Question

Question 1

1. Table 2-1
   The following data pertains to Cavalier Corporation. Total assets at January 1, 20X9, were $290,000; at December 31, 20X9, total assets were $334,000. During 20X9, sales were $995,000; cash dividends were $10,000; and operating expenses (exclusive of cost of goods sold) were $545,000. Total liabilities at December 31, 20X9, were $128,000; at January 1, 20X9, total liabilities were $105,000. There was no additional paid-in capital during 20X9.
   
   
   Referring to Table 2-1, what was the amount of stockholders' equity as of January 1, 20X9?

   		$635,000
   		$440,000
   		$185,000
   		$175,000
   		$450,000

1 points

Question 2

1. Using LIFO to value inventory one year and using FIFO the next is a violation of which accounting principle?

   		Matching
   		Recognition
   		Consistency
   		Conservatism
   		Neutrality

1 points

Question 3

1. An accountant records a transaction when cash is paid or received under which basis of accounting?

   		Accrual
   		Deferral
   		Cost recovery
   		Cash
   		Prepaid

1 points

Question 4

1. Weber Phone Company sells phones and related accessories. Which of these situations demonstrate proper revenue recognition for Weber Phone Company?

   		Employees are paid for hours worked last month.
   		Phones are sold to customers, but customers can opt to have the additional charges added to their next monthly bill.
   		Rent is paid a month in advance of the due date because the accountant will be on vacation when the next rent payment should be made.
   		An interest bearing certificate of deposit is purchased. Interest will be paid at the end of 60-day note.
   		Phones are purchased for sale to customers, but the accountant has not yet paid the bill.

1 points

Question 5

1. Net income is

   		the primary way of evaluating the financial performance for an entity.
   		not appropriate for individuals.
   		not applicable to not-for-profit entities.
   		the only way to evaluate for-profit corporations.
   		the bottom line according to IRS accounting.

1 points

Question 6

1. Revenues are

   		increases in retained earnings resulting from delivering goods or services to customers.
   		decreases in retained earnings resulting from delivering goods or services to customers.
   		increases in liabilities resulting from delivering goods or services to customers.
   		another term for assets.
   		decreases in assets resulting from delivering goods or services to customers.

1 points

Question 7

1. Net income is defined as

   		assets minus revenues.
   		revenues minus expenses.
   		assets plus revenues.
   		expenses minus revenues.
   		owners' equity assets minus expenses.

1 points

Question 8

1. Reliability is defined as

   		choosing accounting policies without attempting to achieve purposes other than measuring economic impact.
   		the capability of information to make a difference to the decision maker.
   		a correspondence between the accounting numbers and the resources or events those numbers purport to represent.
   		a quality of information such that there would be a high extent of consensus among independent measurers of an item.
   		the quality of information that allows decision makers to depend on it to represent the conditions or events that it purports to represent.

1 points

Question 9

1. Which of the following accounts may be thought of as stored costs that are carried forward to future periods rather than immediately charged against revenue?

   		Depreciation expense
   		Rent expense
   		Advertising expense
   		Prepaid rent
   		Cost of goods sold

1 points

Question 10

1. One year's worth of insurance is paid in advance. The accountant records the payment as an asset, Prepaid Insurance, and expenses 1/12 of the amount each month as Insurance Expense. This is an example of which of the following concepts?

   		Product costs
   		Realization
   		Matching
   		Neutrality
   		Recognition

1 points

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Answer 1

1	$185,000
	Stockholders' equity = Total Assets - Total liabilities
	Stockholders' equity = $290,000 - $105,000
2	Consistency
3	Cash
4	Phones are sold to customers, but customers can opt to have
	the additional charges added to their next monthly bill.