CNNHS - Avellano & Salvino

The act of transferring information from the General Journal to the General Ledger is called what?

• Journalizing

• Entry

• Posting

• All of the Above

This method relates to inventory valuation, specifically keeping track of each specific item in inventory and assigning costs individually instead of grouping items together.

• Average Cost Method

• Specific identification method

• First-in, first-out method

• Last-in, first out method

Accounting method assumes that the oldest merchandise is sold first, with its associated costs being used to determine profitability.

• Average Cost Method

• Specific identification method

• First-in, first-out method

• Last-in, first out method

Assume that sales are 500,000, sales discount is 20,000, net income if 25,000, and the cost of general merchandise sold is 380,000. Gross profit and operating expenses are, respectively.

• 120,000 and 95,000

• 100,000 and 95,000

• 120,000 and 75,000

• 100,000 and 75,000

Avellano Group of Companies purchase a generator that cost 100,000. It has an estimated life of five years and a residual value of 30,000. It is estimated that it will be good for 7,000 hours. Can you compute the depreciation expense for the first year using the units-of-activity method of depreciation assuming that the generator was used for 1,505 hours?

• 26,000

• 25,800

• 20,850

• 28,500

Generally, the older the information, the less useful it becomes. However, some information may continue to be timely long after the end of a reporting period because, for example, some users may need to identify and assess trends.

• 
  Completeness

• Faithful representation

• Verifiability

• Timeliness

Financial statements are normally prepared on the assumption that business will continue in operation for the foreseeable future.

• 
  Accrual Basis Assumption

• Going Concern Assumption

• Periodicity Assumption

• Monetary Unit Assumption

The information must be free of material error and bias, and not misleading.

• Materiality

• Faithful Representation

• Completeness

• Timeliness

The information must be comprehensible to users of the financial statements. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification.

• Understandability

• Relevance

• Completeness

• Timeliness

This accounting assumption tells us to recognize revenues and expenses as they are earned or incurred, rather than recording them when payment is received or made.

• Going Concern Assumption

• Accrual Basis Assumption

• Accounting Basis Assumption

• Periodicity Assumption