-
The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?
Cost
Economic Entity
Monetary Unit
Economic Entity
-
Which principle/guideline requires a company's
balance sheet to report its land at the amount the company paid to
acquire the land, even if the land could be sold today at a
significantly higher amount?
Cost
Economic Entity
Monetary Unit
Cost
-
Which principle/guideline allows a company to ignore the change in the purchasing power of the dollar over time?
Cost
Economic Entity
Monetary Unit
Monetary Unit
-
Which
principle/guideline requires the company's financial statements to have
footnotes containing information that is important to users of the
financial statements?
Conservatism
Economic Entity
Full Disclosure
Full Disclosure
-
Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial?
Conservatism
Full Disclosure
Materiality
Materiality
-
Which
principle/guideline is associated with the assumption that the company
will continue on long enough to carry out its objectives and
commitments?
Economic Entity
Going Concern
Time Period
Going Concern
-
A very large
corporation's financial statements have the dollar amounts rounded to
the nearest $1,000. Which accounting principle/guideline justifies not
reporting the amounts to the penny?
Full Disclosure
Materiality
Monetary Unit
Materiality
-
Accountants might
recognize losses but not gains in certain situations. For example, the
company might write-down the cost of inventory, but will not write-up
the cost of inventory. Which principle/guideline is associated with
this action?
Conservatism
Materiality
Monetary Unit
Materiality (Materiality involves insignificant amounts ie. pennies or depreciating a 15.00 stapler over 3 years)
-
Which
principle/guideline directs a company to show all the expenses related
to its revenues of a specified period even if the expenses were not paid
in that period?
Cost
Matching
Monetary Unit
matching
-
When the accountant
has to choose between two acceptable alternatives, the accountant should
select the alternative that will report less profit, less asset amount,
or a greater liability amount. This is based upon which
principle/guideline?
Conservatism
Cost
Materiality
Conservativism (This is used to break a tie, Accountants should be objective and use conservativism to break a tie)
-
Public utilities'
balance sheets list the plant assets before the current assets. This is
acceptable under which accounting principle/guideline?
Conservatism
Cost
Industry Practices
Industry Practices (have unique reporting practices that are followed on financial statements as well as reported to the government)
-
A large company
purchases a $250 digital camera and expenses it immediately instead of
recording it as an asset and depreciating it over its useful life. This
practice may be acceptable because of which principle/guideline?
Cost
Matching
Materiality
Materiality (because it is a large company 250.00 is considered to be an insignificant amount)
-
A corporation pays its
annual property tax bill of approximately $12,000 in one payment each
December 28. During the year, the corporation's monthly income
statements report Property Tax Expense of $1,000. This is an example of
which accounting principle/guideline?
Conservatism
Matching
Monetary Unit
Matching (requires company to match 1/12 of the annual property tax to each month when revenues are earned as a result of the property)
-
A company sold
merchandise of $8,000 to a customer in December. The company's sales
terms require the customer to pay the company in 30 days. The company's
income statement reported the sale in December. This is proper under
which accounting principle/guideline?
Full Disclosure
Monetary Unit
Revenue Recognition
Revenue Recognition (requires that revenue is reported when it is earned. When goods are sold or services provided not when payment is received)
-
Accrual accounting is based on this principle/guideline.
Cost
Full Disclosure
Matching
Matching (expenses matched to the related revenues or to the accounting period in which the expenses occured. When the expense was payed for is not relevent)
-
The creative chief
executive of a corporation who is personally responsible for numerous
inventions and innovations is not reported as an asset on the
corporation's balance sheet. The accounting principle/guideline that
prevents the corporation for reporting this person as an asset is
Conservatism
Cost
Going Concern
Cost - Assets and other transactions be recorded at cost.
-
An asset with a cost
of $120,000 is depreciated over its useful life of 10 years rather than
expensing the entire amount when it is purchased. This complies with
which principle/guideline?
Cost
Full Disclosure
Matching
Matching
-
Near the end of the
current year, a company required a customer to pay $200,000 as a deposit
for work that is to begin in the following year. At the end of the
current year the company reported the $200,000 as a liability on its
balance sheet. Which accounting principle/guideline prevented the
company from reporting the $200,000 on its income statement for the
current year?
Going Concern
Materiality
Revenue Recognition
Revenue Recognition (revenue recorded when its earned not when cash received)
-
A retailer wishes to
report its merchandise inventory on its balance sheet at its retail
value. This would violate which accounting principle/guideline?
Cost
Full Disclosure
Monetary Unit
Cost
-
A company borrowed
$100,000 in December and will make its only payment for interest when
the note comes due six months later. The total interest for the six
months will be $3,600. On the December income statement the accountant
reported Interest Expense of $600. This action was the result of which
accounting principle/guideline?
Cost
Matching
Revenue Recognition
Matching (the company is incurring interest every minute it has the loan, for one month the company has interest expense of 600 and it needs to be recorded on Dec. Income statement
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