Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Predictive value is an ingredient of the qualitative criteria of $$\begin{array} { | l | l | l | } 
\hline & \text { Relevance } & \text { Reliability } \
\hline 1 & \text { Yes } & \text { No } \
\hline 2 & \text { Yes } & \text { Yes } \
\hline 3 & \text { No } & \text { No } \
\hline 4 & \text { No } & \text { Yes } \
\hline
\end{array}$$

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 3

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?

Accepted Answer

A) Continuity assumption 
B) Separate entity assumption 
C) Cost principle 
D) Reliability quality 
E) Materiality constraint

Question 4

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

Accepted Answer

A) time period assumption. 
B) industry peculiarities constraint. 
C) relevance quality. 
D) full-disclosure principle. 
E) comparability characteristic.

Question 5

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?

Accepted Answer

A) $180,000 
B) $165,000 
C) $150,000 
D) $160,000

Question 6

A primary objective of financial reporting is to:

Accepted Answer

A) assist investors in predicting prospective cash flows. 
B) assist investors in analyzing the economy. 
C) assist suppliers in determining an appropriate discount to offer a particular company. 
D) enable banks to determine an appropriate interest rate for their commercial loans.

Question 7

Verifiability is an ingredient of the qualitative criteria of $$\begin{array} { | l | l | l | } 
\hline & \text { Relevance } & \text { Reliability } \
\hline 1 & \text { Yes } & \text { No } \
\hline 2 & \text { Yes } & \text { Yes } \
\hline 3 & \text { No } & \text { No } \
\hline 4 & \text { No } & \text { Yes } \
\hline
\end{array}$$

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 8

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

Accepted Answer

A) reliability. 
B) conservatism. 
C) materiality. 
D) an accounting error. 
E) None of these answers are correct.

Question 9

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:

Accepted Answer

A) $10,000 
B) $2,500 
C) $5,000 
D) $6,000

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.

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:

A primary objective of financial reporting is to:

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