2009-05-01_063811_Multiple_Choice-2

2009-05-01_063811_Multiple_Choice-2 - 1. An organization...

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1. An organization that has not published accounting standards is the (Points: 6) American Institute of Certified Public Accountants. Securities and Exchange Commission. Financial Accounting Standards Board. All of these have published accounting standards. 2. Members of the Financial Accounting Standards Board are (Points: 6) employed by the American Institute of Certified Public Accountants (AICPA). part-time employees. required to hold a CPA certificate. independent of any other organization. 3. 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 The chronological order in which these items are released is as follows: (Points: 6) 1, 2, 3. 1, 3, 2. 2, 3, 1. 3, 1, 2. 4. Which of the following best illustrates the accounting concept of conservatism? (Points: 6) Use of the allowance method to recognize bad debt losses from credit sales Use of the lower of cost or market approach in valuing inventories Use of the same accounting method from one period to the next in computing depreciation expense Utilization of a policy of deliberate understatement of asset values in order to present a conservative net income figure 5. Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between (Points: 6) verifiability and reliability. reliability and comparability. timeliness and verifiability. neutrality and consistency.
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6. A prepaid expense can best be described as an amount (Points: 6) paid and currently matched with revenues. paid and not currently matched with revenues. not paid and currently matched with revenues. not paid and not currently matched with revenues. 7. An unearned revenue can best be described as an amount (Points: 6) collected and currently matched with expenses. collected and not currently matched with expenses. not collected and currently matched with expenses. not collected and not currently matched with expenses. 8. In November and December 2007, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2008 issue. Lane included the entire $90,000 in its 2007 income tax return. What amount should Lane report in its 2007 income statement for subscriptions revenue? (Points: 6) $ -0- $5,000 $30,000 $90,000 $90,000 / 3 years x 2/12 = $5,000 9. On June 1, 2007, Nott Corp. loaned Horn $400,000 on a 12% note, payable in five annual installments of $80,000 beginning January 2, 2008. In connection with this loan, Horn was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Horn after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2007. Horn made timely payments through November 1, 2007. On January 2,
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2009-05-01_063811_Multiple_Choice-2 - 1. An organization...

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