Intermediate Exams 1-3

A company with a high rate of return on sales should consider the inventory sold when

• when the retailer gives a confirmation that the goods won't be returned

• when the payment for goods in received

• when the goods are sold an installment

• when it can reasonably estimate the amount on returns

In a perpetual inventory system, the inventory account

• is not adjusted for the cost of goods sold

• is debited for purchases and credited when the goods are sold and the cost is transferred to cost of good sold

• is debited for purchases and credited for purchase returns and freight-in

• is debited for purchases and credited for sales return

The financial statements most frequently provided include all of the following except

• income statement

• statement of cash flows

• trial balance

• balance sheet

How does accounting help the capital allocation process allocate investment capital?

• By promoting productivity

• By providing relevant and reliable information

• By encouraging innovation

• By providing relevant and reliable information and by encouraging innovation

Which of the following is an ingredient of relevance?

• Materiality

• Neutrality

• Timeliness

• Completeness

Neutrality is an ingredient of which fundamental quality of information?

• Understandability

• Relevance

• Faithful Representation

• Comparability

Which of the following is not a basic assumption underlying the financial accounting structure?

• Periodicity assumption

• Going concern assumption

• Economic assumption

• Historical cost assumption

Which basic assumption may not be followed when a firm in bankruptcy reports financial results

• Periodicity assumption

• Going concern assumption

• Economic assumption

• Monetary assumption

The measurement principle include the

• historical cost principle only

• fair value principle only

• historical cost and fair value principles

• revenue and expense recognition principles

The correct order to present current assets is

• cash, accounts receivable, inventories, prepaid items

• cash, inventories, prepaid items, accounts receivable

• cash, prepaid items, inventories, accounts receivable

• cash, accounts receivable, prepaid items, inventories