Question : 68. Which of the following statements concerning materiality true? A. Generally accepted accounting : 1229708

68. Which of the following statements concerning materiality is true? 
A. Generally accepted accounting principles are violated if estimates are used in end-of-period adjustments.
B. Each year the Financial Accounting Standards Board (FASB) publishes the dollar amount considered “material” for each industry.
C. Immaterial items should be handled in the most expedient manner, even if resulting financial statements are not completely precise.
D. Accountants should not waste time and money in recording transactions involving small dollar amounts.

69. The concept of materiality: 
A. Treats as material only those items that are greater than 2% or 3% of net income.
B. Justifies ignoring the matching principle or the realization principle in certain circumstances.
C. Affects only items reported in the income statement.
D. Results in financial statements that are less useful to decision makers because many details have been omitted.

70. Which of the following would not be a proper application of the concept of materiality by Millridge Corporation? 
A. Transactions involving small dollar amounts are not recorded in Millridge’s accounting records.
B. Estimates of supplies on hand are used to determine the supplies expense for the period.
C. On a monthly basis, utility bills are expensed in the month paid, rather than in the month in which services are used.
D. Immaterial items are ignored in making end-of-period adjusting entries.

71. After preparing the financial statements for the current year, the accountant for Barbara’s Jewel Co closed the dividends account at year-end by debiting Retained Earnings and crediting the dividends account. What is the effect of this entry on current-year net income and the balance in the owners’ equity account(s) at year-end? 
A. Net income is overstated; balance in the retained earnings account is correct.
B. Net income is correct; balance in the capital stock account is correct.
C. Net income is understated; balance in the capital stock account is correct.
D. Net income is understated; balance in the retained earnings account is understated.

72. Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue? 
A. Realization principle.
B. Materiality.
C. Matching.
D. Depreciation.

73. Which of the following is not an example of an adjusting entry? 
A. The entry to record unpaid expenses.
B. The entry to record uncollected revenues.
C. The entry to convert liabilities to revenue.
D. The entry to pay outstanding bills.

74. Unearned revenue appears: 
A. As income on the income statement.
B. As an asset on the balance sheet.
C. As a liability on the balance sheet.
D. As a part of the retained earnings.

75. Prepaid expenses appear: 
A. As an expense on the income statement.
B. As an asset on the balance sheet.
C. As a liability on the balance sheet.
D. As a reduction to retained earnings.

76. Which of the following is considered an adjusting entry? 
A. The entry to record depreciation.
B. The entry to pay salaries.
C. The entry to pay outstanding bills.
D. The entry to declare a dividend distribution.

77. Which of the following is considered a contra-asset account? 
A. Prepaid expenses.
B. Unearned revenue.
C. Accumulated depreciation.
D. Accounts receivable.