Monday, May 30, 2016
Under Protection provides underground storage facilities for companies desiring off-site storage of sensitive documents, computer records, and other items. They have developed a sophisticated surveillance and security system which they initially used in their own facilities, and have recently started to market elsewhere as well.
Under Protection provides underground storage facilities for companies desiring off-site storage of sensitive documents, computer records, and other items. They have developed a sophisticated surveillance and security system which they initially used in their own facilities, and have recently started to market elsewhere as well.
Under Protection provides underground storage facilities for companies desiring off-site storage of sensitive documents, computer records, and other items. They have developed a sophisticated surveillance and security system which they initially used in their own facilities, and have recently started to market elsewhere as well.
The underground storage facilities are made from natural caves in some instances (reinforced and modified as appropriate) and from excavations of natural rock formations in others. The land was purchased over ten years ago for a total of $2.5 million. The modifications have cost approximately $15 million more. The company has never depreciated its storage facilities because the market value of the property has continued to rise. Presently, the market price is between $30 and $40 million.
Betsy Brantley, a new accounting manager, questioned this depreciation policy. Will Gray, the controller, has told her that she needn't worry about it. For one thing, he says, this is really a special form of Land account, which should not be depreciated at all. For another, this is a privately held company, and so they don't need to worry about misleading investors. All the owners know about and approve the depreciation policy.
Required:
What are the ethical issues in this situation?
You have recently started to work for Storry Malcom, manufacturers of cemetery markers and monuments. During your first month at work, you inadvertently recorded as revenue, about $4,000 of prepayments from Budger Company. The financial statements had been released within the company when you discovered your error. The month-end closing had not been completed, however, and you were able to correct the accounts without incident.
Required:
Prepare a short note to accompany the re-released financial statements explaining the mistake.
The following items were taken from the financial statements of Buttercup Company. (All dollars are in thousands.)
The following items were taken from the financial statements of Buttercup Company. (All dollars are in thousands.)
Mortgage payable $ 2,443 Accumulated depreciation 3,655
Prepaid expenses 880 Accounts payable 1,444
Property, plant, and equipment 11,500 Notes payable after 2015 1,200
Long-term investments 1,100 Owner’s capital 13,480
Short-term investments 3,690 Accounts receivable 1,696
Notes payable in 2015 1,000 Inventories 1,756
Cash 2,600
Instructions
Prepare a classified balance sheet in good form as of December 31, 2014.
Wakefield Company discovered the following errors made in January 2014.
Wakefield Company discovered the following errors made in January 2014.
1. A payment of salaries expense of $900 was debited to Equipment and credited to Cash, both for $900.
2. A collection of $2,000 from a client on account was debited to Cash $200 and credited to Service Revenue $200.
3. The purchase of equipment on account for $680 was debited to Equipment $860 and credited to Accounts Payable $860.
Instructions
Correct the errors by reversing the incorrect entry and preparing the correct entry.
As Mel Smith was doing his year-end accounting, he noticed that the bookkeeper had made errors in recording several transactions. The erroneous transactions are as follows:
As Mel Smith was doing his year-end accounting, he noticed that the bookkeeper had made errors in recording several transactions. The erroneous transactions are as follows:
(a) A check for $700 was issued for goods previously purchased on account. The bookkeeper debited Accounts Receivable and credited Cash for $700.
(b) A check for $180 was received as payment on account. The bookkeeper debited Accounts Payable for $810 and credited Accounts Receivable for $810.
(c) When making the entry to record the year's depreciation expense, the bookkeeper debited Accumulated Depreciation—Equipment for $1,000 and credited Cash for $1,000.
(d) When accruing interest on a note payable, the bookkeeper debited Interest Receivable for $200 and credited Interest Payable for $200.
Instructions
Prepare the appropriate correcting entries. (Do not reverse the original entries.)
Indicate the proper sequence of the steps in the accounting cycle by placing numbers 1-8 in the blank spaces.
Indicate the proper sequence of the steps in the accounting cycle by placing numbers 1-8 in the blank spaces.
____ a. Analyze business transactions.____ b. Journalize and post adjusting entries.
____ c. Journalize and post closing entries.
____ d. Journalize the transactions.
____ e. Prepare a post-closing trial balance.
____ f. Prepare a trial balance.
____ g. Prepare financial statements.
____ h. Post to ledger accounts.
The trial balances of Orton Company follow with the accounts arranged in alphabetic order. Analyze the data and prepare (a) the adjusting entries and (b) the closing entries made by Orton Company.
Identify which of the following accounts would appear in a post-closing trial balance.
Accumulated Depreciation—Equipment Owner’s DrawingsDepreciation Expense Service Revenue
Interest Payable Equipment
Solution
The following accounts would appear in a post-closing trial balance:
Accumulated Depreciation—Equipment
Interest Payable
Equipment
The trial balances of Orton Company follow with the accounts arranged in alphabetic order. Analyze the data and prepare (a) the adjusting entries and (b) the closing entries made by Orton Company.
Trial BalancesUnadjusted Adjusted Post-Closing
Accounts Payable $10,000 $10,000 $10,000
Accounts Receivable 2,200 3,200 3,200
Accumulated Depreciation—Equipment 13,000 17,000 17,000
Advertising Expense 0 16,300 0
Cash 60,000 60,000 60,000
Depreciation Expense 0 4,000 0
Equipment 75,000 75,000 75,000
Owner’s Capital 82,200 82,200 102,400
Owner’s Drawings 11,000 11,000 0
Prepaid Advertising 17,800 1,500 1,500
Prepaid Rent 15,000 11,000 11,000
Rent Expense 0 4,000 0
Service Revenue 96,000 105,000 0
Supplies 3,200 700 700
Supplies Expense 2,000 4,500 0
Unearned Service Revenue 23,000 15,000 15,000
Salaries and Wages Expense 38,000 45,000 0
Salaries and Wages Payable 0 7,000 7,000
The income statement of Fezzik's Shoe Repair is as follows:
The income statement of Fezzik's Shoe Repair is as follows:
FEZZIK’S SHOE REPAIR
Income Statement
For the Month Ended April 30, 2014
Revenue
Service Revenue $9,500
Expenses
Salaries and Wages Expense $4,200
Depreciation Expense 350
Utilities Expense 400
Rent Expense 600
Supplies Expense 1,050
Total Expenses 6,600
Net Income $2,900
On April 1, the Owner’s Capital account had a balance of $12,900. During April, Fezzik withdrew $3,000 cash for personal use.
Instructions
(a) Prepare closing entries at April 30.
(b) Prepare an owner's equity statement for the month of April.
The adjusted account balances of the Fitness Center at July 31 are as follows:
The adjusted account balances of the Fitness Center at July 31 are as follows:
Accounts Account Balances Accounts Account Balances
Cash $ 16,000 Service Revenue $105,000
Accounts Receivable 15,000 Interest Revenue 8,000
Supplies 4,000 Depreciation Expense 27,000
Prepaid Insurance 8,000 Insurance Expense 6,000
Buildings 300,000 Salaries and Wages Expense 35,000
Accumulated Depreciation— Supplies Expense 9,000
Buildings 120,000 Utilities Expense 12,000
Accounts Payable 19,000
Owner’s Capital 195,000
Owner’s Drawings 15,000
Instructions
Prepare the end of the period closing entries for the Fitness Center.
The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just-completed year.
The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just-completed year.
Sales $920Purchases of raw materials $215
Direct labor $170
Manufacturing overhead $275
Administrative expenses $180
Selling expenses $140
Raw materials inventory, beginning $100
Raw materials inventory, ending $65
Work-in-process inventory, beginning $75
Work-in-process inventory, ending $35
Finished goods inventory, beginning $130
Finished goods inventory, ending $165
Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.
Saturday, May 28, 2016
The worksheet for Montoya Company has been completed through the adjusted trial balance. You are ready to extend each amount to the appropriate financial statement column. Indicate for each account, the financial statement column to which the account should be extended by placing a check mark () in the appropriate column.
The worksheet for Montoya Company has been completed through the adjusted trial balance. You are ready to extend each amount to the appropriate financial statement column. Indicate for each account, the financial statement column to which the account should be extended by placing a check mark () in the appropriate column.
———————————————————————————————————————————Income Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr.
———————————————————————————————————————————
(1) Cash
———————————————————————————————————————————
(2) Owner’s Capital
———————————————————————————————————————————
(3) Mortgage Payable
———————————————————————————————————————————
(4) Interest Receivable
———————————————————————————————————————————
(5) Supplies
———————————————————————————————————————————
(6) Accounts Payable
———————————————————————————————————————————
(7) Short-term Investments
———————————————————————————————————————————
(8) Maintenance and Repairs Expense
———————————————————————————————————————————
(9) Unearned Service Revenue
———————————————————————————————————————————
(10) Equipment
———————————————————————————————————————————
(11) Depreciation Expense
———————————————————————————————————————————
(12) Interest Revenue
———————————————————————————————————————————
(13) Salaries and Wages Expense
———————————————————————————————————————————
(14) Owner’s Drawings
———————————————————————————————————————————
(15) Accum. Deprec.—Equipment
———————————————————————————————————————————
(16) Utilities Expense
———————————————————————————————————————————
(17) Salaries and Wages Payable
———————————————————————————————————————————
(18) Accounts Receivable
———————————————————————————————————————————
(19) Notes Payable
———————————————————————————————————————————
(20) Service Revenue
————————————————
Use the following income statement for the year 2014 for Belle Company to prepare entries to close the revenue and expense accounts for the company.
Use the following income statement for the year 2014 for Belle Company to prepare entries to close the revenue and expense accounts for the company.
Service revenue $85,000
Expenses:
Salaries and Wages Expense $40,000
Rent Expense 12,500
Advertising Expense 8,700
Total expenses 61,200
Net income (loss) $23,800
Solution
Service Revenue 85,000
Income Summary 85,000
Income Summary 61,200
Salaries and Wages Expense 40,000
Rent Expense 12,500
Advertising Expense 8,700
Sebastien Company earned net income of $44,000 during 2014. The company had owner drawings totalling $20,000 during the period. Prepare the entries to close Income Summary and the Owner’s Drawings account.
Solution
Income Summary 44,000
Owner’s Capital 44,000
Owner’s Capital 20,000
Owner’s Drawings 20,000
At April 1, 2014, Spiderland Company reported a balance of $20,000 in the Owner’s Capital account. Spiderland Company earned revenues of $50,000 and incurred expenses of $32,000 during April 2014. The company had owner drawings of $10,000 during the month.
(a) Prepare the entries to close Income Summary and the Owner’s Drawings acccount at April 30, 2014.
(b) What is the balance in Owner’s Capital on the April 30, 2014 post-closing trial balance?
Identify which of the following are temporary accounts of Sabrina Company.
(1) Owner’s Capital
(2) Owner’s Drawings
(3) Equipment
(4) Accumulated Depreciation
(5) Depreciation Expense
148. Which statement about long-term investments is not true? a. They will be held for more than one year. b. They are not currently used in the operation of the business. c. They include investments in stock of other companies and land held for future use. d. They can never include cash accounts. Ans: D 149. What is the order in which assets are generally listed on a classified balance sheet? a. Current and long-term b. Current; property, plant, and equipment; long-term investments; intangible assets c. Current; property, plant, and equipment; intangible assets; long-term investments d. Current; long-term investments; property, plant, and equipment; intangible assets Ans: D 150. These are selected account balances on December 31, 2014. Land (location of the corporation’s office building) $100,000 Land (held for future use) 150,000 Corporate Office Building 700,000 Inventory 200,000 Equipment 450,000 Office Furniture 150,000 Accumulated Depreciation 425,000 What is the total amount of property, plant, and equipment that will appear on the balance sheet? a. $975,000 b. $1,125,000 c. $1,175,000 d. $1,400,000 Ans: A Solution: $100,000 $700,000 $450,000 $150,000 $425,000 $975,000 151. The following selected account balances appear on the December 31, 2014 balance sheet of Superchunk Co. Land (location of the corporation’s office building) $150,000 Land (held for future use) 225,000 Corporate Office Building 800,000 Inventory 300,000 Equipment 675,000 Office Furniture 225,000 Accumulated Depreciation 640,000 What is the total amount of property, plant, and equipment that will be reported on the balance sheet? a. $1,210,000 b. $1,435,000 c. $1,510,000 d. $1,850,000 a152. A reversing entry a. reverses entries that were made in error. b. is the exact opposite of an adjusting entry made in a previous period. c. is made when a business disposes of an asset it previously purchased. d. is made when a company sustains a loss in one period and reverses the effect with a profit in the next period. a 153. If a company utilizes reversing entries, they will a. be made at the beginning of the next accounting period. b. not actually be posted to the general ledger accounts. c. be made before the post-closing trial balance. d. be part of the adjusting entry process. 154. The steps in the preparation of a worksheet do not include a. analyzing documentary evidence. b. preparing a trial balance on the worksheet. c. entering the adjustments in the adjustment columns. d. entering adjusted balances in the adjusted trial balance columns. 155. Balance sheet accounts are considered to be a. temporary owner's equity accounts. b. permanent accounts. c. capital accounts. d. nominal accounts. 156. Income Summary has a credit balance of $17,000 in S. Sufjan Co. after closing revenues and expenses. The entry to close Income Summary is a. credit Income Summary $17,000, debit Owner’s Capital $17,000. b. credit Income Summary $17,000, debit Owner’s Drawings $17,000. c. debit Income Summary $17,000, credit Owner’s Drawings $17,000. d. debit Income Summary $17,000, credit Owner’s Capital $17,000. 157. The post-closing trial balance contains only a. income statement accounts. b. balance sheet accounts. c. balance sheet and income statement accounts. d. income statement, balance sheet, and owner's equity statement accounts. 158. Which of the following is an optional step in the accounting cycle? a. Adjusting entries b. Closing entries c. Correcting entries d. Reversing entries 159. Which one of the following statements concerning the accounting cycle is incorrect? a. The accounting cycle includes journalizing transactions and posting to ledger accounts. b. The accounting cycle includes only one optional step. c. The steps in the accounting cycle are performed in sequence. d. The steps in the accounting cycle are repeated in each accounting period. 160. Correcting entries are made a. at the beginning of an accounting period. b. at the end of an accounting period. c. whenever an error is discovered. d. after closing entries. 161. On September 23, Sebadoh Company received a $350 check from Surfer Rosa Inc. for services to be performed in the future. The bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should a. debit Cash $350 and credit Unearned Service Revenue $350. b. debit Accounts Receivable $350 and credit Unearned Service Revenue $350. c. debit Accounts Receivable $350 and credit Cash $350. d. debit Accounts Receivable $350 and credit Service Revenue $350. 162. All of the following are owner's equity accounts except a. the Capital account. b. Capital Stock. c. Investment in Stock. d. Retained Earnings. 163. Current liabilities a. are obligations that the company is to pay within the forthcoming year. b. are listed in the balance sheet in order of their expected maturity. c. are listed in the balance sheet, starting with accounts payable. d. should not include long-term debt that is expected to be paid within the next year. a164. The use of reversing entries a. is a required step in the accounting cycle. b. changes the amounts reported in the financial statements. c. simplifies the recording of subsequent transactions. d. is required for all adjusting entries. 165. The classified balance sheet is a. required under GAAP but not under IFRS. b. required under IFRS in the same format as under GAAP. c. required under IFRS but not under GAAP. d. required under IFRS with certain variations in format as compared to GAAP. 166. IFRS requires the use of a. the term balance sheet. b. the term statement of financial position. c. neither balance sheet nor statement of financial position, but recommends use of the term balance sheet. d. neither balance sheet nor statement of financial position, but recommends use of the term statement of financial position. 167. IFRS a. requires a specific format for the balance sheet (statement of financial position) that is identical to U.S. GAAP. b. requires a specific format for the balance sheet (statement of financial position) that is different from U.S. GAAP. c. requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement identical to U.S. GAAP. d. requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement in a different format from U.S. GAAP. 168. Most companies that follow IFRS present balance sheet (statement of financial position) information in this order: a. current assets; investments; property, plant and equipment; intangible assets; current liabilities; long term liabilities; owners' equity. b. intangible assets; property, plant and equipment; investments; current assets; current liabilities; owners' equity; long term liabilities. c. current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity. d. noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities. 169. Under IFRS and under GAAP, current assets are listed in IFRS GAAP a. order of liquidity order of liquidity b. reverse order of liquidity order of liquidity. c. order of liquidity reverse order of liquidity d. reverse order of liquidity reverse order of liquidity 170. The subtotal net assets is used in a. both GAAP and IFRS. b. GAAP but not IFRS. c. IFRS but not GAAP. d. neither IFRS nor GAAP. 171. Both IFRS and GAAP require disclosure about a. accounting policies followed. b. judgements that management has made in the process of applying the entity's accounting policies. c. the key assumptions and estimation uncertainty. d. All of these answer choices are correct. 172. Under IFRS a. comparative prior-period information must be presented, but financial statements need not be provided annually. b. comparative prior-period informaton must be presented, and financial statements must be provided annually. c. comparative prior-period information is not required, and financial statements need not be provided annually. d. comparative prior-period information is not required, but financial statements must be provided annually. 173. The use of fair value to report assets a. is not allowed under GAAP or IFRS. b. is required by GAAP and IFRS. c. is increasing under GAAP and IFRS, but GAAP has adopted it more broadly. d. is increasing under GAAP and IFRS, but IFRS has adopted it more broadly. 174. Under IFRS a. companies can apply fair value to property, plant, and equipment and natural resources. b. companies can apply fair value to property, plant, and equipment but not to natural resources. c. companies can apply fair value to neither property, plant, and equipment nor natural resources. d. companies can apply fair value to natural resources but not to property, plant, and equipment. 175. The IASB and FASB are working on a converged statement of financial position using the headings of a. assets, liabilities, and owner's equity. b. revenues and expenses. c. assets, liabilities, revenues, expenses and owner's equity. d. operating, investing, and financing. CLICK HERE TO GET THE ANSWER !!!!
148. Which statement about long-term investments is not true?
a. They will be held for more than one year.
b. They are not currently used in the operation of the business.
c. They include investments in stock of other companies and land held for future use.
d. They can never include cash accounts.
Ans: D
149. What is the order in which assets are generally listed on a classified balance sheet?
a. Current and long-term
b. Current; property, plant, and equipment; long-term investments; intangible assets
c. Current; property, plant, and equipment; intangible assets; long-term investments
d. Current; long-term investments; property, plant, and equipment; intangible assets
Ans: D
150. These are selected account balances on December 31, 2014.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 700,000
Inventory 200,000
Equipment 450,000
Office Furniture 150,000
Accumulated Depreciation 425,000
What is the total amount of property, plant, and equipment that will appear on the balance sheet?
a. $975,000
b. $1,125,000
c. $1,175,000
d. $1,400,000
Ans: A
Solution: $100,000 $700,000 $450,000 $150,000 $425,000 $975,000
151. The following selected account balances appear on the December 31, 2014 balance sheet of Superchunk Co.
Land (location of the corporation’s office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 800,000
Inventory 300,000
Equipment 675,000
Office Furniture 225,000
Accumulated Depreciation 640,000
What is the total amount of property, plant, and equipment that will be reported on the balance sheet?
a. $1,210,000
b. $1,435,000
c. $1,510,000
d. $1,850,000
a152. A reversing entry
a. reverses entries that were made in error.
b. is the exact opposite of an adjusting entry made in a previous period.
c. is made when a business disposes of an asset it previously purchased.
d. is made when a company sustains a loss in one period and reverses the effect with a profit in the next period.
a 153. If a company utilizes reversing entries, they will
a. be made at the beginning of the next accounting period.
b. not actually be posted to the general ledger accounts.
c. be made before the post-closing trial balance.
d. be part of the adjusting entry process.
154. The steps in the preparation of a worksheet do not include
a. analyzing documentary evidence.
b. preparing a trial balance on the worksheet.
c. entering the adjustments in the adjustment columns.
d. entering adjusted balances in the adjusted trial balance columns.
155. Balance sheet accounts are considered to be
a. temporary owner's equity accounts.
b. permanent accounts.
c. capital accounts.
d. nominal accounts.
156. Income Summary has a credit balance of $17,000 in S. Sufjan Co. after closing revenues and expenses. The entry to close Income Summary is
a. credit Income Summary $17,000, debit Owner’s Capital $17,000.
b. credit Income Summary $17,000, debit Owner’s Drawings $17,000.
c. debit Income Summary $17,000, credit Owner’s Drawings $17,000.
d. debit Income Summary $17,000, credit Owner’s Capital $17,000.
157. The post-closing trial balance contains only
a. income statement accounts.
b. balance sheet accounts.
c. balance sheet and income statement accounts.
d. income statement, balance sheet, and owner's equity statement accounts.
158. Which of the following is an optional step in the accounting cycle?
a. Adjusting entries
b. Closing entries
c. Correcting entries
d. Reversing entries
159. Which one of the following statements concerning the accounting cycle is incorrect?
a. The accounting cycle includes journalizing transactions and posting to ledger accounts.
b. The accounting cycle includes only one optional step.
c. The steps in the accounting cycle are performed in sequence.
d. The steps in the accounting cycle are repeated in each accounting period.
160. Correcting entries are made
a. at the beginning of an accounting period.
b. at the end of an accounting period.
c. whenever an error is discovered.
d. after closing entries.
161. On September 23, Sebadoh Company received a $350 check from Surfer Rosa Inc. for services to be performed in the future. The bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should
a. debit Cash $350 and credit Unearned Service Revenue $350.
b. debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
c. debit Accounts Receivable $350 and credit Cash $350.
d. debit Accounts Receivable $350 and credit Service Revenue $350.
162. All of the following are owner's equity accounts except
a. the Capital account.
b. Capital Stock.
c. Investment in Stock.
d. Retained Earnings.
163. Current liabilities
a. are obligations that the company is to pay within the forthcoming year.
b. are listed in the balance sheet in order of their expected maturity.
c. are listed in the balance sheet, starting with accounts payable.
d. should not include long-term debt that is expected to be paid within the next year.
a164. The use of reversing entries
a. is a required step in the accounting cycle.
b. changes the amounts reported in the financial statements.
c. simplifies the recording of subsequent transactions.
d. is required for all adjusting entries.
165. The classified balance sheet is
a. required under GAAP but not under IFRS.
b. required under IFRS in the same format as under GAAP.
c. required under IFRS but not under GAAP.
d. required under IFRS with certain variations in format as compared to GAAP.
166. IFRS requires the use of
a. the term balance sheet.
b. the term statement of financial position.
c. neither balance sheet nor statement of financial position, but recommends use of the term balance sheet.
d. neither balance sheet nor statement of financial position, but recommends use of the term statement of financial position.
167. IFRS
a. requires a specific format for the balance sheet (statement of financial position) that is identical to U.S. GAAP.
b. requires a specific format for the balance sheet (statement of financial position) that is different from U.S. GAAP.
c. requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement identical to U.S. GAAP.
d. requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement in a different format from U.S. GAAP.
168. Most companies that follow IFRS present balance sheet (statement of financial position) information in this order:
a. current assets; investments; property, plant and equipment; intangible assets; current liabilities; long term liabilities; owners' equity.
b. intangible assets; property, plant and equipment; investments; current assets; current liabilities; owners' equity; long term liabilities.
c. current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity.
d. noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.
169. Under IFRS and under GAAP, current assets are listed in
IFRS GAAP
a. order of liquidity order of liquidity
b. reverse order of liquidity order of liquidity.
c. order of liquidity reverse order of liquidity
d. reverse order of liquidity reverse order of liquidity
170. The subtotal net assets is used in
a. both GAAP and IFRS.
b. GAAP but not IFRS.
c. IFRS but not GAAP.
d. neither IFRS nor GAAP.
171. Both IFRS and GAAP require disclosure about
a. accounting policies followed.
b. judgements that management has made in the process of applying the entity's accounting policies.
c. the key assumptions and estimation uncertainty.
d. All of these answer choices are correct.
172. Under IFRS
a. comparative prior-period information must be presented, but financial statements need not be provided annually.
b. comparative prior-period informaton must be presented, and financial statements must be provided annually.
c. comparative prior-period information is not required, and financial statements need not be provided annually.
d. comparative prior-period information is not required, but financial statements must be provided annually.
173. The use of fair value to report assets
a. is not allowed under GAAP or IFRS.
b. is required by GAAP and IFRS.
c. is increasing under GAAP and IFRS, but GAAP has adopted it more broadly.
d. is increasing under GAAP and IFRS, but IFRS has adopted it more broadly.
174. Under IFRS
a. companies can apply fair value to property, plant, and equipment and natural resources.
b. companies can apply fair value to property, plant, and equipment but not to natural resources.
c. companies can apply fair value to neither property, plant, and equipment nor natural resources.
d. companies can apply fair value to natural resources but not to property, plant, and equipment.
175. The IASB and FASB are working on a converged statement of financial position using the headings of
a. assets, liabilities, and owner's equity.
b. revenues and expenses.
c. assets, liabilities, revenues, expenses and owner's equity.
d. operating, investing, and financing.
136. Intangible assets are a. listed under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. long-lived assets that are often very valuable. d. listed as a long-term investment on the balance sheet.
136. Intangible assets are
a. listed under current assets on the balance sheet.
b. not listed on the balance sheet because they do not have physical substance.
c. long-lived assets that are often very valuable.
d. listed as a long-term investment on the balance sheet.
Ans: C
137. The relationship between current assets and current liabilities is important in evaluating a company's
a. profitability.
b. liquidity.
c. market value.
d. accounting cycle.
Ans: B
138. The most important information needed to determine if companies can pay their current obligations is the
a. net income for this year.
b. projected net income for next year.
c. relationship between current assets and current liabilities.
d. relationship between short-term and long-term liabilities.
Ans: C
139. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
What is the company’s net income for the year ending December 31, 2014?
a. $12,000
b. $28,000
c. $42,000
d. $133,000
140. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Multiple Choice 140. (Cont.)
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
What is the balance that would be reported for owner’s equity at December 31, 2014?
a. $158,000
b. $144,000
c. $130,000
d. $102,000
141. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
What are total current assets at December 31, 2014?
a. $26,000
b. $32,000
c. $36,000
d. $42,000
142. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Equipment 210,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
What is the book value of the equipment at December 31, 2014?
a. $170,000
b. $182,000
c. $210,000
d. $238,000
143. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
Multiple Choice 143. (Cont.)
What are total current liabilities at December 31, 2014?
a. $18,000
b. $70,000
c. $88,000
d. $120,000
144. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
What are total long-term liabilities at December 31, 2014?
a. $0
b. $70,000
c. $88,000
d. $90,000
145. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Equipment 210,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
What is total liabilities and owner’s equity at December 31, 2014?
a. $176,000
b. $218,000
c. $190,000
d. $232,000
146. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Equipment 210,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Multiple Choice 146. (Cont.)
The sub-classifications for assets on the company’s classified balance sheet would include all of the following except
a. Current Assets.
b. Property, Plant, and Equipment.
c. Intangible Assets.
d. Long-term Assets.
147. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2014:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation – equipment 28,000
Advertising expense 21,000
Cash 15,000
Owner’s capital (1/1/14) 102,000
Owner’s drawings 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/15 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries and wages expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000
The current assets should be listed on Postal Service’s balance sheet in the following order:
a. cash, accounts receivable, prepaid insurance, equipment.
b. cash, prepaid insurance, supplies, accounts receivable.
c. cash, accounts receivable, prepaid insurance, supplies.
d. equipment, supplies, prepaid insurance, accounts receivable, cash.
Subscribe to:
Posts (Atom)