Acct 504 Quiz
1. Two primary external users of accounting information are investors and creditors. TRUE
2. The economic resources that are owned by a business are called stockholders' equity. FALSE
3. Net income for the period is determined by subtracting total expenses and dividends from revenues. FALSE
4. The heading for the income statement might include the line “As of December 31, 20xx.” TRUE
5. Net income is another term for revenue. FALSE
6. The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time. TRUE
7. The balance sheet reports assets and claims to those assets at a specific point in time. True?
8. One way of …show more content…
Accounts receivable are one of a company's least liquid assets. FALSE
76. The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing. True?
77. Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts. FALSE
78. The allowance method of accounting for bad debts violates the matching principle. FALSE
79. Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected. TRUE
80. If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts. TRUE
81. The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded. True?
82. All plant assets (fixed assets) must be depreciated for accounting purposes. False?
83. When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. FALSE
84. Land improvements are generally charged to the Land account. …show more content…
A corporation can be organized for the purpose of making a profit or it may be nonprofit. TRUE
102. A corporation must be incorporated in each state in which it does business. FALSE
103. A stockholder has the right to vote in the election of the board of directors. TRUE
104. When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital. TRUE
105. As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized. FALSE
106. The par value of common stock must always be equal to its market value on the date the stock is issued. FALSE
107. For accounting purposes, stated value is treated the same way as par value. TRUE
108. Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership. TRUE
109. The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity. FALSE
110. Treasury stock should not be classified as a current asset. TRUE
111. Treasury stock is a contra stockholders' equity account.
2. The economic resources that are owned by a business are called stockholders' equity. FALSE
3. Net income for the period is determined by subtracting total expenses and dividends from revenues. FALSE
4. The heading for the income statement might include the line “As of December 31, 20xx.” TRUE
5. Net income is another term for revenue. FALSE
6. The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time. TRUE
7. The balance sheet reports assets and claims to those assets at a specific point in time. True?
8. One way of …show more content…
Accounts receivable are one of a company's least liquid assets. FALSE
76. The two accounting problems with accounts receivable are: (1) recognizing and (2) disposing. True?
77. Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts. FALSE
78. The allowance method of accounting for bad debts violates the matching principle. FALSE
79. Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected. TRUE
80. If a company uses the allowance method to account for uncollectible accounts, the entry to write off an uncollectible account only involves balance sheet accounts. TRUE
81. The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjusting entry is recorded. True?
82. All plant assets (fixed assets) must be depreciated for accounting purposes. False?
83. When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. FALSE
84. Land improvements are generally charged to the Land account. …show more content…
A corporation can be organized for the purpose of making a profit or it may be nonprofit. TRUE
102. A corporation must be incorporated in each state in which it does business. FALSE
103. A stockholder has the right to vote in the election of the board of directors. TRUE
104. When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital. TRUE
105. As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized. FALSE
106. The par value of common stock must always be equal to its market value on the date the stock is issued. FALSE
107. For accounting purposes, stated value is treated the same way as par value. TRUE
108. Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership. TRUE
109. The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity. FALSE
110. Treasury stock should not be classified as a current asset. TRUE
111. Treasury stock is a contra stockholders' equity account.