Question : Multiple Choice Questions 31.Which of the following the primary objective of : 1259627

 

Multiple Choice Questions 

31.Which of the following is the primary objective of an income statement?   

A. Providing managers with detailed information about where the enterprise stands at a specific date.

 

B. Providing users outside the business organization with information about the company’s financial position and operating results.

 

C. Reporting to the Internal Revenue Service the company’s taxable income.

 

D. Indicating to investors in a particular company the current market values of their investments.

 

 

 

 

32.Which of the following describes the proper form of a balance sheet?   

A. The heading sets forth the period of time covered.

 

B. Cash is always the first asset listed, followed by permanent assets (such as land and buildings), and finally by assets such as receivables and supplies.

 

C. Liabilities are listed before owners’ equity.

 

D. A subtotal for total assets plus total liabilities is shown.

 

 

 

 

33.A balance sheet is designed to show:   

A. How much a business is worth.

 

B. The profitability of the business during the current year.

 

C. The assets, liabilities, and owners’ equity of a business as of a particular date.

 

D. The cost of replacing the assets and of paying off the liabilities at December 31.

 

 

 

 

34.Blue Wholesale Shirt Co. sold shirts to Pink Retail Shoppe. The owner of Pink Retail said she would pay Blue at a later date, which Blue Wholesale agreed to. Blue Wholesale Shirt Co. is considered to be a:   

A. borrower.

 

B. liability.

 

C. creditor.

 

D. debtor.

 

 

 

 

35.Which of the following best defines an asset?   

A. Something with physical form that is valued at cost in the accounting records.

 

B. An economic resource owned by a business and expected to benefit future operations.

 

C. An economic resource representing cash or the right to receive cash in the near future.

 

D. Something owned by a business that has a ready market value.

 

 

 

 

36.From an accounting viewpoint, when is a business considered as an entity separate from its owner(s)?   

A. Only when organized as a sole proprietorship.

 

B. Only when organized as a partnership.

 

C. Only when organized as a corporation.

 

D. A business is always considered as an accounting entity separate from the activities of the owner(s).

 

 

 

 

37.The accounting principle that assumes that a company will operate in the foreseeable future is:   

A. Going concern.

 

B. Objectivity.

 

C. Liquidity.

 

D. Disclosure.

 

 

 

 

38.The valuation of assets in the balance sheet is based primarily upon:   

A. What it would cost to replace the assets.

 

B. Cost, because cost is usually factual and verifiable.

 

C. Current fair market value as established by independent appraisers.

 

D. Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost.

 

 

 

 

39.Which of the following is not a generally accepted accounting principle relating to the valuation of assets?   

A. The cost principle – in general, assets are valued at cost, rather than at estimated market values.

 

B. The objectivity principle – accountants prefer to use objective, rather than subjective, information as the basis for accounting information.

 

C. The safety principle – assets are valued at no more than the value for which they are insured.

 

D. The going-concern assumption – one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them.

 

 

 

 

40.Each year, the accountant for Southern Real Estate Company adjusts the recorded value of each asset to its market value. Using these market value figures on the balance sheet violates:   

A. The accounting equation.

 

B. The stable-dollar assumption.

 

C. The business entity concept.

 

D. The cost principle.