Question : 51.The adequacy of a company’s disclosure based on: A.Laws established by : 1237616

 

 

51.The adequacy of a company’s disclosure is based on:   

A.Laws established by Congress.

 

B.IRS rules and FASB requirements.

 

C.A combination of official rules, tradition, and professional judgment.

 

D.The needs of stockholders and creditors.

 

 

 

 

52.The concept of adequate disclosure:   

A.Demands a “good faith effort” by management.

 

B.Grants users of the financial statements access to a company’s accounting records.

 

C.Does not apply to events occurring after the balance sheet date.

 

D.Specifies which accounting methods must be used in a company’s financial statements.

 

 

 

 

53.The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except:   

A.The accounting methods in use.

 

B.The due dates of major liabilities.

 

C.Destruction of a large portion of the company’s inventory on January 20, three weeks after the balance sheet date, but prior to issuance of the financial statements.

 

D.Income projections for the next five years based upon anticipated market share of a new product; the new product was introduced a few days before the balance sheet date.

 

 

 

 

54.Closing entries would be prepared before:   

A.Financial statements are prepared.

 

B.The after-closing trial balance.

 

C.An adjusted trial balance.

 

D.Adjusting entries.

 

 

 

 

55.The closing entry for an expense account would consist of a:   

A.Debit to Income Summary and a credit to the expense account.

 

B.Debit to the expense account and a credit to Income Summary.

 

C.Credit to Retained Earnings and a debit to the expense account.

 

D.Credit to Revenue and a debit to the expense account.

 

 

 

 

56.The Income Summary account has debits of $85,000 and credits of $75,000. The company had which of the following:   

A.Net income of $10,000.

 

B.Net income of $160,000.

 

C.Net loss of $10,000.

 

D.Net loss of $160,000.

 

 

 

 

57.During the closing process:   

A.All income statement accounts are credited to income summary.

 

B.All income statement accounts are debited to income summary.

 

C.All revenue accounts are credited and expense accounts are debited.

 

D.All revenue accounts are debited and expense accounts are credited.

 

 

 

 

58.A debit balance in the income summary account indicates:   

A.An error was made.

 

B.A Net Profit.

 

C.A Net Loss.

 

D.That revenues were greater than expenses.

 

 

 

 

59.If Income Summary has a net credit balance, it signifies:   

A.A net loss.

 

B.Net income.

 

C.A reduction of net worth.

 

D.Dividends have been declared.

 

 

 

 

60.The balance in Income Summary:   

A.Should equal retained earnings.

 

B.Will always be equal to the increase in retained earnings.

 

C.Will equal net income less dividends.

 

D.Will equal net income or net loss.