True or False A gain or loss on revaluation of assets should be allocated to the

Question

True or False

A gain or loss on revaluation of assets should be allocated to the partners according to the balances of their capital accounts.

For financial accounting purposes, when an asset is traded in for a similar asset, a gain is reported if the trade-in allowance exceeds the book value of the asset traded in.

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of total liabilities.

The Bond Sinking Fund Investment account is reported as an investment in the Assets section of the balance sheet.

To systematically accumulate cash for the retirement of bonds at maturity, a corporation may set up a bond sinking fund investment.

When bonds are issued at a price below face value, the Discount on Bonds Payable account is credited for the difference between the issue price and the face value.

A corporation may report net income for federal income tax purposes at an amount different from the amount reported for financial accounting purposes.

Both cash dividends and stock dividends decrease the total stockholders' equity.

The conversion ratio is the number of shares of common stock for which a share of convertible preferred stock may be exchanged.

The entry to record the declaration of a stock split includes a debit to Retained Earnings.

The adjusting entry to record accrued bond interest is reversed on the first day of the following period.

Property that is received as a gift should be recorded in the corporation's records at the asset's fair market value.

The modified accelerated cost recovery system (MACRS) is acceptable for financial accounting purposes because it matches the costs of assets with the revenues produced by those assets.

The cost of land is not depreciated.

The assets of a sole proprietorship are revalued before they are assumed by a partnership.

Explanation / Answer

Ans-

A gain or loss on revaluation of assets should be allocated to the partners according to the balances of their capital accounts.True

For financial accounting purposes, when an asset is traded in for a similar asset, a gain is reported if the trade-in allowance exceeds the book value of the asset traded in.True

In vertical analysis, it is customary to express each item on the balance sheet as a percentage of total liabilities.False

The Bond Sinking Fund Investment account is reported as an investment in the Assets section of the balance sheet.True

To systematically accumulate cash for the retirement of bonds at maturity, a corporation may set up a bond sinking fund investment.False

When bonds are issued at a price below face value, the Discount on Bonds Payable account is credited for the difference between the issue price and the face value.False

A corporation may report net income for federal income tax purposes at an amount different from the amount reported for financial accounting purposes.False

Both cash dividends and stock dividends decrease the total stockholders' equity. False

The conversion ratio is the number of shares of common stock for which a share of convertible preferred stock may be exchanged.True

The entry to record the declaration of a stock split includes a debit to Retained Earnings.False

The adjusting entry to record accrued bond interest is reversed on the first day of the following period.False

Property that is received as a gift should be recorded in the corporation's records at the asset's fair market value.True

The modified accelerated cost recovery system (MACRS) is acceptable for financial accounting purposes because it matches the costs of assets with the revenues produced by those assets.True

The cost of land is not depreciated. True

The assets of a sole proprietorship are revalued before they are assumed by a partnership.True

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