Multiple Choice Depreciation is a non cash item on the income statement. Generally accepted accounting principles (GAAP) require that income is reported when it is earned, even though no cash fi may have occured.
Q: Which of the following is not a criterion to recognize revenue under GAAP? GAAP requires that the…
A: Revenue recognition is one of the important accounting principle being used in business. It shows…
Q: Interest expense is listed on the Income Statement in 'Other revenue and Expenses'. Assess the…
A: Interest Expenses: The cost that an organization must pay to service its interest obligation is…
Q: A system of accounting in which revenues are recognised when earned and expenses are recognised when…
A: Accrual system of accounting is the one in which expenses are recorded as and when they are incurred…
Q: under the cost recovery method of revenue recognition, a. Income is recognized immediately b. Income…
A: Cost recovery method of recognition of revenue is used when there exists substantial doubt regarding…
Q: rue or False Unearned revenue is revenue that is earned but not yet collected
A: Solution Concept Unearned revenue The term unearned revenue means the revenue which…
Q: Accounting The account "Net-Assets: Resources Released from Restriction" is used to: A) Reduce…
A: Correct option with proper explanation are as follows
Q: The accounting treatment of depreciation is not recorded in.. Receipt-Payment A/C All of the above…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: If the cash amount paid to satisfy the “Asset Retirement Obligation” (ARO) account balance is…
A: Asset retirement obligation is the obligation on the entity which is to be paid on the retirement of…
Q: The historical cost principle provides that: Select one: O a. the recorded amount of an acquired…
A: Accounting principles are the rules required to be followed by the company in the process of…
Q: How can the quality of financial statements be compromised? Discuss fully and explain, giving a…
A: Financial statements are documents that provide valuable insight into the financial health of a…
Q: Which of the following accounts would not be involved in preparing the income statement? Group of…
A: Profit and loss : Amount earned or lost on the sale of one or more items is referred to as the…
Q: 1. Consider each of the items below. Place the proper letter in the blank space provided to indicate…
A: Golden Rules of Accounting: Account Debit Credit Personal Accounts The Receiver The…
Q: In a multiple-step income statement, interest expense usually is not classified as an operating…
A: A multi-step income statement is the type of income statement that presents revenues and expenses as…
Q: How is the valuation of cuIrent assets affected if the company follows IFRS? OValuation is based on…
A: SOLUTION- HISTORICAL COST IS THE ORIGINAL OF AN ASSET , AS RECORDED IN AN ENTITY'S ACCOUNTING…
Q: Which of the following is NOT true of revenue expenditure? It is an expenditure that keeps an asset…
A: Revenue expenditure is considered as a short-term expense while capital expenditure is long-term i.e…
Q: Which of the following statements is correct? Options: • The net income would still be the same…
A: The accrual basis of accounting is the method under which the income earned and expenses incurred is…
Q: Which of the following accounts is typically considered a contra-asset account in financial…
A: A contra-asset account is an accounting entry that reduces the value of an associated asset…
Q: Which one of these statements is true of the accumulated depreciation account? O the account is to…
A: Accumulated depreciation is the total of depreciation applied on a fixed asset on a particular point…
Q: Which accounting principle requires that bad debts expense be recognized in the same period as the…
A: Bad debt expense is the amount of money a business recognizes as a loss due to customers who are…
Q: Under accrual accounting, which of the following is an appropriate accounting policy regarding…
A: Accrual basis: It is one of the methods of basis of accounting that records the transactions basing…
Q: Which of the following statements is most likely to be correct? Bad debts recovered account, if…
A: The company will maintain a book called journal where all the transactions will be recorded. From…
Q: please answer the following 2 questions: 3. Any Loss in the Income statement should be: a) added…
A: The cash flow statement summarises a company's capacity to earn cash and satisfy its commitments, in…
Q: Interest revenue need not be added to the gross income to compute for the total income.
A: Gross income and net income are two concepts associated with the accounting that helps to identify…
Q: Which of the following statements about accounting income and economic income is (are) correct? I.…
A: Accounting profits includes explicit costs only, whereas economic profits includes both explicit and…
Q: 2) Accounts receivable erroneously debited to note receivable Effect on retained earnings -Since…
A: We know that both the accounts receivable and notes receivable are current assets. Retained earnings…
Q: Technically, offsetting in financial statements is accomplished when a. Gains or losses from…
A: Financial statements are those annual statements and reports which are prepared at the end of…
Q: Which of the following statements is correct? Options: • Prepayments of supplies initially…
A: Solution: "If unpaid expenses incurred during the accounting period are not accrued, the income for…
Q: Why is depreciation on the income statement different from the depreciation on the balance sheet?
A: Depreciation is the reduction in the value of asset during a period of time due to wear and tear.…
Q: The cost of new non-current assets is a cash payment not an expense in the statement of profit or…
A: Non-current assets: The assets purchased for the use in business for the long-term or for the period…
Q: What is the accounting treatment for discontinued operations? A : It is reported at its gross…
A: In the today's world, it is possible that an entity of group is not earning profit due to several…
Q: What is a cost-volume-profit analysis?
A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…
Q: Which of the following is not a criterion to recognize revenue under GAAP?A. The earnings process…
A: GAAP is the generally accepted accounting principles that are used by the accountants for the…
Q: unlike depreciation and retained earnings, the interest expense does not have to directly tie on any…
A: Depreciation is shown both under the balance sheet and the income statement. Retained earnings are…
Q: Unearned income is credited to the Profit and loss account. Do you agree with the statement?
A: Unearned income is the revenue received in advance for services to rendered in future. For example,…
Q: Which of the following is a limitation of the direct write-off method of accounting for…
A: Direct write-off method:This method does not make allowance or estimation for uncollectible…
Step by step
Solved in 3 steps
- Which of the following statements is/are FALSE: I. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows. V. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset's useful life and increase the asset's capacity is capitalised.…Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)? I. Firms have the option whether to apply this accounting method. II. Firms can reduce the cost of inventory but not increase it. III. If the NRV is lower, the entry recorded reduces total assets.T o p i c : F o r e c a s t i n g T e c h n i q u e s Why does the presence of fixed costs cause the percent-of-sales method of pro forma income statement preparation to fail? What is a better method? Describe the judgmental approach for simplified preparation of the pro forma balance sheet. T o p i c : F i n a n c i n g O p e r a t i o n s a n d E x p a n s i o n W h a t a r e t h e n e t p r o c e e d s f r o m t h e s a l e o f a b o n d ? W h a t a r e f l o t a t i o n c o s t s , a n d h o w d o t h e y a f f e c t a b o n d ’ s n e t p r o c e e d s ? W h a t p r e m i s e a b o u t s h a r e v a l u e u n d e r l i e s t h e c o n s t a n t - g r o w t h v a l u a t i o n ( G o r d o n g r o w t h ) m o d e l t h a t i s u s e d t o m e a s u r e t h e c o s t o f c o m m o n s t o c k e q u i t y , r s ? H o w d o t h e c o n s t a n t - g r o w t…
- On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presented4. (A) Which of the following transactions would cause net income for the period to be understated and explain why your answer is correct – feel free to make-up numbers to help your explanation? a. Misclassifying period cost and considering it product cost b. Misclassifying product cost and considering it period cost c. All of the above d. None of the above EXPLAINATION:None
- Which method results in a more realistic amount for income because it matches the most current costs against revenue? a.FIFO b.Weighted average cost c.Specific identification d.LIFOTraditional accounting systems record only actual transac-tions. As a result, how can opportunity costs be important in incremental decisions?Choose the best answer for each of the following multiple-choice questions.1. Cost-volume-profit analysis includes some simplifying assumptions. Which of thefollowing is not one of these assumptions?a. Cost and revenues are predictable.b. Cost and revenues are linear over the relevant range.c. Changes in beginning and ending inventory levels are insignificant in amount.d. Sales mix changes are irrelevant. 2. The term relevant range, as used in cost accounting, means the rangea. over which costs may fluctuateb. over which cost relationships are validc. of probable productiond. over which production has occurred in the past 10 years3. How would the following be used in calculating the number of units that must besold to earn a targeted operating income? Price per unit Targeted operating income Denominator Numerator Numerator Numerator Not used Denominator Numerator Denominator 4. Information concerning Korian Corporation’s product is as follows: Sales $300,000 Variable…
- Do solve asap True and False questions - Indicate True or False 1. A negative net present value is acceptable. 2. Sunk costs are relevant past expenditures. 3. The liquidity ratio tests the solvency of the company.Below is the information on a project that you are evaluating for deciding on its worthiness as an investment. ABC company is considering a new investment whose data are shown below. WACC for the project under consideration Net investment in fixed assets (immediate) Required new working capital (immediate) Working capital from the end of the first year onwards as a Percentage of Sales Straight line deprec. Rate (every year end from the end of year 1} Sales revenues (starting at the end of year 1) Operating cost excluding depreciation, (starting at the end of year 1) 10% 75000 15000 25% 33.33% 75000 25000 Tax Rate Annual increase in Operating Costs each year from year 2 onwards Annual increase in Sales revenue from the end of the year 2 onwards Depreciation: Fixed assets to be fully depreciated in books using the straight line method over 4 years to zero Salvage value of the fixed assets at the end of the project life 35% 6% 9750If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that write-down affect the company's financial statements? Multiple Choice Total assets will decrease. Net income will increase. Net income and total assets will both decrease. Gross margin will decrease.
