Question : 81. If the firm measures an asset at acquisition cost the : 1245873

81. If the firm measures an asset at acquisition cost on the balance sheet, it measures expenses based on the _____ of the asset consumed. 
A. fair market value
B. acquisition cost
C. current value
D. liquidation value
E. replacement value

82. Which of the following is/are true? 
A. Interpreting the income statement involves studying the relations among revenues, expenses, and net income both over time and across firms.
B. Comparisons are likely more valid for the same firm over time than across firms because of the difficulty in identifying truly similar firms.
C. In evaluating over-time performance of a given firm, the user must understand both current economic conditions and how those conditions may have changed over the period of analysis.
D. In evaluating across-firm performance, the user should control for the underlying business model by selecting peer firms that are similar, economically, to the firm being analyzed.
E. all of the above are true

83. Under the accrual method, the timing of revenue recognition is influenced by 
A. where the purchaser gets funds to pay the seller.
B. whether the buyer pays with cash or a promise.
C. when the services or product are provided.
D. when the seller has received a form of payment in settlement of a purchaser’s promise.
E. the nature of the services or product provided.

84. Which of the following are not an example of adjusting entries? 
A. recognition of depreciation on equipment purchased during the year
B. recording the expiration of a portion of the cost of prepaid insurance that was purchased during the previous year
C. recognition of income tax expense on the net income before income taxes earned during the period
D. recording of collections received from customers during the period
E. all of the above

85. Llama Company signed a new $36,000 three-year lease beginning October 1, Year 1, for a storage facility for holding merchandise inventory. On October 1, Year 1, Llama Company recorded the first year’s payment of $12,000 in the Prepaid Rent account. There was no balance in the Prepaid Rent account prior to this entry. Llama Company records adjustments only at the calendar year end. At December 31, Year 1, the adjusting entry needed to accurately reflect the correct balances in the Prepaid Rent and Rent Expense accounts would be to debit: 
A. Prepaid Rent for $12,000 and credit Rent Expense for $12,000
B. Rent Expense for $12,000 and credit Prepaid Rent for $12,000
C. Prepaid Rent for $3,000 and credit Rent Expense for $3,000
D. Rent Expense for $3,000 and credit Prepaid Rent for $3,000
E. Prepaid Rent for $9,000 and credit Rent Expense for $9,000

86. Roseland Company uses the periodic method of accounting for inventory. Unfortunately, the sales manager of Roseland Company failed to record a valid sale on account of merchandise that had been shipped to a customer prior to the end of the current year.  However, he did exclude the merchandise from inventory at the end of the current year. As a result of this error, Roseland Company’s 
A. total assets are overstated for the current year.
B. total expenses are understated for the current year.
C. net income is overstated for the current year.
D. total assets are understated at the end of the current year.
E. none of the above

87. Columbia Manufacturing Corp. purchased a new lathe machine for its baseball bat manufacturing plant on January 1. The machine cost $12,000 and is expected to be used in production for 4 years at which time its estimated salvage value will be $2,000. The yearly straight-line depreciation for this asset would be 
A. $2,500
B. $3,000
C. $4,000
D. $12,000
E. $9,500

88. On April 1, Year 1, Seaside Bookstore bought an insurance policy costing $48,000 that would insure the retail building for two years against fire loss. What asset account and what amount are recorded on the balance sheet at December 31, Year 1? 
A. Prepaid Insurance, $30,000
B. Insurance Expense, $30,000
C. Prepaid Insurance, $18,000
D. Insurance Expense, $18,000
E. Insurance Expense, $9,000

89. On November 1, Year 1, Dorian Collections Agency accepted a $100,000, 3-month note from a customer. The note earns 9% interest per year. What is the amount of interest receivable recorded by Dorian Collections Agency at December 31, Year 1? (Assume no other entries to record interest have been made.) 
A. $9,000
B. $1,500
C. $750
D. $0, because interest is not due until February 1 of Year 2
E. $900

90. If a firm detects an error at the end of the year, where property taxes on the headquarters buildings was recorded as a debit to Cost of Goods Sold instead of Selling and Administrative Expenses, which of the following entries would they make? 
A. correcting
B. reversing
C. closing
D. memorandum
E. t-account