Question :
54.When a new company was formed, one partner contributed some : 1168973
54.When a new company was formed, one partner contributed some used equipment he owned. The equipment was appraised at $44,000 and $50,000 by two different dealers. The accountant entered the equipment at $44,000 in the financial records of the partnership. This is an example of
A. the materiality constraint.
B. the conservatism constraint.
C. the matching principle.
D. industry practice constraint.
55.The materialityconstraint refers to:
A. the significance of an item of financial data in relation to other financial data.
B. whether the increased cost of complying with an accounting principle is justified by the benefit that would result.
C. the idea that “when in doubt, take the conservative action.”
D. existing accounting practices that have evolved based on the amount of debt that would be incurred by the business.
56.The cost-benefittestconstraint refers to:
A. the idea that “when in doubt, take the most beneficial action.”
B. the benefit of complying with an accounting principle should outweigh the cost of compliance.
C. the recording of assets at their historical cost rather than their fair market value.
D. the requirement that all benefit transactions must conform to “industry practice”.
57.Under the accrual basis of accounting
A. Revenue is recorded in the period in which it is earned and expenses are recorded in the period in which incurred.
B. Expenses are recorded in the period in which they are incurred and revenue is recorded when payment is received.
C. Revenue and expenses are recorded when cash is received or paid.
D. When revenues and expenses are recorded is up to the owners and/or managers.
58.Paige Turner Publishing receives cash from its subscribers in advance for a one year subscription. Under the revenue recognition principle, Paige Turner Publishing should recognize the revenue from the subscriptions
A. at the time the cash is received.
B. after the one year subscription has expired.
C. in equal installments over the one year subscription period, as it is earned.
D. in two equal installments, six months apart.
59.The Boston Red Sox receives cash from its season ticket holders in advance for the entire season. Under the revenue recognition principle, the Boston Red Sox should recognize the revenue from the season ticket holders
A. at the time the cash is received.
B. after the season is completed.
C. as each game is played.
D. in two equal installments, six months apart.
60.Paige Turner Publishing paid cash in advance for a one year insurance policy. According to the matching principle, Paige Turner Publishing should recognize the policy as insurance expense
A. at the time the cash is paid.
B. after the one year policy has expired.
C. in equal installments over the one year policy period, as the expense is incurred.
D. in two equal installments, six months apart.
61.Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy. According to the matching principle, if 4 months of the policy has expired by the balance sheet date, how much should Hour Place Clock Repair report as Prepaid Insurance?
A. $0
B. $600
C. $1,200
D. $1,800
62.Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy. According to the matching principle, if 4 months of the policy has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Insurance Expense on the Income Statement?
A. $0
B. $600
C. $1,200
D. $1,800
63.Hour Place Clock Repair paid $2,400 cash in advance for a six month advertising contract with the local newspaper. According to the matching principle, if 2 months of the contract has expired by the end of the current fiscal year, how much should Hour Place Clock Repair report as Advertising Expense on the Income Statement?
A. $0
B. $400
C. $800
D. $2,400
64.Paige Turner Publishing’s employees worked the last 3 days of December 2016, that they will not be paid for until January 2017. According to the matching principle, Paige Turner Publishing should recognize the wages expense for the last 3 days of 2016
A. in 2016 when the employees worked.
B. in 2017 when they were paid.
C. half in 2016 and half in 2017.
D. in whichever year the management wants to.
65.Holly Day Company purchased a piece of land 10 years ago for $50,000. Holly Day Company is considering selling the land. The piece of land was recently appraised for $120,000, they received an offer from a prospective buyer for $105,000, and a similar piece of land 5 block away recently sold for $113,000. How much should Holly Day Company report on its balance sheet for the piece of land?
A. $120,000
B. $50,000
C. $113,000
D. $105,000
66.Which of the following statements is NOT true?
A. The American Institute of CPA’s has in the past had strong influence on the development of accounting principles.
B. The Sarbanes-Oxley Act places great emphasis on internal controls and fraud prevention.
C. The SEC has authority to accept or reject financial accounting principles and standards developed by the FASB.
D. Because of the Sarbanes-Oxley Act, it is probable that the FASB’s conceptual framework will become less important in developing accounting principles and standards.
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