Theory of Accounts
The fundamental qualitative characteristic of faithful representation has the components of a.
Predictive value and confirmatory value
Comparability, consistency, and confirmatory value
Understandability, predictive value, and reliability
Completeness, neutrality, and freedom from error
The amount reported as “Cash” on a company’s balance sheet normally should exclude a.
Postdated checks that are payable to the company
Cash in a payroll account
Undelivered checks written and signed by the company
Which of the following reconciling items would require an adjusting journal entry on the company’s books?
Non-sufficient fund checks
Deposits in transit
Cash on hand
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?
Bank service charges
Deposit in transit
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
three months of accrued interest income
nine months of accrues interest income
twelve months of accrued income
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
Plus estimated costs of completion
Which of the following statement is incorrect concerning biological assets? a.
Biological assets are living animals and living plants
Agricultural activity is the management by an entity of the biological transformation of biological asset into agricultural produce or additional biological asset c.
Biological assets are measured at fair value less costs to sell d.
Agricultural produce is measured at fair value less costs to sell at the point of harvest less normal profit margin
Significant changes in the market value of trading securities occurring after the balance sheet date should a.
Be considered in the valuation of the securities at the balance sheet date and disclosed in the notes to financial statements b.
Be treated as a prior period error in next year’s financial statements c.
Not be considered in the valuation of the securities at balance sheet date but disclosed in the notes to financial statements d.
Result in an adjustment of the market value used in the lower of cost or market valuation at balance sheet date. 9.
An investment property should be measured initially at
Cost less accumulated impairment losses
Depreciable cost less accumulated impairment losses
Fair value less accumulated impairment losses
The carrying amount of property, plant, and equipment subsequent to the acquisition is the a.
Historical costs less accumulated depreciation
Revalued amount less accumulated depreciation and accumulated impairment losses thereon c.
Amount at which an asset is recognized in balance sheet less accumulated depreciation and accumulated impairment losses thereon d.
Fair value less accumulated impairment losses thereon
What is the acceptable approach in accounting for government grants? a.
Government grants should be deferred and amortized over a maximum period of 20 years b.
Government grants should be recognized as income over the periods necessary to match them with the related costs...
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