Accounting and Business Operations Multiple Choice Questions

Amounts received in advance from customers for future products or services:

• Are revenues.

• Increase income.

• Are Unearned revenues.

• Are not allowed under GAAP.

• Require an outlay of cash in the future.

• Withdraw cash from the business by owner or paid cash for an expense

• Withdraw cash from the business by owner

• Paid cash for an expense

• Collected cash from customers

• None of these

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:

• A. Liabilities can involve uncertainty in whom to pay.

• B. A company can create a liability with a known amount even when the holder...

• C. A company can have an obligation of a known amount to a known creditor...

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

• E. A company can be aware of an obligation but not know how much...

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...

• amounts to be received in the future from customers for delivery...