foreseeable future.

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The time frame associated with a balance sheet is:

answer

a point in time in the past.

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Paid-in Capital represents:

answer

the amount invested in the entity by the stockholders.

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When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

answer

Dr. Supplies Expense Cr. Supplies

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The effect of an adjustment on the financial statements is usually to:

answer

increase the accuracy of both the balance sheet and income statement.

question

The effect of an adjustment is:

answer

to increase the accuracy of the financial statements.

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When a firm purchases supplies for its business:

answer

an adjustment will probably be required as supplies are used.

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A debit entry will:

answer

increase the balance of an expense account.

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Matching revenues and expenses refers to:

answer

accurately reflecting the results of operations for a fiscal period.

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The principle of full disclosure pertains to:

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The entity fully discloses all necessary information to prevent a reasonably astute user of financial statements from being misled.

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Expenses are:

answer

decreases in net assets resulting from usual operating activities.

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Revenues are:

answer

increases in net assets from selling a product.

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The purpose of the income statement is to show the:

answer

net income or net loss for the period covered by the statement.

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The balance sheet of an entity:

answer

shows amounts that are not adjusted for changes in the purchasing power of the dollar.

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A debit entry will:

answer

increase the balance of an expense account.

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When a firm purchases supplies for its business:

answer

an adjustment will probably be required as supplies are used.

question

An expanded version of the accounting equation could be:

answer

Assets = Liabilities + Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends

question

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

answer

Dr. Supplies Expense Cr. Supplies

question

The effect of an adjustment on the financial statements is usually to:

answer

increase the accuracy of both the balance sheet and income statement.

question

The financial leverage characteristic of long-term debt results in:

answer

a magnification of ROE relative to what it would be without long-term debt.

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Which of the following is(are) a true statement(s) pertaining to bonds?

answer

Bonds can be sold at a discount, par, or premium.

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If a firm sells treasury stock for more than its cost:

answer

additional paid-in capital is increased.

question

The declaration of a cash dividend by the directors results in

answer

a decrease in retained earnings and an increase in current liabilities.

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Retained earnings represents:

answer

cumulative net income of the firm since its beginning that has not been distributed to its stockholders in the form of dividends.

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Another term frequently used to describe stockholders' equity is:

answer

net assets.

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A working capital loan will generally:

answer

not affect working capital.

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The adjusting entry to accrue Interest Expense results in:

answer

an increase in Interest Expense.

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A transaction that is likely to cause an increase in a current liability is:

answer

accrual of interest expense.

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When bonds are issued at a premium:

answer

interest expense on the bonds will be less than the interest paid.

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The balance sheet might also be called:

answer

Statement of Financial Position.

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The time frame associated with a balance sheet is:

answer

a point in time in the past.

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Transactions are summarized in:

answer

The entity's accounts.

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A fiscal year:

answer

must end on the last day of a month.

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The accrual of interest on short-term marketable securities results in:

answer

an increase in current assets and an increase in net income.

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When a manufacturer invests in short-term marketable securities:

answer

risk avoidance is of great importance.

question

The current assets of most companies are usually made up of:

answer

cash and assets expected to be converted to cash within a year.

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Which of the following is the correct balance sheet presentation for current assets?

answer

Accounts receivable, inventories, prepaid expenses, other current assets.

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A cash equivalent is a current asset that:

answer

is readily convertible into cash with a minimal risk.

question

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

answer

merchandise inventory

question

the effect of an error resulting in an understatement of ending inventory is to:

answer

overstate cost of goods sold of the current period

question

the inventory cost flow assumption describes the flow of product cost:

answer

into the asset (inventory) account and out to the expense (cost of goods sold) account

question

When a firm uses the LIFO inventory cost flow assumption:

answer

better matching of revenue and expense is achieved than under FIFO

question

The balance sheet valuation of inventories is:

answer

lower of cost or market

question

Noncurrent, intangible assets such as leasehold improvements, patents, and copyrights are all subject to:

answer

amortization

question

The principle challenge to calculating depletion is estimating:

answer

the quantity of material to be recovered

question

Which of the following statements best describes the process of accounting for depreciation?

answer

A process for recognizing the cost of an asset that should be matched against revenue earned as a result of using the asset

question

The net book value of a depreciable asset is:

answer

the difference between the asset's cost and accumulated depreciation

question

Goodwill is an asset that arises because the present value if an acquired company's estimated future earnings, discounted at the acquiring firm's ROI:

answer

is MORE THAN the fair value of of the net assets of the acquired company

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