multiple choice

Which of the following is not a potential benefit of accrual accounting, compared to cash-basis accounting? A. Timeliness.B. Better reflecting economic activity.C. Periodicity.D. Better matching of revenues and expenses.
2.	The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was: A. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination.B. The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination.C. The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination.D. The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.
3.	Which of the following was the first private-sector entity that set accounting standards in the United States? A. Accounting Principles Board.B. Committee on Accounting Procedure.C. Financial Accounting Standards Board.D. AICPA.
4.	Which of the following is not true about net operating cash flow? A. It is the difference between cash receipts and cash disbursements from providing goods and services.B. It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows.C. Over short periods, it may not be indicative of long-run cash-generating ability.D. It is easy to understand and all information required to measure it is factual
5.	 In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of: A. Conservatism.B. The matching principle.C. Realization principle.D. Economic entity.
6.	Accruals occur when cash flows: A. Occur before expense recognition.B. Occur after revenue or expense recognition.C. Are uncertain.D. May be substituted for goods or services.

7.	XYZ Corporation receives $100,000 from investors for issuing them shares of its stock. XYZ's journal entry to record this transaction would include a: A. Debit to investments.B. Credit to retained earnings.C. Credit to capital stock.D. Credit to revenue.
8.	Prepayments occur when: A. Cash flow precedes expense recognition.B. Sales are delayed pending credit approval.C. Customers are unable to pay the full amount due when goods are delivered.D. Manufactured goods await quality control inspections.
9.	A sale on account would be recorded by: A. Debiting revenue.B. Crediting assets.C. Crediting liabilities.D. Debiting assets.

10.	On December 31, 2012, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2013, $86,000 was paid for insurance. At the end of 2013, after adjusting entries were recorded, the balance in the prepaid insurance account was 42,000. Insurance expense for 2013 would be: A. $6,400.B. $134,400.C. $86,000.D. $92,400.

11.	Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in exchange. Mary Parker Co.'s journal entry to record this transaction would include a: A. Debit to investments.B. Credit to retained earnings.C. Credit to capital stock.D. Debit to expense.

12.	Somerset Leasing received $12,000 for 24 months rent in advance. How should Somerset record this transaction? A.  B.  C.  D.