Preparing the statement of cash ows involves all of the following except determining the
Allowing firms to esmate rather than physically count inventory at interim (quarterly) periods is an
example of a trade-o between
Murphy Company sublet a poron of its warehouse for five years at an annual rental of $60,000,
beginning on May 1, 2014. The tenant, Sheri Charter, paid one year’s rent in advance, which Murphy
recorded as a credit to Unearned Rent Revenue. Murphy reports on a calendar-year basis. The
adjustment on December 31, 2014 for Murphy should be
Which of the following publications does not qualify as a statement of generally accepted
accounting principles?
The accounts receivable turnover ratio measures the
Under Statement of Financial Accounng Concepts No. 2, free from error is an ingredient of the
fundamental quality of ans. Yes no for faithful rep and relevance
On January 1, 2014, Ball Co. exchanged equipment for a $500,000 zero-interest-bearing note due on
January 1, 2017. The prevailing rate of interest for a note of this type at January 1, 2014 was 10%. The
present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be
included in Ball’s 2015 income statement?
Which of the following statements is true?
In 2014, Benfer Corporaon reported net income of $189,000. It declared and paid common stock
dividends of $24,000 and had a weighted average of 70,000 common shares outstanding. Compute the
earnings per share to the nearest cent.
Why are certain costs of doing business capitalized when incurred and then depreciated or
amortized over subsequent accounting cycles?
Under IFRS, current assets are listed in:
The IASB and the FASB are working on a joint project that has an objective of developing a
conceptual framework that leads to standards that are:
What is the “expectations gap”?
A trial balance before adjustments included the following:
Debit Credit
Sales $850,000
Sales returns and allowance $28,000
Accounts receivable 86,000
Allowance for doubtful accounts 1,520
What is the relationship between the future value of one and the present value of one? According
to the FASB’s conceptual framework, the calculation of comprehensive income includes which
of the following?
Income from Distributions
Continuing Operations to Owners
Yes n no
What is the objective of financial reporting?
Adjusting entries are necessary to
1. obtain a proper matching of revenue and expense.
2. achieve an accurate statement of assets and equities.
3. adjust assets and liabilities to their fair market value.
A. 1 and 2
B. 2
C. 1
D. 3
Which of the following should be reported as a prior period adjustment?
Change in Estimated Lives Mistakes in the Application of
