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Exam 1: Introducing Financial Statements

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Question 71

Multiple Choice

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Revenue is properly recognized:

A) When the customer makes an order.
B) Only if the transaction creates an account receivable.
C) At the end of the accounting period.
D) Upon completion of the sale or when services have been performed.
E) When cash from a sale is received.

F) B) and D)
G) D) and E)

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Question 72

Multiple Choice

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The accounting concept that requires financial statement information to be supported by independent,unbiased evidence is:

A) Business entity assumption.
B) Revenue recognition principle.
C) Going-concern assumption.
D) Time-period assumption.
E) Objectivity principle

F) A) and C)
G) All of the above

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Question 73

Multiple Choice

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The full disclosure principle:

A partnership:

________ is net income divided by average total assets.

An exchange of value between two entities that yields a change in the accounting equation is called:

Marsha Bogswell is the sole stockholder of Bogswell Legal Services.Which accounting principle requires Marsha to keep her personal financial information separate from the financial information of Bogswell Legal Services?

The balance sheet is based on the accounting equation.

Return on assets (ROA)is useful in evaluating management,analyzing and forecasting profits,and planning activities.

In accounting,the rule that requires that assets,services,and liabilities be recorded initially at the cash or cash-equivalent value of what was given up or of the item received is called the ________.

Generally,the lower the risk,the higher the return that can be expected.

Risk is the uncertainty about the return we will earn.

A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.

Cornelia's Closet has the following account balances for the dates given: October 1 October 31 Cash $40,000 60,000 Accounts Receivable 40,000 38,000 Accounts payable 6,000 ? Also,its net income,for October 1 through October 31 was $20,000 and there were no dividends or stock issuances.Determine the equity at both October 1 and October 31.

Jet Styling has the following beginning cash balance and cash transactions for the month of January.Using this information prepare a statement of cash flows.

Creditors' claims on the assets of a company are called:

Determine the net income of a company for which the following information is available for the month of July.

The accounting equation is ________.

U.S.Government Treasury bonds provide low return and low risk to investors.

Resources a company owns or controls that are expected to yield future benefits are: