c Under the double entry approach each transaction must be recorded with one

C under the double entry approach each transaction

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c. Under the double-entry approach, each transaction must be recorded with one debit and one credit of equal dollar amounts. d. Special-purpose financial information for a specific decision, such as whether or not to purchase a new machine, is best obtained from the detailed accounting records rather than from the financial statements. Which of the following statements is true?
a. All assets are carried indefinitely at their original costs in the financial statements. b. Liabilities are measured in the cash to be paid or the value of services to be performed to satisfy the liabilities. c. Accounting principles are derived by merely summarizing accounting practices used to date. d. Accountants can easily measure all changes in assets and liabilities since they never involve estimates or calculations. Which of the following statements is false? a. The exchange-price principle is also called the cost principle. b. The matching principle is closely related to the revenue recognition principle. c. The installment sales method recognizes revenue sooner than it would normally be recognized. d. The percentage-of-completion method recognizes revenue sooner than the completed- contract method. Alternate problem B Nevada Real Estate Sales Company sells lots in its development in Dry Creek Canyon under terms calling for small cash down payments with monthly installment payments spread over a few years. Following are data on the company's operations for its first three years: 2008 2009 2010 Gross margin rate ...................... ..... 45% 48% 50% Cash collected in 2010 from sales of lots made in ................ ..... $640,000 $800,000 $900,000 The total selling price of the lots sold in 2010 was USD 3,000,000, while general and administrative expenses (which are not included in the costs used to determine gross margin) were USD 800,000. a. Compute net income for 2010 assuming revenue is recognized on the sale of a lot. b. Compute net income for 2010 assuming use of the installment basis of accounting for sales and gross margin. Alternate problem C The following contract prices and costs relate to all of Orlando Construction Company's long-term construction projects (in millions of dollars): Costs Incurred Cost to Be Contract Prior to In Incurred in Price 2010 2010 Future Years On projects completed in 2010 $46 $4 $36 $0 On incomplete projects 144 24 48 48 General and administrative expenses for 2010 amounted to USD 1,200,000. Assume that the general and administrative expenses are not to be treated as a part of the construction cost. a. Compute net income for 2010 using the completed-contract method. b. Compute net income for 2010 using the percentage-of-completion method. Alternate problem D In each of these circumstances, the accounting practices may be questioned. Indicate whether you agree or disagree with the accounting practice employed and state the assumptions, concepts, or principles that justify your position.

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