Question

Which of the following accounting concepts justifies the following practice: For financial reporting purposes, the economic life of the business is divided into months, quarters, or years?

Materiality

Periodicity

Full disclosure

Consistency

In which balance sheet section would trademarks be reported?

		Property, plant, and equipment
		Current assets
		Intangible assets

Entity F has current assets of $1,600,000 and current liabilities of $750,000. If the company issues $200,000 of new stock what will its new current ratio be? (rounded)

		2.13:1
		1.7:1
		1.9:1
		2.4:1

Which statement is correct?

		The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
		As long as management is ethical, there are no problems with using the cash basis of accounting.
		As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.
		Use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.

1. Entity D had the following information available:
   Inventory 3,000
   Accounts payable 4,700
   Accounts receivable 1,500
   Accumulated depreciation, equipment 4,000
   Cash 2,600
   Common stock 4,800
   Equipment 7,500
   Land 10,000
   Intangible assets 2,500
   Notes payable (due in 5 years) 6,000
   Retained earnings 16,000
   Stock investments (long-term) 8,400
   
   
   On the classified balance sheet, what is the amount for long-term liabilities?

   		$10,700
   		$6,000
   		$20,800
   		$4,700

2.4 points   

QUESTION 18

1. Entity D had the following information available:
   Inventory 3,000
   Accounts payable 4,700
   Accounts receivable 1,500
   Accumulated depreciation, equipment 4,000
   Cash 2,600
   Common stock 4,800
   Equipment 7,500
   Land 10,000
   Intangible assets 2,500
   Notes payable (due in 5 years) 6,000
   Retained earnings 16,000
   Stock investments (long-term) 8,400
   
   
   On the classified balance sheet, what is the amount for total stockholders' equity?

   		$10,700
   		$20,800
   		$16,000
   		$31,500

Entity C's total liabilities decreased by $75,000 and its stockholders’ equity increased by $15,000. Entity C's total assets must change by what amount and in what direction during that same period?

		$60,000 decrease
		$60,000 increase
		$90,000 increase
		$75,000 increase

Entity D had the following information available:
Inventory 3,000
Accounts payable 4,700
Accounts receivable 1,500
Accumulated depreciation, equipment 4,000
Cash 2,600
Common stock 4,800
Equipment 7,500
Land 10,000
Intangible assets 2,500
Notes payable (due in 5 years) 6,000
Retained earnings 16,000
Stock investments (long-term) 8,400
On the classified balance sheet, what is the amount for total current assets?

		$10,700
		$31,500
		$8,400
		$7,100

Entity K purchased $8,500 worth of office supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of supplies indicated only $1,500 on hand. The adjusting entry that should be made by the company on June 30 is:

		Dr. Supplies Expense 1,500 Cr. Supplies 1,500.
		Dr. Supplies 7,000 Cr. Supplies Expense 7,000.
		Dr. Supplies 1,500; Cr. Supplies Expense 1,500.
		Dr. Supplies Expense 7,000; Cr. Supplies 7,000.

Entity E purchased land for a warehouse several years ago for $1 million. Although a recent appraisal suggests a market value for the land of $2.5 million, the financial statements reflect a value of $1 million. This is an example of:

		Comparability
		Full disclosure
		Consistency
		Historical cost

On Entity A's statement of cash flows, Entity A's payment of cash dividends is a (an):

		Non-cash investing and financing activity.
		Operating activity.
		Investing activity.
		Financing activity.

Entity M signed a four-month note payable in the amount of $40,000 on November 1. The note requires interest at an annual rate of 6%. The amount of interest expense Entity M must recognize at December 31 is:

		$400.
		$2,400.
		$1,200.
		$200.

Entity H received a cellphone bill that it will pay next month. The entry to record this transaction will include:

		a debit to Utility Expense and a credit to Cash
		a debit to Prepaid Utilities and a credit Cash
		a debit to Utility Expense and a credit to Accounts Payable
		a debit to Prepaid Utilities and a credit to Accounts Payable

Answer 1