IntermAcctIFall2007Test1

IntermAcctIFall2007Test1 - Intermediate Accounting I Fall...

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Unformatted text preview: Intermediate Accounting I Fall 2007 Test #1 Name; é gV/ Date: A 1. An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. A) True B) False A 2. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards. A) True B) False Z 3. Decision Usefulness is the underlying theme of the conceptual framework. A) True B) False . Users of financial statements are assumed to have no knowledge of business and financial accounting matters by financial statement preparers. A) True B) False A 5. The idea of consistency does not mean that companies cannot switch from one accounting method to another. A) True B) False . The historical cost principle would be of limited usefulness if not for the going concern assumption. A) True B) False -. 8 7. Consernaiism in accounting means the accountant should attempt to understate assets and inc e when possible. A) True I B) False \ Page 1 __.._______._______.____________._____..—___—___—.__ W643. _____._.__11. z 14. 10. 12. 13. Accounting standards are now less likely to require the recording or disclosure of fair value information due to its inherent subjectivity. A) True B) False . Accounting standards are a product of careful logic or empirical findings and are not influenced by political action. A) True B) False The first step in the accounting cycle is the journalizing of transactions and selected other events. A) True B) False Which of the following statements is not an objective of financial reporting? A) Provide information that is useful in investment and credit decisions. B) Provide information about enterprise resources, claims to those resources, and changes to them. C) Provide information on the liquidation value of an enterprise. D) Provide information that is useful in assessing cash flow prospects. A common set of accounting standards and procedures are called A) financial accounting standards. B) generally accepted accounting principles. C) objectives of financial reporting. D) statements of financial accounting concepts. The Financial Accounting Standards Board A) has issued a series of pronouncements entitled Statements on Auditing Standards. B) was the forerunner of the current Accounting Principles Board. C) is the arm of the Securities and Exchange Commission responsible for setting financial accounting standards. D) is appointed by the Financial Accounting Foundation. The Financial Accounting Standards Board employs a "due process" system which A) is an efficient system for collecting dues from members. B) enables interested parties to express their views on issues under cons‘ideration. C) identifies the accounting issues that are the most important. D) requires that all accountants must receive a copy of financial standards. \ Page 2 ______..——_____.__w.._. “Mr ..__. .____ ___, __________—__——____—._.—.._— 15. 16. 17. 18. 19. The Governmental Accounting Standards Board A) Oversees the activities of the SEC. B) is a private-sector body, which addresses state and local governmental reporting issues. C) is a division of the Securities and Exchange Commission, which oversees the corpo- rate accounting in annual reports. D) was terminated when the Financial Accounting Standards Board was created. The purpose of Statements of Financial Accounting Concepts is to A) establish GAAP. B) modify or extend the existing FASB Standards Statement. C) form a conceptual framework for solving existing and emerging problems. D) determine the need for FASB involvement in an emerging issue. Members of the Financial Accounting Standards Board are A) employed by the American Institute of Certified Public Accountants (AICPA). B) part-time employees. C) required to hold a CPA certificate. D) independent of any other organization. The following published documents are part of the "due process" system used by the FASB in the evolution of a typical FASB Statement of Financial Accounting Standards: 1. Exposure Draft 2. Statement of Financial Accounting Standards 3. Discussion Memorandum A) l, 2, 3. B) 1, 3, 2. C) 2, 3, l. D) 3, 1, 2. The purpose of the International Accounting Standards Board is to A) issue enforceable standards which regulate the financial accounting and reporting of multinational corporations. B) develop a uniform currency in which the financial transactions of companies through-out the world would be measured. C) promote uniform accounting standards among countries of the world. D) arbitrate accounting disputes between auditors and international companies. l Page 3 D 20. The assumption that a business enterprise will not be sold or liquidated in the near future is known as the A) economic entity assumption. B) monetary unit assumption. C) conservatism assumption. D) none of these. . Revenue generally should be recognized A) at the end of production. B) at the time of cash collection. C) when realized. D) when realized or realizable and earned. . Which of the following is not a time when revenue may be recognized? A) At time of sale B) At receipt of cash C) During production D) All of these are possible times of revenue recognition. . According to the FASB's conceptual framework, predictive value is an ingredient of Relevance Reliability Yes No Yes Yes No Yes No No QQEZQPVP U0w> Page 4 24. Accounting concepts—identification. State the accounting assumption, principle, information characteristic, or constraint that is most applicable in the following cases. __———- [a «fa/54 : 7? 1.All payments less than $25 are expensed as incurred. (Do not use conservatism.) (I, M 5'3 71?“: 2.The company employs the same inventory valuation method from period to period. ntI/h - , ' 5’ . . . . - wgk patent is capitalized and amortized over the periods benefited. W 4.Assuming that dollars today will buy as much as ten years ago. anil/I- a! film; 1/ l2"52'Rent paid in advance is recorded as prepaid rent. 45””7’47‘3 6.Financ:ial statements are prepared each year. /2LL______/ all 5“ /f’ “’57. .All significant post-balance sheet events are reported. éj_§7_______ 7/ j 8.Personal transactions of the proprietor are distinguished from business transactions. 25. Present, in journal form, the adjustments that would be made on July 31, 2007, the end of the fiscal year, for each of the following. 1. The supplies inventory on August 1, 2006 was $7,350. Supplies costing $20,150 were acquired during the year and charged to the supplies inventory. A count on July 31, 2007 indicated supplies on hand of $8,810. 2. On April 30, a ten—month, 9% note for $20,000 was received from a customer. 3. On March 1, $12,000 was collected as rent for one year and Rent Revenue was credited. /f,é?o —— f [Al/A); %nfl»’4” / ’4?” v w = me: Q Inféva/ firewall/e (7m ‘ Infynf rMflvhue, y}? )0,0oo x,o? x 3/2, 7 95-” l 00" 3. Kat/Mae \ 7' 7L0“ Z/xlean’w/ 16%.} K‘W‘rm ~e / Page 5 26. The adjusted trial balance of Ryan Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare (using appropriate titles and format) for the month ending December 31: 1. an income statement. 2. a statement of retained earnings. 3. a balance sheet. RYAN FINANCIAL PLANNERS Adjusted Trial Balance December 31, 2007 _____________________.____—_—-————————— Debit Credit Cash ................................................................................................. .. '5 4,400 Accounts Receivable ........................................................................ .. 2,200 Office Supplies ................................................................................. .. 1,800 Office Equipment ............................................................................. .. 15,000 Accumulated Depreciation—Office Equipment .............................. .. $ 4.000 Accounts Payable ............................................................................. .. 3,800 Unearned Revenue ........................................................................... .. 5,000 Common Stock ................................................................................. .. 10,000 Retained Earnings ............................................................................ .. 4,400 Dividends ........................................................................................ .. 2,500 \ Service Revenue ............................................................................... .. 3,700 Office: Supplies Expense .................................................................. .. 600 Depreciation Expense ...................................................................... .. 2,500 Rent Expense .................................................................................... .. 1,900 $30,900 $30,900 \ / Page 6 26. 1. RYAN FINANCIAL PLANNERS Income Statement For the Month Ended December 31, 2007 Revenues Service revenue .......................................................................... .. $ 3.700 Expenses Depreciation expense ................................................................. .. $2,500 Rent expense .............................................................................. .. 1,900 Office supplies expense ............................................................. .. 600 Total expenses ......................................................................... .. 5,000 Net loss ............................................................................................. .. 1 300 2. RYAN FINANCIAL PLANNERS Statement of Retained Earnings For the Month Ended December 31, 2007 Retained earnings, December 1 ....................................................... .. $ 4.400 Less: Net loss ................................................................................... .. $1,300 Dividends ............................................................................... .. 2,500 3,800 Retained earnings, December 31 ..................................................... .. $600 i \ / Page 8 3. . RYAN FINANCIAL PLANNERS $ 8,800 Balance Sheet December 31, 2007 _ Assets Cash .................................................................................................. .. Accounts receivable ......................................................................... .. Office supplies ................................................................................. ,. Office equipment .............................................................................. .. $15,000 Less: Accumulated depreciation—office equipment ....................... .. 4,000 Total assets ................................................................................ .. Liabilities and Stockholders' Equity Liabilities Accounts payable ....................................................................... .. '5 3.800 Unearned revenue ...................................................................... .. 5,000 Total liabilities ............................................................... .. Stockholders' Equity Common stock ........................................................................... .. 10,000 Retained earnings ....................................................................... .. 600 Total liabilities and stockholders' equity ....................... .. Page 9 ...
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This note was uploaded on 10/28/2009 for the course ACCOUNTING 796 taught by Professor Dnaldkieso during the Spring '09 term at SUNY Suffolk.

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IntermAcctIFall2007Test1 - Intermediate Accounting I Fall...

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