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Section 1. Multiple Choice Questions;1. The information provided by financial reporting pertains to;a. individual business enterprises, rather than to industries or an;economy as a whole or to members of society as consumers.;b. business industries, rather than to individual enterprises or an;economy as a whole or to members of society as consumers.;c. individual business enterprises, industries, and an economy as a;whole, rather than to members of society as consumers.;d. an economy as a whole and to members of society as consumers;rather than to individual enterprises or industries.;2. An effective capital allocation process;a. promotes productivity.;b. encourages innovation.;c. provides an efficient market for buying and selling securities.;d. all of these.;3. Companies that are listed on a stock exchange are required to submit;their financial statements to the;a. AICPA.;b. APB.;c. FASB.;d. SEC.;4. Compared to the accrual basis of accounting, the cash basis of;accounting overstates income by the net increase during the;accounting period of the;Accounts Accrued;Receivable Expenses Payable;??????? ?????????;a. No No;b. No Yes;c. Yes No;d. Yes Yes;5. The following information is available concerning the accounts of;Franz Company;Accounts payable, January 1, 2004 $18,000;Cash payments on account during 2004 75,000;Purchase discounts taken during 2004;on 2004 purchases 1,200;Accounts payable, December 31, 2004 10,000;Assuming the company records purchases at the gross amounts, the;total purchases for 2004 would be;a. $82,200.;b. $65,800.;c. $68,200.;d. $67,000.;-------------------------;Sectin 2. Excercises;6? The Financial Accounting Standards Board was established because;many groups interested in financial reporting believed that the;Accounting Principles Board was not effective. Discuss the apparent;advantages that the FASB should have over its earlier counterpart;the APB.;7. State the accounting assumption, principle, information character-;istic, or constraint that is most applicable in the following cases.;(1). All payments less than $25 are expensed as incurred. (Do not use;conservatism.);(2). The company employs the same inventory valuation method from;period to period.;(3). A patent is capitalized and amortized over the periods benefited.;(4). Assuming that dollars today will buy as much as ten years ago.;(5). Rent paid in advance is recorded as prepaid rent.;(6). Financial statements are prepared each year.;(7). All significant post-balance sheet events are reported.;(8). Personal transactions of the proprietor are distinguished from;business transactions.;Section 3. Problems;8. Yates Company's records provide the following information concerning;certain account balances and changes in these account balances dur-;ing the current year. Transaction information is missing from each;item below.;INSTRUCTIONS;Prepare the ENTRY to record the missing information for each;account. (Consider each independently.);1. Accounts Receivable: Jan. 1, balance $41,000, Dec. 31;balance $50,000, uncollectible accounts written off during the;year, $6,000, accounts receivable collected during the year;$134,000. Prepare the entry to record sales.;2. Allowance for Doubtful Accounts: Jan. 1, balance $4,000;Dec. 31, balance $7,500, uncollectible accounts written off;during the year, $30,000. Prepare the entry to record bad debt;expense.;3. Accounts Payable: Jan. 1, balance $25,000, Dec. 31, balance;$34,000, purchases on account for the year, $110,000. Prepare;the entry to record payments on account.;4. Interest Receivable: Jan. 1 accrued, $3,000, Dec. 31 accrued;$2,100, earned for the year, $20,000. Prepare the entry to;record cash interest received.


Paper#80763 | Written in 18-Jul-2015

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