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When a company uses coupon or premium offers in conjunction with the sale of its
products, there is no need to record any contingent liability.
a. True
b. False
What five-member body created by the Sarbanes-Oxley Act was given authority to set
U.S. auditing standards?
a. FASB
b. SEC
c. IAS
d. PCAOB
Indicate whether each should be (a) included or (b) excluded from the line item titled
Cash and cash equivalents on the balance sheet.
a. Included
b. Excluded
Certificate of deposit maturing in 60 days
Three organizations important to accounting are listed below. Select the organization th
at most closely achieves the role described.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Is a professional organization of
certified public accountants.
Several items from the financial statements of Standard Tires are listed below. Use the f
ollowing answer choices to identify the type of accountf
or each item listed. Place your answers in the space provided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners' equity Selling expenses
Refer to the data for Benton Corporation. If the aging approach is used to estimate bad
debts, what should the balance in the Allowance for Doubtful Accounts be after the bad
debts adjustment?
a. $26,900
b. $14,900
c. $13,200
d. $11,500
Under the indirect method, the first line in the operating activities section of the
statement of cash flows is the net income or loss for the period.
a. True
b. False
a. A liability resulting from the signing of a promissory note.
b. A measure of how long it takes to collect receivables.
c. A written promise to repay a definite sum of money on demand or at a fixed or
determinable date in the future.
d. The length of time a note is outstanding, that is, the period of time between the date it
is issued and the date it matures.
e. The party that will receive the money from a promissory note at some future date.
f. The process of selling a promissory note.
g. The date the promissory note is due.
h. The amount of cash the maker is to pay the payee on the maturity date of the note.
i. The difference between the principal amount of the note and its maturity value.
j. An asset resulting from the acceptance of a promissory note from another company.
k. Securities issued by corporations and governmental bodies as a form of borrowing.
l. Securities issued by corporations as a form of ownership in the business.
m. The party that agrees to repay the money for a promissory note at some future date.
n. The amount of cash received, or the fair value of the products or services received,
by the maker when a promissory note is issued.
Debt securities
Which of the following below is an example of a capital expenditure?
a. cleaning the carpet in the front room
b. tune-up for a company truck
c. replacing an engine in a company car
d. replacing all burned-out light bulbs in the factory
The following items were reported on the balance sheets and income statement for the
Flying Mullet Company:
How would the change in accounts receivable be reported in the operating activities
section of the statement of cash flows under the indirect method?
a. As an addition to sales
b. As a deduction from sales
c. As an addition to net income
d. As a deduction from net income
The face rate is also called the nominal or stated rate.
a. True
b. False
Each of the following documents is used in the control of cash receipts except:
a. Cash register tapes
b. Check lists or prelists
c. Canceled checks from customers
d. Bank deposit slips
