29 Jun Question Financial Accounting Exam 2
Question
Financial Accounting Exam 2
1)
The fundamental accounting equation is a reflection of the:
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Money measurement concept
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Conservatism concept
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Dual-aspect concept
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Historical cost concept
2)
The historical cost concept reflects the fact that financial accounting practice favors:
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Reliability over relevance
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Management’s best guess over historical financial information
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Relevance over reliability
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Consensus market values over historical financial information
3)
Jon Sports’ inventory account increased from $25,000 on December 31, 2003 to $30,000 on December 31, 2004. Which one of the following items would be included in the operating section of its 2004 indirect method statement of cash flows?
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Add increase in inventory $5,000
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Subtract increase in inventory ($5,000)
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Add inventory balance $20,000
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Subtract inventory balance ($20,000)
4)
Turnkey Systems, Inc. began the month of June, 2004 with a prepaid expenses balance of $240,000. During the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. What was the June, 2004 ending balance of prepaid expenses?
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A debit balance of $210,000
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A credit balance of $210,000
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A debit balance of $270,000
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A credit balance of $270,000
5)
Pentex and Marbro, small companies in the stationery business, each had a dollar gross margin of $20,000 during September 2004. Pentex’s September sales were twice that of Marbro’s. If Pentex’s gross margin as a percentage of sales for September was 10%, Marbro’s gross margin as a percentage of sales for the same period was:
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10%
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5%
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20%
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Cannot be calculated
6)
When an entity recognizes revenue before it has received cash for the sale, it records an increase in a(n):
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Liability such as ‘Advances from customers’
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Accounts payable
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Accounts receivable
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