Please answer the following questions. After you select your answer, you will be informed whether it is correct, followed by the Chinese translation of the question and options, and the answer analysis.
1. The Code of Ethics of the AICPA calls for a commitment to ethical behavior but not at the sacrifice of personal advantage. True False
2. The Code of Ethics of the AICPA calls for a member in public practice to be independent in fact and appearance when providing auditing services. True False
3. Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients. True False
4. Career opportunities in accounting exist in public accounting, management accounting, governmental accounting and accounting education. True False
5. The objectives of an accounting system include all of the following, except Interpret and record the effects of business transactions. Classify the effects of transactions to facilitate the preparation of reports. Summarize and communicate information to decision makers. Dictate the specific types of business transactions that the enterprise may engage in.
6. Suppose a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $8,000 to help get the company started, and have promised to repay your $8,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment $8,000 $800 $8,800 $7,200
7. Which of the following is generally not considered one of the general purpose financial statements issued by a corporation Income statement forecast for the coming year. Balance sheet. Statement of financial position. Statement of cash flows.
8. Which of the following is considered a return 'on' investment Dividends. Repayment of a loan. Purchase of an asset. Securing a loan.
9. When a business borrows money from a bank, the immediate effect is an increase in total assets and a decrease in liabilities or owners’ equity. True False
10. The purchase of an asset, such as office equipment, for cash will cause owners’ equity to decrease. True False
11. Total assets must always equal total liabilities plus total owners’ equity. True False
12. If a company purchases equipment with cash, its total assets will increase. True False
13. 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 The accounting equation. The stable-dollar assumption. The business entity concept. The cost principle.
14. The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant’s balance sheet. The reporting of this item in this manner violated the Cost principle. Business entity concept. Objectivity principle. Going-concern assumption.
15. Eton Corporation purchased land in 1998 for $190,000. In 2014, it purchased a nearly identical parcel of land for $430,000. In its 2014 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the Cost principle. Principle of the business entity. Objectivity principle. Going-concern assumption.
16. Bob Bertolucci, owner of Bob’s Bazaar, also owns a personal residence that costs $575,000. The market value of his residence is $725,000. During preparation of the financial statements for Bob’s Bazaar, the accounting principle most relevant to the presentation of Bob’s home is The concept of the business entity. The cost principle. The going-concern assumption. The objectivity principle.
17. Ledger accounts are updated through a process called posting. True False
18. Earning revenue increases owners' equity and expenses reduce owners' equity, therefore, revenues are recorded with debit entries and expenses are recorded with credit entries. True False
19. Dividends are an expense to a corporation and appear on the income statement. True False
20. The matching principle refers to the relationship between revenues and expenses. True False
21. The cash account of Grande Home Improvement Store shows the following: a debit on June 1 for $25,000; a credit on June 5 for $10,000, a debit on June 16 for $14,000, and a credit on June 27 for $8,000. What is the balance in the cash account at the end of June $39,000 debit. $21,000 debit. $18,000 credit. $21,000 credit.
22. The purchase of equipment on credit is recorded by a Debit to Equipment and a credit to Accounts Payable. Debit to Accounts Payable and a credit to Equipment. Debit to Equipment and a debit to Accounts Payable. Credit to Equipment and a credit to Accounts Payable.
23. The collection of accounts receivable is recorded by a Debit to Cash and a debit to Accounts Receivable. Credit to Cash and a credit to Accounts Receivable. Debit to Cash and a credit to Accounts Receivable. Credit to Cash and a debit to Accounts Receivable.
24. In accounting, the terms debit and credit indicate, respectively Increase and decrease. Left and right. Decrease and increase. Right and left.
25. Prepaid expenses are assets that should appear on the balance sheet. True False
26. Since the Accumulated Depreciation account has a credit balance, it is reported on the liability side of the balance sheet along with other accounts that have a credit balance. True False
27. Recording depreciation expense is an example of an adjusting entry to accrue unpaid expenses resulting from expenses being incurred before cash is paid. True False
28. When a company receives cash in advance and is obligated to provide a service or a product in the future, the entry would be a debit to a revenue account and a credit to a liability account. True False
29. If Hot Bagel Co. estimates depreciation on an automobile to be $578 for the year, the company should make the following adjusting entry Debit Accumulated Depreciation $578 and credit Depreciation Expense $578. Debit Depreciation Expense $578 and credit Automobile $578. Debit Depreciation Expense $578 and credit Accumulated Depreciation $578. Debit Automobile $578 and credit Depreciation Expense $578.
30. Accumulated Depreciation is An asset account. A revenue account. A contra-asset account. An expense account.
31. Which of the following statements regarding depreciation is correct Depreciation is an exact calculation of the decline in value of an asset. Depreciation is only an estimate of the decline in value of an asset. Depreciation is only recorded at the end of a year and never over a shorter time period. Management must know the exact life of an asset in order to calculate an acceptable depreciation expense.
32. The entry to record depreciation is an example of an adjusting entry To apportion a recorded cost. To apportion unearned revenue. To convert a liability to revenue. To record unrecorded revenue.
33. The adjusted trial balance contains income statement accounts and balance sheet accounts, while the after-closing trial balance will only have balance sheet accounts. True False
34. The purpose of the after-closing trial balance is to give assurance that the accounts are in balance and ready for the new accounting period. True False
35. An after-closing trial balance consists only of asset, liability, and owners’ equity accounts. True False
36. Measures of profitability tell us how quickly current assets can be converted into profits. True False
37. In the notes to financial statements, adequate disclosure would typically not include The accounting methods in use. Lawsuits pending against the business. Customers that account for 10 percent or more of the company’s revenues. The optimism of the CFO regarding future profits.
38. The adequacy of a company’s disclosure is based on Laws established by Congress. IRS rules and FASB requirements. A combination of official rules, tradition, and professional judgment. The needs of stockholders and creditors.
39. The concept of adequate disclosure Demands a “good faith effort” by management. Grants users of the financial statements access to a company’s accounting records. Does not apply to events occurring after the balance sheet date. Specifies which accounting methods must be used in a company’s financial statements.
40. The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except The accounting methods in use. The due dates of major liabilities. 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. 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.
41. When an adjusting entry is made to record inventory shrinkage, the Inventory account is debited and the Cost of Goods Sold account is credited. True False
42. In a periodic inventory system, the Inventory and Cost of Goods Sold accounts are kept up-to-date throughout the accounting period. True False
43. In a periodic inventory system, when a sale is made there is no entry made to record the cost of goods sold. True False
44. In a periodic inventory system, a complete physical inventory must be taken at year-end in order to compute the amount of purchases made during the period. True False
45. To arrive at net sales Add sales discounts to sales. Subtract the cost of goods sold from the sales price. Subtract sales returns and sales discounts from sales. Subtract accounts receivable from sales.
46. The Sales Returns and Allowances account is debited when Merchandise is returned to a supplier. Merchandise is returned by a customer. Payment is made to a supplier within the discount period. An account receivable is collected within the discount period.
47. All of the following accounts normally have debit balances except Transportation-in. Cost of Goods Sold. Sales Returns & Allowances. Purchase Returns & Allowances.
48. If sales discounts are shown as a separate item in financial statements, they should be shown as a(n) Deduction from accounts receivable. Deduction from gross sales revenue. Operating expense. Current liability.
49. When credit sales exceed collections of cash from accounts receivable, the increase in accounts receivable is added to net sales to determine the amount of cash collected from customers during the period. True False
50. Dividends paid belong in the operating activities section of the statement of cash flows. True False
51. All of the following are financing activities except Borrowing money. Lending money. Selling capital stock. Paying dividends.
52. A cash dividend paid to shareholders is reported on the Financing activities section of the statement of cash flows. Balance sheet. Income statement. Operating activities section of the statement of cash flows.
53. The debt ratio is computed by dividing total liabilities by current assets. True False
54. The lower the current ratio, the more liquid the company appears. True False
55. The current ratio will be ________ the quick ratio. Less than Greater than or equal to The same as Always different than
56. The measures most often used in evaluating solvency—the current ratio, quick ratio, and amount of working capital—are developed from amounts appearing in the: A.? Balance sheet. B.? Income statement. C.? Statement of retained earnings. D.? Statement of cash flows.
57. The standards issued by the International Accounting Standards Board must be followed by all multinational companies. True False
58. 11. Generally accepted accounting principles (GAAP) in the United States are fully converged with International Financial Reporting Standards (IFRS) True False
59. Walblue imports a desk from a French manufacturer for sale in its chain of U.S. stores. The cost of a desk to Walblue is 3,700 euros (€). What is the dollar cost of one of these desks if the exchange rate is currently 1.117 euros per U.S. dollar? (round to nearest cent) A.? $1,117.00. B.? $4,132.90. C.? $3,312.44. D.? $3,700.00.
60. At the current exchange rate of $1.40 per British pound, a one-day pass to Worldwide Theme Park of Florida sells for 45 pounds at travel agencies throughout Great Britain. If the exchange rate increases to $1.70 per pound, what will happen to the price of a one-day pass sold in Great Britain? A.? The price will be unchanged. B. The price will fall to 37 pounds. C.? The price will increase to 54 pounds. D.? The price will fall by 12 pounds.