Question : 44.Which of the following allowed under generally accepted accounting principles? A. A : 1168972

 

 

44.Which of the following is allowed under generally accepted accounting principles?   

A. A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.

 

B. An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company’s balance sheet.

 

C. A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.

 

D. The Equipment account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.

 

 

 

 

45.Recording land at its cost rather than its appraisal value illustrates   

A. the full disclosure principle.

 

B. the cost basis principle.

 

C. the realization principle.

 

D. the matching principle.

 

 

 

 

46.An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is   

A. following the accrual principle.

 

B. following the conservatism constraint.

 

C. violating generally accepted accounting principles.

 

D. following the consistency principle.

 

 

 

 

47.Depreciating equipment over its useful life is an example of   

A. following the objectivity assumption.

 

B. applying the matching principle.

 

C. applying the realization principle.

 

D. applying the conservatism constraint.

 

 

 

 

48.The financial statements in the annual report of a corporation contain footnotes explaining the methods used to depreciate the firm’s equipment. This practice is an example of   

A. the consistency principle.

 

B. the conservatism constraint.

 

C. the full disclosure principle.

 

D. the accrual principle.

 

 

 

 

49.The Garrison Company offers terms of net 30 days for its credit sales. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is an example of the   

A. realization principle.

 

B. matching principle.

 

C. conservatism constraint.

 

D. consistency principle.

 

 

 

 

50.Select the statement below that correctly describes the revenuerecognitionprinciple.   

A. Assets will generally be recorded and carried at their historical cost.

 

B. Revenue is recognized when it is both earned and realized.

 

C. Income (revenue) must be matched against expired costs incurred in earning the revenue.

 

D. Revenue will be recorded when payment has been received.

 

 

 

 

51.Select the statement below that correctly describes the matchingprinciple.   

A. Expenses (debts) will be paid when matched to corresponding invoices.

 

B. Income (revenue) must be matched against expired costs incurred in earning the revenue.

 

C. Assets must be matched against liabilities on the financial statements.

 

D. The historical costs of assets are matched to expenses associated with their purchase.

 

 

 

 

52.A deviation from generally accepted accounting principles is   

A. permissible if the amount involved is material.

 

B. permissible if the amount involved is immaterial.

 

C. never allowed.

 

D. permissible only if its required in order to conform to the monetary unit assumption.

 

 

 

 

53.An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant did not choose to depreciate it. The modifying constraint that the accountant followed was   

A. materiality.

 

B. objectivity.

 

C. conservatism.

 

D. industry practice.