Exam 2: Accounting Judgements

In order to recognize sales revenue,collection of cash from the buyer is not necessary; however,collection must be reasonably assured.

Predictive value is an ingredient of the qualitative criteria of Relevance Reliability 1 Yes No 2 Yes Yes 3 No No 4 No Yes

Which of the following accounting concepts states that before a transaction is recorded,sufficient evidence must exist to allow two or more knowledgeable individuals to reach essentially the same conclusion about the transaction?

The inclusion of notes and supporting schedules in the financial statements reflect application of the:

C Corporation exchanged 20,000 shares of its nonconvertible preferred shares for land owned by B Corporation.A competing buyer previously had offered $150,000 cash for the land.Because of tax consequences,the cash offer was not accepted and the lot was exchanged for the shares.C Corporation previously had sold only 100 shares of its preferred shares at $9 per share several months ago.Based on the cost principle,at what amount should the land be reported on C's financial statements?

A primary objective of financial reporting is to:

Verifiability is an ingredient of the qualitative criteria of Relevance Reliability 1 Yes No 2 Yes Yes 3 No No 4 No Yes

A large international corporation immediately expenses the $50 cost of a small item of office equipment.This is an example of:

The list price of a new van was $30,000 at a local car dealership.However,a customer convinced the dealer to sell the van for $25,000 (the van had cost the dealer $20,000 one year earlier).The van would cost the dealer $24,000 today.Inflation is 5% per year.The amount of profit that would be recognized by the dealer as a result of the sale using the nominal dollar approach is: