1) The cost of an asset and its fair value are never the same. irrelevant when t
ID: 2417352 • Letter: 1
Question
1)
The cost of an asset and its fair value are
never the same.
irrelevant when the asset is used by the business in its operations.
the same when the asset is sold.
none of these are correct.
the same on the date of the financial statement presentation
2)
Which one of the following represents the expanded basic accounting equation?
Assets = Revenues + Expenses - Liabilities.
None of these are correct
Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues.
Assets - Liabilities - Dividends = Common stock + Retained Earnings + Revenues - Expenses.
Assets = Liabilities + Common stock + Retained Earnings + Dividends - Revenues - Expenses.
3)
Consider the following facts:
Company A had $375,000 of current assets and $150,000 of current liabilities before borrowing $75,000 from the bank with a 3-month note payable.
What effect did the borrowing transaction have on Company A's current ratio?
The ratio remained unchanged
None of these answers are correct
The change in the current ratio cannot be determined
The ratio increased
The ratio decreased
4)
The matching principle in accounting requires the matching of
unearned revenue with the expenses incurred to produce the revenue.
revenue earned with the assets used less the liabilities incurred.
revenue earned with the assets used to produce the revenue.
revenue earned with the liabilities incurred to produce the revenue.
none of these answers are correct
5)
A company started the year with owners' equity of $85,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and paid dividends of $20,000. What was the company's owners' stockholders' equity at the end of the year?
$205,000
$125,000
$245,000
$225,000
$265,000
Explanation / Answer
1.the same on the date of the financial statement presentation
2.Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues.
3.The ratio decreased from 2.5 to 2
4.revenue earned with the liabilities incurred to produce the revenue.
5.$125,000
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