Financial Accounting: Test 2 – Flashcards

In a period of rising prices, FIFO will have

Under the LCM approach, the market value is defined as

The inventory turnover ratio is computed by dividing cost of goods sold by

Inventories affect

If goods in transit are shipped FOB destination

Accounting information is relevant if it

Accounting information should be verifiable in order to enhance

The economic entity assumption states that

The revenge recognition principle dictates that revenue should be recognized in the accounting period in which it is

The matching principle states that

Internal controls are concerned with

Companies that are subject to, but fail to comply with, the Sarbanes-Oxley Act of 2002

The control principle related to not having the same person authorize and pay for goods is known as

Joe is a warehouse custodian and also maintains the accounting records of the inventory held at the warehouse. An assessment of the situation indicates

The entry to replenish a petty cash fund includes a credit to

Under the allowance method, writing off an uncollectible account

When an account becomes uncollectible and must be written off

Two methods of accounting for uncollectible accounts are the

The percentage of sales basis of estimating expected uncollectible

A company purchased land for $90,000 cash. Real Estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at

Which of the following assets does NOT decline in service potential over the course of its useful life

Belle Company buys land for $50,000 on 12/31/07. As of 3/31/08, the land has appreciated in value to $50,700. On 12/31/08, the land has an appraised value of $51,800. By what amount should the land account be increased?

All of the following factors in computing depreciation are estimates expect

The book value of an asset is equal to the