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e None of the above
13 Which of the following is true regarding the SEC?
a It prepares the financial statements of all publicly-held companies.
b It audits the financial statements of all publicly-held companies.
c Its requirements apply to all publicly and privately-held companies.
d It was established in 1933.
e It is another name for the FASB.
14 Which of the following is an example of accrual accounting?
a When a sale is recorded on the company's books by increasing cash and increasing revenue.
b When a cash payment for the purchase of land is shown on the company's statement of cash flows.
c When a cash purchase of inventory is recorded as an exchange of one asset for another.
d When the company's statement of cash flows is increased by the receipt of cash.
e When a sale on account is recorded on the company's income statement.
15 The purpose of an end-of-the-period adjustment is to
a correctly state the balance sheet and the income statement.
b correctly state the statement of cash flows.
c balance the statement of cash flows with the income statement.
d correctly state the balance sheet and the statement of cash flows.
e comply with the requirements of cash-basis accounting.
16 Sterling, Inc. had $80,000 in sales during 2009. The company purchased $32,000 in inventory and sold three-fourths of the
inventory during the year. At December 31, 2009, Sterling still owed $2,000 for the inventory it had purchased during the
year, and was owed $5,000 on sales made during 2009. What is the company's gross profit for 2009?
e None of the above
Use the following information to answer questions 17 through 24 :
Shutter Company began business on December 1, 2009. During the month of December the company had the following transactions:
12/1 - Sold 100 shares of stock in Shutter Corporation to stockholders for $10,000.
12/1 - Borrowed $20,000, which is due back along with $1,200 in interest on December 1, 2010.
12/1 - Purchased insuranc...
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