Quiz_2_answers - BA 301 Quiz #2 Group 1 1. Which of the...

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Unformatted text preview: BA 301 Quiz #2 Group 1 1. Which of the following public accounting firms no longer exists? A. Ernst and Young B. KPMG C. Arthur Andersen D. PriceWaterHouse Coopers E. Deloitte & Touche Answer: C 2. What is the biggest public accounting firm? A. Ernst and Young B. KPMG C. Arthur Andersen D. PriceWaterHouse Coopers E. Deloitte & Touche Answer: E Group 2 3. Which of the following is an accurate description of the difference between current assets and long-term assets? A. Current assets are depreciated whereas long- term assets are not. B. Current assets are expected to be consumed/ sold within one year whereas long-term assets have a life of longer than one year. C. Both current assets and long-term assets are included on the balance sheet at market value D. Both long-term assets and current assets are capitalized and depreciated over their useful life. E. Current assets include property, plant, and equipment. Long-term assets include cash and inventory. Answer: B 4. Which of the following is an accurate description of the difference between current liabilities and long-term liabilities? A. Debt is always classified as a long-term liability, regardless of maturity. B. Current liabilities include accounts receivable and long-term liabilities include accounts payable. C. Both current and long-term liabilities must be paid within one year. D. Current liabilities are expected to be paid within one year whereas long-term liabilities have maturities of longer than one year. E. Whether or not a liability is classified as current or long-term depends on its intended use. Answer: D Group 3 5. Which of the following correctly describes the revenue recognition policy under US GAAP? A. Revenue is recognized when a company has manufactured the product. B. Revenue is recognized only when a good or service has been provided AND the company has received payment. C. GAAP does not provide any guidance on revenue recognition. D. Revenue is recognized when a company receives payment for a good or service. E. Revenue is recognized when a good or service has been provided. Answer: E 6. Which of the following correctly describes the expense recognition policy under US GAAP? A. Expenses are recognized when a company receives payment for a good or service. B. Expenses are only recognized when they are paid AND the good or service has been received. C. According to the matching concept, expenses incurred in providing a good or service are recognized in the same period that the sale is made. D. Expenses are recognized when they are paid. E. GAAP does not provide any guidance on expense recognition. Answer: C Group 4 7. Given the following data, identify the correct gross profit and operating profit. Assume no outside information other than that which is provided. Sales $500, Depreciation $50, Interest Expense $10, COGS $200, SG&A $100, Taxes $56 A. Gross Profit = $250, Operating Income = $140 B. Gross Profit = $300, Operating Income = $200 C. Gross Profit = $150, Operating Income = $140...
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This note was uploaded on 05/17/2008 for the course B A 301 taught by Professor Gray,garyjosephwoolridge,joseph during the Spring '07 term at Pennsylvania State University, University Park.

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Quiz_2_answers - BA 301 Quiz #2 Group 1 1. Which of the...

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