Assignment
Part 1: MC Questions
1. Charging off equipment that cost less than $20 would be an example of the application of:
a. going concern.
b. cost.
c. matching.
d. materiality.
e. realization.
2. The going concern assumption:
a. is applicable to all financial statements.
b. primarily involves periodic income measurement.
c. allows for the statements to be prepared under generally accepted accounting principles.
d. requires that accounting procedures be the same from period to period.
e. none of the answers are correct.
3. Understating assets and revenues is justified based on:
a. realization assumption.
b. matching.
c. consistency.
d. realization.
e. None of the answers are correct.
4. 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:
a. time period.
b. business entity.
c. historical cost.
d. transaction.
e. None of the answers are correct.
5. Valuing assets at their liquidation values is not consistent with:
a. conservatism.
b. materiality.
c. going concern.
d. time period.
e. None of the answers are correct.
6. The business being separate and distinct from the owners is an integral part of the:
a. time period assumption.
b. going concern assumption.
c. business entity assumption.
d. realization assumption.
e. None of the answers are correct.
7. The following data relate to Falcon Company for the year ended December 31, 2012. 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, 2012?
a. $90,000
b. $80,000
c. $70,000
d. $60,000
e. None of the answers are correct.
8. At the end of the fiscal year, an adjusting entry is made that increases both interest expense and interest payable. This entry is an application for which accounting principle?
a. Full disclosure
b. Materiality
c. Matching
d. Going concern
e. Realization
9. Who is responsible for the preparation and integrity of financial statements?
a. A cost accountant
b. Management
c. An auditor
d. A bookkeeper
e. The FASB
10. Which of the following is not an objective of the SEC's integrated disclosure system?
a. To coordinate the Form 10-K requirements with those of the annual report
b. To lessen the impact of the FASB
c. To expand the management discussion of liquidity, capital resources, and results of operations
d. To improve the quality of disclosure
e. To standardize information requirements
11. Which of the following is not a type of audit opinion?
a. Unqualified opinion
b. Qualified opinion
c. Adverse opinion
d. Clean opinion
e. Disclaimer of opinion
12. Which of the following statements is not true?
a. A qualified opinion or an adverse opinion may bring into question the reliability of the financial statements.
b. A disclaimer of opinion indicates that one should not look to the auditor's report as an indication of the reliability of the statements.
c. In some cases, outside accountants are associated with financial statements when they have performed less than an audit.
d. A review is substantially less in scope than an examination in accordance with generally accepted auditing statements.
e. The accountant's report expresses an opinion on reviewed financial statements.
13. In addition to the balance sheet, the income statement, and the statement of cash flows, a complete set of financial statements must include:
a. an auditor's opinion.
b. a ten-year summary of operations.
c. a note disclosure of such items as accounting policies.
d. historical common-size (percentage) summaries.
e. a list of corporate officers.
14. In terms of debits and credits, which of the following accounts have the same normal balances?
a. Accounts payable, accounts receivable, notes payable
b. Dividends, accounts receivable, notes payable
c. Advertising expense, selling expense, accounts receivable
d. Land, building, accounts payable
e. Common stock, notes payable, land
15. If liabilities total $70,000 and stockholders' equity totals $50,000, then total assets must be:
a. $20,000.
b. $80,000.
c. $120,000.
d. $30,000.
e. $30,000.
Essay question
What is the relationship between revenue recognition and matching concepts? Give an example to illustrate your points.