Extracted Worksheet Questions (Pages 1–3)

The buyer is responsible for the cost of shipping when goods are sold with the terms FOB.

• Shipping board

• Shipping point

• Destination

• On board

• None of these

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

• Issued

• Authorized

• Subscribed

• Outstanding

• In treasury

Items used in business operations, such as office pens and paper are several samples of:

• Office expense

• Office supplies

• Office equipment

• Prepayment

• None of these

All of the following statements regarding uncertainty in liabilities are true except:

• Liabilities can involve uncertainty in whom to pay.

• A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date.

• A company can have an obligation of a known amount to a known creditor but not know when it must be paid.

• A company only records liabilities when it knows whom to pay, when to pay, and how much to pay.

• A company can be aware of an obligation but not know how much will be required to settle it.

When applying the lower of cost or market (LCM) rule, which of the following is considered the "market" value?

• Replacement cost

• Sales price

• Cost of production

• Original purchase price

• Future sales value

The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:

• Minimum legal capital

• Stock subscriptions

• Organization expenses

• Selling expenses

• Prepaid fees

The difference between a company's assets and its liabilities, or net assets, is:

• Net income

• Expense

• Equity

• Revenue

• Net loss

Which of the following statements about unearned revenues is not true?

• Also called deferred revenues

• Also called collections in advance

• Also called prepayments

• Amounts received in advance from customers for future delivery of products or services

• Amounts to be received in the future from customers for delivery of products or services in the current period

• Debit Sales, Credit Unearned Revenue

• Debit Unearned Revenue, Credit Sales

• Debit Cash, Credit Unearned Revenue

• Debit Accounts Receivable, Credit Cash

• Debit Cash, Credit Revenue

Resources owned or controlled by a company that are expected to yield future benefits are:

• Assets

• Revenues

• Liabilities

• Owner's Equity

• Expenses