Chapter 6 Multiple choice T F test questions

Chapter 6 Multiple choice T F test questions - Chapter 06 -...

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Chapter 06 - Analyzing Operating Activities Chapter 06 Analyzing Operating Activities Multiple Choice Questions 1. As a general rule, revenue is normally recognized when it is: A. measurable and earned. B. measurable and received. C. realizable and earned. D. realizable. 2. Which of the following measures of accounting income is typically reported in an income statement? A. Net income B. Comprehensive income C. Continuing income D. All of the above 3. According to FASB, initial franchise fees should be recognized as income when: A. the franchiser has substantially performed or satisfied all material services and conditions. B. the franchiser has collected the majority of fee in cash. C. the franchisee shows the ability to pay the fee. D. the franchiser bills the franchisee. 4. Which of the following statements concerning deferred taxes is correct? A. Deferred taxes will not be found in asset section of the balance sheet. B. Deferred taxes arise from permanent differences in GAAP and tax accounting. C. Deferred taxes will only decrease when a cash payment is made. D. Deferred taxes arising from the depreciation of a specific asset will ultimately reduce to zero as the item is depreciated. 5. Differences in taxable income and pretax accounting income that will not be offset by corresponding differences or "turn around" in future periods are called: A. timing differences. B. circular differences. C. permanent differences. D. reverse differences. 6-1
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Chapter 06 - Analyzing Operating Activities 6. If a company that normally expenses advertising costs was to capitalize and amortize these costs over 3 years instead: A. after the third year net income would always be higher if it is capitalized. B. after the third year net income would always be lower if it is capitalized. C. after the third year net income would be higher (if it is capitalized) only if advertising costs were increasing. D. after the third year net income would be lower (if it is capitalized) only if advertising costs were increasing. 7. Compared with companies that expense costs, firms that capitalize costs can be expected to
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Chapter 6 Multiple choice T F test questions - Chapter 06 -...

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