Accounting 3

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DSWare
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218862
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Accounting 3
Updated:
2013-05-09 22:04:21
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Accounting
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Accounting Principles
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  1. The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?



    Cost
                
    Economic Entity
                
    Monetary Unit
    Economic Entity
  2. Which principle/guideline requires a company's
    balance sheet to report its land at the amount the company paid to
    acquire the land, even if the land could be sold today at a
    significantly higher amount?


    Cost
                
    Economic Entity
                
    Monetary Unit
    Cost
  3. Which principle/guideline allows a company to ignore the change in the purchasing power of the dollar over time?


    Cost
                
    Economic Entity
                
    Monetary Unit
    Monetary Unit
  4. Which
    principle/guideline requires the company's financial statements to have
    footnotes containing information that is important to users of the
    financial statements?


    Conservatism
                
    Economic Entity
                

    Full Disclosure
    Full Disclosure
  5. Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial?


    Conservatism

                
    Full Disclosure
                
    Materiality
    Materiality
  6. Which
    principle/guideline is associated with the assumption that the company
    will continue on long enough to carry out its objectives and
    commitments?



    Economic Entity
                
    Going Concern
                
    Time Period
    Going Concern
  7. A very large
    corporation's financial statements have the dollar amounts rounded to
    the nearest $1,000. Which accounting principle/guideline justifies not
    reporting the amounts to the penny?


    Full Disclosure
                
    Materiality
                
    Monetary Unit
    Materiality
  8. Accountants might
    recognize losses but not gains in certain situations. For example, the
    company might write-down the cost of inventory, but will not write-up
    the cost of inventory. Which principle/guideline is associated with
    this action?


    Conservatism
                
    Materiality
                
    Monetary Unit
    Materiality (Materiality involves insignificant amounts ie. pennies or depreciating a 15.00 stapler over 3 years)
  9. Which
    principle/guideline directs a company to show all the expenses related
    to its revenues of a specified period even if the expenses were not paid
    in that period?


    Cost
                
    Matching

                
    Monetary Unit
    matching
  10. When the accountant
    has to choose between two acceptable alternatives, the accountant should
    select the alternative that will report less profit, less asset amount,
    or a greater liability amount. This is based upon which
    principle/guideline?


    Conservatism

                
    Cost
                
    Materiality
    Conservativism (This is used to break a tie, Accountants should be objective and use conservativism to break a tie)
  11. Public utilities'
    balance sheets list the plant assets before the current assets. This is
    acceptable under which accounting principle/guideline?


    Conservatism
                
    Cost
                

    Industry Practices
    Industry Practices (have unique reporting practices that are followed on financial statements as well as reported to the government)
  12. A large company
    purchases a $250 digital camera and expenses it immediately instead of
    recording it as an asset and depreciating it over its useful life. This
    practice may be acceptable because of which principle/guideline?


    Cost
                

    Matching
                
    Materiality
    Materiality (because it is a large company 250.00 is considered to be an insignificant amount)
  13. A corporation pays its
    annual property tax bill of approximately $12,000 in one payment each
    December 28. During the year, the corporation's monthly income
    statements report Property Tax Expense of $1,000. This is an example of
    which accounting principle/guideline?



    Conservatism
                
    Matching
                
    Monetary Unit
    Matching (requires company to match 1/12 of the annual property tax to each month when revenues are earned as a result of the property)
  14. A company sold
    merchandise of $8,000 to a customer in December. The company's sales
    terms require the customer to pay the company in 30 days. The company's
    income statement reported the sale in December. This is proper under
    which accounting principle/guideline?


    Full Disclosure
                
    Monetary Unit
                
    Revenue Recognition
    Revenue Recognition (requires that revenue is reported when it is earned.  When goods are sold or services provided not when payment is received)
  15. Accrual accounting is based on this principle/guideline.


    Cost
                
    Full Disclosure
                
    Matching
    Matching (expenses matched to the related revenues or to the accounting period in which the expenses occured.  When the expense was payed for is not relevent)
  16. The creative chief
    executive of a corporation who is personally responsible for numerous
    inventions and innovations is not reported as an asset on the
    corporation's balance sheet. The accounting principle/guideline that
    prevents the corporation for reporting this person as an asset is


    Conservatism
                
    Cost
                
    Going Concern
    Cost - Assets and other transactions be recorded at cost.
  17. An asset with a cost
    of $120,000 is depreciated over its useful life of 10 years rather than
    expensing the entire amount when it is purchased. This complies with
    which principle/guideline?


    Cost
                
    Full Disclosure
                
    Matching
    Matching
  18. Near the end of the
    current year, a company required a customer to pay $200,000 as a deposit
    for work that is to begin in the following year. At the end of the
    current year the company reported the $200,000 as a liability on its
    balance sheet. Which accounting principle/guideline prevented the
    company from reporting the $200,000 on its income statement for the
    current year?



    Going Concern
                
    Materiality
                
    Revenue Recognition
    Revenue Recognition (revenue recorded when its earned not when cash received)
  19. A retailer wishes to
    report its merchandise inventory on its balance sheet at its retail
    value. This would violate which accounting principle/guideline?


    Cost
                
    Full Disclosure
                
    Monetary Unit
    Cost
  20. A company borrowed
    $100,000 in December and will make its only payment for interest when
    the note comes due six months later. The total interest for the six
    months will be $3,600. On the December income statement the accountant
    reported Interest Expense of $600. This action was the result of which
    accounting principle/guideline?


    Cost
                
    Matching
                
    Revenue Recognition
    Matching (the company is incurring interest every minute it has the loan, for one month the company has interest expense of 600 and it needs to be recorded on Dec. Income statement

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