Accounting. Theory of Accounts
Theory of Accounts
1. The fundamental qualitative characteristic of faithful representation has the components of
a. Predictive value and confirmatory value
b. Comparability, consistency, and confirmatory value
c. Understandability, predictive value, and reliability
d. Completeness, neutrality, and freedom from error
2. The amount reported as “Cash” on a company’s balance sheet normally should exclude
a. Postdated checks that are payable to the company
b. Cash in a payroll account
c. Undelivered checks written and signed by the company
d. Petty cash
3. Which of the following reconciling items would require an adjusting journal entry on the company’s books? a. Outstanding checks
b. Non-sufficient fund checks
c. Deposits in transit
d. Cash on hand
4. In preparing a monthly bank reconciliation, which of the following items would be deducted from the balance reported on the bank statement to arrive at the correct cash balance? a. Outstanding checks
b. Bank service charges
c. Deposit in transit
d. A customer’s note collected by the bank on behalf of the depositor
5. On October 1, 2011, a company received a one-year note receivable, bearing interest at market rate. The face of amount of the note receivable and the entire amount of the interest are due on September 30, 2012. The interest receivable account at December 31, 2011 would consist of the amount representing a. three months of accrued interest income
b. nine months of accrues interest income
c. twelve months of accrued income
d. the excess on October 1, 2011 of the present value of the note receivable over its face value
6. Net realizable value of inventory is defined as the net amount that an enterprise expects to realize from the sale of inventory
a. In the ordinary course of operations less estimated costs of completion and costs necessary to make a sale;
b. Plus estimated costs of completion plus estimated costs necessary to make a sale
c. In a forced sale
d. Plus
1. The fundamental qualitative characteristic of faithful representation has the components of
a. Predictive value and confirmatory value
b. Comparability, consistency, and confirmatory value
c. Understandability, predictive value, and reliability
d. Completeness, neutrality, and freedom from error
2. The amount reported as “Cash” on a company’s balance sheet normally should exclude
a. Postdated checks that are payable to the company
b. Cash in a payroll account
c. Undelivered checks written and signed by the company
d. Petty cash
3. Which of the following reconciling items would require an adjusting journal entry on the company’s books? a. Outstanding checks
b. Non-sufficient fund checks
c. Deposits in transit
d. Cash on hand
4. In preparing a monthly bank reconciliation, which of the following items would be deducted from the balance reported on the bank statement to arrive at the correct cash balance? a. Outstanding checks
b. Bank service charges
c. Deposit in transit
d. A customer’s note collected by the bank on behalf of the depositor
5. On October 1, 2011, a company received a one-year note receivable, bearing interest at market rate. The face of amount of the note receivable and the entire amount of the interest are due on September 30, 2012. The interest receivable account at December 31, 2011 would consist of the amount representing a. three months of accrued interest income
b. nine months of accrues interest income
c. twelve months of accrued income
d. the excess on October 1, 2011 of the present value of the note receivable over its face value
6. Net realizable value of inventory is defined as the net amount that an enterprise expects to realize from the sale of inventory
a. In the ordinary course of operations less estimated costs of completion and costs necessary to make a sale;
b. Plus estimated costs of completion plus estimated costs necessary to make a sale
c. In a forced sale
d. Plus