ACCT ANSWERS - ACCOUNTING with answers Depreciation is the...

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ACCOUNTING with answers 1. Depreciation is the process of: (A) valuing an asset at its fair market value. (B) increasing the value of an asset over its useful life in a rational and systematic manner. (C) allocating the cost of an asset to expense over its useful life in a rational and systematic manner. (D) writing down an asset to its real value each accounting period. 2. Under the accrual basis of accounting: (A) cash must be received before revenue is recognized. (B) net income is calculated by matching cash outflows against cash inflows. (C) events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. (D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. 3. The primary purpose of the statement of cash flows is to: (A) provide information about the investing and financing activities during a period. (B) prove that revenues exceed expenses if there is a net income. (C) provide information about the cash receipts and cash payments during a period. (D) facilitate banking relationships. 4. On 5/1/97 , Flintstone Corporation purchased a truck for $20,000. The vehicle is expected to have a useful life of 6 years and a residual value of $2,000. Assuming that Flintstone uses straight-line depreciation and rounds depreciation expense to the nearest month , depreciation expense for 1997 would be: Depreciate asset’s useful life 20,000- 2000=18,000 (A) $3,000 6 years=72 months (B) $2,222 (rounded). 18,000/72=$250 per month depreciation (C) $2,000 May 1-Dec 31=8 months (D) None of the above. 8x250=2,000 5. Which of the following is not true about the Balance Sheet? (A) It includes only permanent accounts. (B) It is a presentation of the company’s assets, liabilities, and equities at a specific moment in time. (C) Total Assets must equal Total Liabilities plus Total Equities. (D) All of the above are true. 6. The Income Statement: (A) Provides a calculation of the firm’s liabilities at a specific moment in time. (B) Presents the revenues and expenses of a firm for a specific time period . (C) Summarizes changes in a firm’s equity accounts for a specific time period. (D) None of the above. 1
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7. Cost of Goods Sold is defined as: $value of inventory you have (A) Beginning Inventory + Ending Inventory - Net Purchases. + $value of what you add (B) Beginning Inventory + Net Purchases - Ending Inventory. $value of all inventory (C) Beginning Inventory + Net Purchases + Ending Inventory. - $value of inventory carried (D) None of the above over to next month’s beginning balance Cost of goods sold (COGS) 8. Which of the following accounts will have a zero balance after closing entries have been journalized and posted? (A)
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ACCT ANSWERS - ACCOUNTING with answers Depreciation is the...

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