Question : Learning Objective 11-2 1) Microsoft sells its corporate customers large computer : 1253081

Learning Objective 11-2

1) Microsoft sells its corporate customers large computer systems that include a three-year service contract. Microsoft promises that for three years it will update the systems whenever the customers need modifications and that it will also provide extensive customer support. Microsoft has chosen to recognize all revenue for these systems over the three-year life of the service contracts rather than when the systems are installed. Microsoft’s accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

2) Rent-a-Wreck leases cars and offers low prices to its customers because it requires the customers to pay a full year’s rent at the time of signing the lease. Rent a Wreck records the revenue at the time the customer signs the lease. Rent-a-Wreck’s accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

3) X Company began selling appliances this year. The company president has decided not to record any warranty expense or estimated warranty liability because the company’s products are so good that he does not expect to have to make any warranty repairs. This accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

4) Three Thugs, Inc. opened a new auto repair shop this year. The owners have decided not to recognize any bad debts expense or allowance for uncollectible accounts because they think that their company name will be enough to enforce collection. This accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

5) W Company just bought ten new cars for its salespeople to use. The company expects to use these cars for two or three years and then replace them. If W Company calculates straight-line depreciation using an estimated useful life of two years, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

6) W Company just bought ten new cars for its salespeople to use. The company expects to use these cars for two or three years and then replace them. If W Company calculates straight-line depreciation using an estimated useful life of three years, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

7) Tastee Bakery just bought a new delivery truck, which the bakery plans to use for four or five years before replacing it. If the company calculates straight-line depreciation using an estimated useful life of four years, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

8) Tastee Bakery just bought a new delivery truck, which the bakery plans to use for four or five years before replacing it. If the company calculates straight-line depreciation using an estimated useful life of five years, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

9) Tastee Bakery donated its used delivery truck to the local Health Right Clinic, which provides free healthcare for people with no medical insurance. The bakery will record the donation as an operating expense. Since Tastee Bakery uses double-declining-balance depreciation, the book value of the truck is only $1,500, but the “blue book” market value of the truck is $2,500. If Tastee Bakery records a charity expense of $1,500, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive

10) Tastee Bakery donated its used delivery truck to the local Health Right Clinic, which provides free healthcare for people with no medical insurance. The bakery will record the donation as an operating expense. Since Tastee Bakery uses double-declining-balance depreciation, the book value of the truck is only $1,500, but the “blue book” market value of the truck is $2,500. If Tastee Bakery records a charity expense of $2,500, this accounting choice would be considered ________.

A) conservative

B) fundamental

C) basic

D) aggressive