1) A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and
2) Which of the following is NOT considered cash for financial reporting purposes?
3) Which of the following items should NOT be included in the Cash caption on the balance sheet?
4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as
5) The advantage of relating a company’s bad debt expense to its outstanding accounts receivable is that this approach
6) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?
7) If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are
8) Valuation of inventories requires the deter¬mination of all of the following EXCEPT
9) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be
10) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?
11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for
13) When the direct method is used to record inventory at market
14) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?
15) In no case can “market” in the lower-of-cost-or-market rule be more than
16) The gross profit method of inventory valuation is invalid when
17) Which of the following is NOT a basic assumption of the gross profit method?
18) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported
19) The cost of land typically includes the purchase price and all of the following costs EXCEPT
20) The cost of land does NOT include
21) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be
22) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be
23) Which of the following costs are capitalized for self-constructed assets?
24) Which of the following assets do NOT qualify for capitalization of interest costs incurred during construction of the assets?
25) The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at
26) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is
27) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
28) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
29) For income statement purposes, depreciation is a variable expense if the depreciation method used is
30) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm wil
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