Question 1

A firm purchased $40,000 of supplies in its first year of operations but used up only $30,000 of the supplies during the year. Therefore:

Accepted Answer

A)  Under the relevance characteristic, the firm should expense $40,000 
B)  Because the firm is a going concern, the firm should record $40,000 of supplies in the balance sheet at the end of the year 
C)  Under the materiality constraint, it makes no difference what the firm does with respect to accounting for supplies 
D)  Under the matching concept, the firm should report $30,000 of expense 
A)  Under the relevance characteristic, the firm should expense $40,000 
B)  Because the firm is a going concern, the firm should record $40,000 of supplies in the balance sheet at the end of the year 
C)  Under the materiality constraint, it makes no difference what the firm does with respect to accounting for supplies 
D)  Under the matching concept, the firm should report $30,000 of expense

Question 2

The separate entity assumption:

Accepted Answer

A)  requires periodic income measurement. 
B)  is applicable to both incorporated and unincorporated businesses. 
C)  is not applicable to an unincorporated business. 
D)  recognizes the legal nature of a business organization. 
A)  requires periodic income measurement. 
B)  is applicable to both incorporated and unincorporated businesses. 
C)  is not applicable to an unincorporated business. 
D)  recognizes the legal nature of a business organization.

A firm purchased $40,000 of supplies in its first year of operations but used up only $30,000 of the supplies during the year. Therefore:

The separate entity assumption:

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 2: Accounting Judgements

A firm purchased $40,000 of supplies in its first year of operations but used up only $30,000 of the supplies during the year. Therefore:

The separate entity assumption:

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters