Question

MULTIPLE Choice

A company has a factory building that orginally cost the company $250,000. The current fair value of the factory building is $3 million. The president would like to report the difference as a gain. The write-up would represent a violation of which accounting assumption or principle?

A) measurement principles

B) Full disclosure principle

C) going concern assumption

D) Economic entity assumptions

2. If a petty cash fund is established in the amount of $250, and contains $200 in cash and $45 in receipts for disbursements when it is replenished the journal entry to record replenishment should include credits t the following accounts

A) Petty Cash, $45

B) Petty Cash, $50

C) Cash, $45; Cash Over and Short $5

D) Cash, $50

3. Expensing the cost of copy paper when the paper is acquired is an example of which qualitative characteric?

A) Materiality

B) Neutrality

C) Timeliness

D) Verifiability

3 Answer B

4. Appliccation of the full disclosure principle

A) is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits

B) is violated when important financial information is buried in the notes to the financial statements.

C) is demonstrated by the use of supplementary information presenting the effects of changing prices due to inflation.

D)requires that financial statements be consistent and comparable.

4 Ans C

5. Assume that you just acquired a new car at a cost of $25,000. You made a down payment of $3,000. The remaining payments will occur monthly and will start one month from today. In order to determine the amount of each payment, which type of annuity problem would have to be solved?

A) Future Value of an Ordinary Annuity.

B)Future Value of a Annuity Due.

C) Present Value of an Ordinary Annuity.

D) Prestent Value if an Annuity Due.

6. The Sherwood Company wishes to accumulate a bond sinking fund. Annual payments will be made - the first payment will occur on January 1, 2014 and the last payment will occur on January 1, 2024, in order to determine the total amount in the fund on January 1, 2024, which type of annuity problem would have to be solved?

A) Future Value of an Ordinary Annuity

B) Future value of an Annuity due

C) Present Value of an Ordinary Annuity

D) Present Value of an Annuity Due

7. Information is neutral if it

A) provides benefits, which are at least equal to the costs of it’d preparation.

B) can be compared with similar information about an enterprise at other points in tune.

C) would have no impact on a decision -maker

D) Is free from bias toward a predetermined result.

8. What accounting concept justifies the usage of accruals and deferrals ?

A) Going concern assumption

B) Materiality characteristic

C) full disclosure principle

D) Monetary unit assumption

9. Sally recently was offered a position with a major accounting firm. The firm offered Sally either a signing bonus of $23,000 payable on the first day of work or a singing bonus of $26,000 payable after one year of employment. Assuming the relevant interest rate is 10%, which option should Sally choose?

A) The options are equivalent.

B) Insufficient information to determine.

C) The signing bonus of $23,000 payable on the first day of work.

D) The signing bonus of $26,000 payable after one year of employment.

10. Before year-end adjusting entries, Bass Company’s account balances at December 31, 20x1, for accounts receivable indicated that $ \62,500 of the December 31 receivables ar4e expected to be uncollectible. The net realizable value of accounts receivable after adjustment is

A) $482,500.

B) $437,500

C) $392,500

D) $455,000

Answer 1

1.A) measurement principles

2.B) Petty Cash, $50

3.C) Timeliness

4.D)requires that financial statements be consistent and comparable.

5.A) Future Value of an Ordinary Annuity.

6.C) Present Value of an Ordinary Annuity

7.D) Is free from bias toward a predetermined result.

8.A) Going concern assumption

9.C) The signing bonus of $23,000 payable on the first day of work

10.B) $437,500