The state legislature is currently debating a bill that, if passed, would requir

Question

The state legislature is currently debating a bill that, if passed, would require the Sandiken Company to go out of business. Which of the following principles or assumptions related to the preparation of Sandiken's financial statements is most directly affected by this impending vote of the legislature?

going concern

verifiability principle

entity concept

materiality concept

3.5 points   

QUESTION 15

The organization that presently has the primary responsibility to establish generally accepted accounting principles that are applicable to the financial statements of entities in the U.S. private sector is the

Accounting Principles Board

Securities and Exchange Commission

Financial Accounting Standards Board

Committee on Accounting Procedure

3.5 points   

QUESTION 16

Prior to preparing the organization's financial statements, the accountant prepares

a balance sheet

a trial balance

an adjusted trial balance

a closed trial balance

3.5 points   

QUESTION 17

A company reports the following amounts at the end of the current year:
Sales revenue                         $860,000
Selling expenses     250,000
Gain on the sale of land      30,000
Interest expense                                 10,000
Cost of goods sold                         520,000
Under normal circumstances (ignoring tax effects), operating income would be computed as:

$80,000.

$50,000.

$110,000.

$90,000.

3.5 points   

QUESTION 18

Current assets include cash and all other assets expected to become cash or be consumed:

Within one year or one operating cycle, whichever is shorter.

Within one year or one operating cycle, whichever is longer.

Within one operating cycle.

Within one year.

3.5 points   

QUESTION 19

The principle of revenue recognition results in

recording revenue in the income statement

recording realized revenue when it is earned

measuring relevant and reliable information whenever a transaction has occurred

assuring the existence of all amounts recorded as net income

3.5 points   

QUESTION 20

Which of the following is false with regard to the element "comprehensive income"?

It is more inclusive than the traditional notion of net income.

It includes net income and all other changes in equity exclusive of owners' investments and distributions to owners.

This concept is not yet being applied in practice.

It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

3.5 points   

QUESTION 21

The purpose of closing entries is to

update a periodic inventory account for credit sales

update the retained earnings account on a daily basis

apportion prepaid expenses and unearned revenues to bring the accounts up to date

reduce all temporary accounts to zero

3.5 points   

QUESTION 22

Hickory Corporation issued 400,000 shares of $2 par value capital stock at its date of incorporation for cash at a price of $8 per share. During the first year of operations, the company earned $80,000 and declared a dividend of $20,000. At the end of this first year of operations, the balance of the Common Stock account is:

$3,200,000.

$3,280,000.

$ 800,000.

$3,260,000.

3.5 points   

QUESTION 23

The Collins Corporation shows the following dividends, revenue, and expense account balances before closing:

Debit

Credit

Debit

Credit

Dividends distributed

$250

Salaries expense

$300

Sales revenue

$2,400

Utilities expense

130

Cost of goods sold

1,350

Miscellaneous expenses

120

Gain on sale of land

300

Income tax expense

180

Please prepare closing entries.

going concern

verifiability principle

entity concept

materiality concept

Explanation / Answer

14 answer is

going concern

15 answer is

financial accounting standard boards

16answer is

an adjusted trial balance

14...

sales revenue 860000

cost of goods sold 520000

gross profit 340000

selling exp 250000

operating income 90000

so answer is 90000

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