Chapter 2 The Recording Process PDF

Chapter 2 The Recording Process
E
An accountant has debited an account for $3,500 and credited a liability account for $2,000.
Which of the following would be an incorrect way to complete the recording of this transaction:
A. Credit another asset account for $1,500.
B. Credit another liability account for $1,500.
C. Credit an expense account for $1,500.
D. Credit the owner's capital account for $1,500.
E. Debit another asset account for $1,500.
B
While in the process of posting from the journal to the ledger a company failed to post a $50
debit to the Office Supplies account. The effect of this error will be that:
A. The Office Supplies account balance will be overstated.
B. The trial balance will not balance.
C. The error will overstate the debits listed in the journal.
D. The total debits in the trial balance will be larger than the total credits.
E. All of these effects will be caused by the error.
B
A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?
A. $150 understated.
B. $135 overstated.
C. $150 overstated.
D. $15 understated.
E. $135 understated.
D
A trial balance taken at year-end showed total credits exceed total debits by $4,950. This
discrepancy could have been caused by:
A. An error in the general journal where a $4,950 increase in Accounts Receivable was
recorded as an increase in Cash.
B. A net income of $4,950.
C. The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950.
D. The balance of $5,500 in the Office Equipment account being entered on the trial balance as
a debit of $550.
E. An error in the general journal where a $4,950 increase in Accounts Payable was recorded
as a decrease in Accounts Payable.
E
. In which of the following situations would the trial balance not balance?
A. A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts
Receivable and a credit to Cash.
B. The purchase of office supplies on account for $3,250 was erroneously recorded in the
journal as $2,350 debit to Office Supplies and credit to Accounts Payable.
C. A $50 cash receipt for the performance of a service was not recorded at all.
D. The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a
credit to Cash for $1,200.
E. The cash payment of a $750 account payable was posted as a debit to Accounts Payable
and a debit to Cash for $750.
C
The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700
debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial
balance?
A. The total of the Debit column of the trial balance will exceed the total of the Credit column by
$4,700.
B. The total of the Credit column of the trial balance will exceed the total of the Debit column by
$4,700.
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by
$9,400.
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by
$9,400.
E. The total of the Debit column of the trial balance will equal the total of the Credit column.
D
If the Debit and Credit column totals of a trial balance are equal, then:
A. All transactions have been recorded correctly.
B. All entries from the journal have been posted to the ledger correctly.
C. All ledger account balances are correct.
D. The total debit entries and total credit entries are equal.
E. The balance sheet would be correct
B
Of the following errors, which one by itself will cause the trial balance to be out of balance?
A. A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries
Expense.
B. A $100 cash receipt from a customer in payment of his account posted as a $100 debit to
Cash and a $10 credit to Accounts Receivable.
C. A $75 cash receipt from a customer in payment of his account posted as a $75 debit to Cash
and a $75 credit to Cash.
D. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50
credit to Cash.
E. An $800 prepayment from a customer for services to be rendered in the future was posted as
an $800 debit to Unearned Revenue and an $800 credit to Cash.
C
A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts
are the accounts under- or overstated as a result of this error?
A. Office Equipment, understated $130; Fees Earned, overstated $130.
B. Office Equipment, understated $260; Fees Earned, overstated $130.
C. Office Equipment, overstated $130; Fees Earned, overstated $130.
D. Office Equipment, overstated $130; Fees Earned, understated $130.
E. Office Equipment, overstated $260; Fees Earned, understated $130.
A
The accounting process begins with:
A. Analysis of business transactions and source documents.
B. Preparing financial statements and other reports.
C. Summarizing the recorded effect of business transactions.
D. Presentation of financial information to decision-makers.
E. Preparation of the trial balance.
B
Source documents include all of the following except:
A. Sales tickets.
B. Ledgers.
C. Checks.
D. Purchase orders.
E. Bank statements.
B
Source documents:
A. Include the ledger.
B. Are the sources of accounting information.
C. Must be in electronic form.
D. Are based on accounting entries.
E. Include the chart of accounts.
E
Various types of documents and other papers that companies use when they conduct their
business:
A. Are called source documents.
B. Can include sales tickets.
C. Are the source of information for recording accounting entries.
D. Can be in electronic form.
E. All of these.
B
Which of the following statements is correct?
A. When a future expense is paid in advance, the payment is normally recorded in a liability
account called Prepaid Expense.
B. Promises of future payment are called accounts receivable.
C. Increases and decreases in cash are always recorded in the owner's capital account.
D. An account called Land is commonly used to record increases and decreases in both the
land and buildings owned by a business.
E. Accrued liabilities include accounts receivable.
E
A ledger is:
A. A record containing increases and decreases in a specific asset, liability, equity, revenue, or
expense item.
B. A journal in which transactions are first recorded.
C. A collection of documents that describe transactions and events entering the accounting
process.
D. A list of all accounts with their debit balances at a point in time.
E. A record containing all accounts and their balances used by a company.
D
The numbering system used in a company's chart of accounts:
A. Is the same for all companies.
B. Is determined by generally accepted accounting principles.
C. Depends on the source documents used in the accounting process.
D. Typically begins with balance sheet accounts.
E. Typically begins with income statement accounts.
D
A simple account form widely used in accounting as a tool to understand how debits and credits
affect an account balance is called a:
A. Withdrawals account.
B. Capital account.
C. Drawing account.
D. T-account.
E. Balance column sheet.
C
Which of the following statements is correct?
A. The left side of a T-account is the credit side.
B. Debits decrease asset and expense accounts, and increase liability, equity, and revenue
accounts.
C. The left side of a T-account is the debit side.
D. Credits increase asset and expense accounts, and decrease liability, equity, and revenue
accounts.
E. In certain circumstances the total amount debited need not equal the total amount credited
for a particular transaction.
C
An account balance is:
A. The total of the credit side of the account.
B. The total of the debit side of the account.
C. The difference between the total debits and total credits for an account including the
beginning balance.
D. Assets = liabilities + equity.
E. Always a credit.
C
Of the following accounts, the one that normally has a credit balance is:
A. Cash.
B. Office Equipment.
C. Sales Salaries Payable.
D. Owner, Withdrawals.
E. Sales Salaries Expense.
D
Management Services, Inc. provides services to clients. On May 1, a client prepaid
Management Services $60,000 for 6-months services in advance. Management Services'
general journal entry to record this transaction will include a
A. Debit to Unearned Management Fees for $60,000.
B. Credit to Management Fees Earned for $60,000.
C. Credit to Cash for $60,000.
D. Credit to Unearned Management Fees for $60,000.
E. Debit to Management Fees Earned for $60,000.
C
Robert Haddon contributed $70,000 in cash and land worth $130,000 to open a new business,
RH Consulting. Which of the following general journal entries will RH Consulting make to record
this transaction?
A.
Assets................................................... $200,000
............Robert Haddon, Capital.....................$200,000
B.
Cash and Land..................................$200,000
............Robert Haddon, Capital.......................$200,000
C.
Cash........................................................$70,000
Land........................................................$130,000
..............Robert Haddon, Capital.....................$200,000
D.
Robert Haddon, Capital...............$200,000
.............Cash..............................................................$70,000
..............Land.............................................................$130,000
E.
Robert Haddon, Capital................$200,000
...............Assets...........................................................$200,000
B
On September 30, the Cash account of Value Company had a normal balance of $5,000.
During September, the account was debited for a total of $12,200 and credited for a total of
$11,500. What was the balance in the Cash account at the beginning of September?
A. A $0 balance.
B. A $4,300 debit balance.
C. A $4,300 credit balance.
D. A $5,700 debit balance.
E. A $5,700 credit balance.
B
On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the
month of May, total credits to Accounts Receivable were $52,000 from customer payments. The
May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during
May?
A. $ 5,000.
B. $47,000.
C. $52,000.
D. $57,000.
E. $32,000.
C
During the month of February, Hoffer Company had cash receipts of $7,500 and cash
disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31
beginning cash balance?
A. $700.
B. $1,100.
C. $2,900.
D. $0.
E. $4,300.
B
The following transactions occurred during July:
1. Received $900 cash for services provided to a customer during July.
2. Received $2,200 cash investment from Barbara Hanson, the owner of the business.
3. Received $750 from a customer in partial payment of his account receivable which arose
from sales in June.
4. Provided services to a customer on credit, $375.
5. Borrowed $6,000 from the bank by signing a promissory note.
6. Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

A. $ 900.
B. $ 1,275.
C. $ 2,525.
D. $ 3,275.
E. $11,100.
C
Zed Bennett opened an art gallery and as a dealer completed these transactions:
1. Started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000.
2. Purchased $70 of office supplies on credit.
3. Paid $1,200 cash for the receptionist's salary.
4. Sold a painting for an artist and collected a $4,500 cash commission on the sale.
5. Completed an art appraisal and billed the client $200.
What was the balance of the cash account after these transactions were posted?
A. $12,230.
B. $12,430.
C. $43,300.
D. $43,430.
E. $61,430.
B
At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal
balance of $52,000 for accounts receivable. During January, the company collected $14,800
from customers on account and provided additional services to customers on account totaling
$12,500. Additionally, during January one customer paid Thomas $5,000 for services to be
provided in the future. At the end of January, the balance in the accounts receivable account
should be:
A. $54,700.
B. $49,700.
C. $2,300.
D. $54,300.
E. $49,300.
A
During the month of March, Cooley Computer Services made purchases on account totaling
$43,500. Also during the month of March, Cooley was paid $8,000 by a customer for services to
be provided in the future and paid $36,900 of cash on its accounts payable balance. If the
balance in the accounts payable account at the beginning of March was $77,300, what is the
balance in accounts payable at the end of March?
A. $83,900.
B. $91,900.
C. $6,600.
D. $75,900.
E. $4,900.
A
On January 1 of the current year, Bob's Lawn Care Service reported owner's capital totaling
$122,500. During the current year, total revenues were $96,000 while total expenses were
$85,500. Also, during the current year Bob withdrew $20,000 from the company. No other
changes in equity occurred during the year. If, on December 31 of the current year, total assets
are $196,000, the change in owner's capital during the year was:
A. A decrease of $9,500.
B. An increase of $9,500.
C. An increase of $30,500.
D. A decrease of $30,500
E. Impossible to determine from the information provided.
B
Andrea Conaway opened Wonderland Photography on January 1 of the current year. During
January, the following transactions occurred and were recorded in the company's books:
1. Conaway invested $13,500 cash in the business.
2. Conaway contributed $20,000 of photography equipment to the business.
3. The company paid $2,100 cash for an insurance policy covering the next 24 months.
4. The company received $5,700 cash for services provided during January.
5. The company purchased $6,200 of office equipment on credit.
6. The company provided $2,750 of services to customers on account.
7. The company paid cash of $1,500 for monthly rent.
8. The company paid $3,100 on the office equipment purchased in transaction #5 above.
9. Paid $275 cash for January utilities.
Based on this information, the balance in the cash account at the end of January would be:
A. $41,450.
B. $12,225
C. $18,700.
D. $15,250.
E. $13,500.
D
Based on the information included in Question #102, the balance in the Andrea Conaway,
Capital account reported on the Statement of Owner's Equity at the end of the month would be:
A. $31,400.
B. $39,200.
C. $31,150.
D. $40,175.
E. $30,875.
C
A column in journals and ledger accounts used to cross reference journal and ledger entries is
the:
A. Account balance column.
B. Debit column.
C. Posting reference column.
D. Credit column.
E. Description column.
E
The general journal provides a place for recording:
A. The transaction date.
B. The names of the accounts involved.
C. The amount of each debit and credit.
D. An explanation of the transaction.
E. All of these.
B
A balance column ledger account is:
A. An account entered on the balance sheet.
B. An account with debit and credit columns for posting entries and another column for showing
the balance of the account after each entry is posted.
C. Another name for the withdrawals account.
D. An account used to record the transfers of assets from a business to its owner.
E. A simple form of account that is widely used in accounting to illustrate the debits and credits
required in recording a transaction.
C
A general journal is:
A. A ledger in which amounts are posted from a balance column account.
B. Not required if T-accounts are used.
C. A complete record of any transaction and the place from which transaction amounts are
posted to the ledger accounts.
D. Not necessary in electronic accounting systems.
E. A book of final entry because financial statements are prepared from it.
MULTIPLE CHOICE QUESTIONS

56. In a classified balance sheet, assets are usually classified as
a. current assets; long-term assets; property, plant, and equipment; and intangible assets.
b. current assets; long-term investments; property, plant, and equipment; and common stocks.
c. current assets; long-term investments; tangible assets; and intangible assets.
d. current assets; long-term investments; property, plant, and equipment; and intangible assets.
: D,
57. On a classified balance sheet, short-term investments are classified as

a. an intangible asset.
b. property, plant, and equipment.
c. a current asset.
d. a long-term investment.
:C
58. A current asset is

a. the last asset purchased by a business.
b. an asset which is currently being used to produce a product or service.
c. usually found as a separate classification in the income statement.
d. expected to be converted to cash or used in the business within a relatively short period of
time.
:D
59. Which of the following is not classified properly as a current asset?

a. Supplies
b. Debt investments
c. A fund to be used to purchase a building within the next year
d. A receivable from the sale of an asset to be collected in two years
:D
60. An intangible asset

a. derives its value from the rights and privileges it provides the owner.
b. is worthless because it has no physical substance.
c. is converted into a tangible asset during the operating cycle.
d. cannot be classified on the balance sheet because it lacks physical substance.
:A
64. Which of the following would not be classified as a long-term liability?

a. Current maturities of long-term debt
b. Bonds payable
c. Mortgage payable
d. Lease liabilities
:A
65. Which of the following is not a current liability?

a. Salaries and Wages Payable
b. Accounts Payable
c. Taxes Payable
d. Bonds Payable
D
67. It is not true that current assets are resources that are expected to be
a. realized in cash within one year.
b. sold within one year.
c. consumed within one year.
d. acquired within one year.
:D
68. The operating cycle of a company is the average time that is required to go from cash to
a. sales in producing revenues.
b. cash in producing revenues.
c. inventory in producing revenues.
d. accounts receivable in producing revenues.
:B
69. On a classified balance sheet, companies usually list current assets

a. in alphabetical order.
b. with the largest dollar amounts first.
c. in the order in which they are expected to be converted into cash.
d. in the order of acquisition.
: C,
70. Intangible assets are

a. listed directly under current assets on the balance sheet.
b. not listed on the balance sheet because they do not have physical substance.
c. listed after property, plant, and equipment.
d. listed as a long-term investment on the balance sheet.
: C,
71. Which statement about long-term investments is not true?

a. They will be held for more than one year.
b. They are not currently used in the operation of the business.
c. They include investments in stock of other companies and land held for future use.
d. They do not include long-term notes receivable.
:D
72. These are selected account balances on December 31, 2014.

Land $100,000
Land (held for future use) 150,000
Buildings 800,000
Inventory 200,000
Equipment 450,000
Furniture 100,000
Accumulated Depreciation 300,000
What is the total amount of property, plant, and equipment that will appear on the balance
sheet?
a. $1,500,000
b. $1,300,000
c. $1,800,000
d. $1,150,000
: D Solution: $100,000 + $800,000 + $450,000 + $100,000 − $300,000 = $1,150,000
73. What is the order in which assets are generally listed on a classified balance sheet?
a. Current and long-term
b. Current; property, plant and equipment; long-term investments; intangibles
c. Current; property, plant and equipment; intangibles; long-term investments
d. Current; long-term investments; property, plant and equipment, intangibles
:D
75. Use the following data to determine the total dollar amount of assets to be classified as
current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2014
Cash $ 130,000 Accounts payable $ 140,000

Accounts receivable 100,000 Salaries and wages payable 20,000
Inventory 110,000 Mortgage payable 160,000
Prepaid insurance 60,000 Total liabilities $320,000
Stock investments 170,000
Land 180,000
Buildings $210,000 Common stock $240,000
Less: Accumulated Retained earnings 500,000
depreciation (40,000) 170,000 Total stockholders' equity $740,000
Trademarks 140,000 Total liabilities and
Total assets $1,060,000 stockholders' equity $1,060,000
a. $570,000
b. $400,000
c. $340,000
d. $290,000
: B,Solution: $130,000 + $100,000 + $110,000 + $60,000 = $400,000
property, plant, and equipment.
Balance Sheet
December 31, 2014

Land 180,000
a. $660,000
b. $350,000
c. $490,000
d. $390,000
:B
Solution: $180,000 + $170,000 = $350,000
investments.
Balance Sheet
December 31, 2014

Land 180,000
a. $0
b. $350,000
c. $170,000
d. $310,000
:C
Solution: Stock investments = $170,000
78. Use the following data to determine the total amount of working capital.
Balance Sheet
December 31, 2014

Land 180,000
a. $240,000
b. $390,000
c. $130,000
d. $180,000
: A,
Solution: ($130,000 + $100,000 + $110,000 + $60,000) − ($140,000 + $20,000) = $240,000
79. Use the following data to calculate the current ratio.

Balance Sheet
December 31, 2014

Land 180,000
a. 2.13 : 1
b. 1.44 : 1
c. 2.86 : 1
d. 2.50 : 1
: D,
Solution: ($130,000 + $100,000 + $110,000 + $60,000) ÷ ($140,000 + $20,000) = 2.50:1
current assets.
Carne Auto Supplies
Balance Sheet
December 31, 2014

Land 95,000
Total assets $535,000 stockholders' equity $535,000
a. $195,000
b. $125,000
c. $285,000
d. $165,000
:A
Solution: $35,000 + $50,000 + $70,000 + $40,000 = $195,000
property, plant, and equipment.
Carne Auto Supplies
Balance Sheet
December 31, 2014

Land 95,000
a. $270,000
b. $250,000
c. $180,000
d. $210,000
: C,
Solution: $95,000 + $85,000 = $180,000
Carne Auto Supplies
Balance Sheet
December 31, 2014

Land 95,000
a. $130,000
b. $120,000
c. $80,000
d. $210,000
:B
Solution: ($35,000 + $50,000 + $70,000 + $40,000) − ($65,000 + $10,000) = $120,000
85. N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained
earnings of $475,000. What are the creditors' claims on their assets?
a. $2,695,000
b. $1,255,000
c. $1,745,000
d. $3,305,000
: C, LO: 1, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory
Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving,
: Reporting
Solution: $3,000,000 − $780,000 − $475,000 = $1,745,000
86. K2 Corporation has assets of $2,400,000, common stock of $624,000, and retained
earnings of $380,000. What are the creditors' claims on their assets?
a. $2,156,000
b. $1,004,000
c. $1,396,000
d. $2,644,000
: C,
Solution: $2,400,000 − $624,000 − $380,000 = $1,396,000
Eddy Auto Supplies
Balance Sheet
December 31, 2014

Land 190,000
a. $404,000
b. $234,000
c. $254,000
d. $174,000
:B
Solution: ($84,000 + $80,000 + $140,000 + $60,000) − ($110,000 + $20,000) = $234,000
158. Which of the following organizations issues accounting standards for countries outside the
United States?
a. SEC
b. GAAP
c. IASB
d. FASB
: C,
160. The agency of the United States Government that oversees the U.S. financial markets is
the
a. Internal Revenue Service.
b. Security Exchange Commission.
c. Financial Accounting Standards Board.
d. International Auditing Standards Committee.
: B,
161. What organization issues U.S. accounting standards?

a. Security Exchange Commission
b. International Accounting Standards Committee
c. International Auditing Standards Committee
d. Financial Accounting Standards Board
: D,
162. Which one of the following is not an enhancing quality of useful information?
a. Timeliness
b. Understandability
c. Materiality
d. Comparability
: C,
163. All of the following are qualities of useful information except

a. faithful representation.
b. materiality.
c. relevance.
d. flexibility.
:D
164. The two fundamental qualities of useful information are

a. relevance and faithful representation.
b. verifiability and timeliness.
c. comparability and flexibility.
d. understandability and consistency.
: A,
165. The convention of consistency refers to consistent use of accounting principles

a. among firms.
b. among accounting periods.
c. throughout the accounting periods.
d. within industries.
: B,
166. The quality of consistency enhances

a. relevance.
b. materiality.
c. comparability.
d. faithful representation.
: C,
167. Information that is presented in a clear fashion, so that users of that information can
interpret it is an example of
a. relevance.
b. faithful representation.
c. understandability.
d. comparability.
: C,
168. In order for accounting information to be relevant, it must

a. have very little cost.
b. help predict future events or confirm prior expectations.
c. not be reported to the public.
d. be used by a lot of different firms.
: B,
169. Accounting information should be verifiable in order to enhance

a. comparability.
b. faithful representation.
c. consistency.
d. relevance.
: B,
170. Accounting information is relevant to business decisions because it

a. has been verified by external audit.
b. is prepared on an annual basis.
c. confirms prior expectations.
d. is neutral in its representations.
:C
171. If accounting information has relevance, it is useful in making predictions about

a. future IRS audits.
b. new accounting principles.
c. foreign currency exchange rates.
d. the future events of a company.
: D,
172. Relevant accounting information

a. is information that has been audited.
b. must be reported within the operating cycle or one year, whichever is longer.
c. has been objectively determined.
d. is information that is capable of making a difference in a business decision.
: D,
173. Which of the following is not a quality associated with faithful representation?
a. Complete
b. Materiality
c. Neutral
d. All of these answer choices are correct.
: B,
174. Accounting information should be neutral in order to enhance
a. faithful representation.
b. consistency.
c. comparability.
d. relevance.
:A
175. Characteristics associated with relevant accounting information are

a. comparability and timeliness.
b. predictive value and confirmatory value.
c. neutral and verifiable.
d. consistency and understandability.
:B
176. Characteristics associated with faithfully representative accounting information are

a. verifiable and timely.
b. verifiable and neutral.
c. complete and neutral.
d. relevance and verifiable.
: C,
177. Which of the following statements is not true?

a. Comparability means using the same accounting principles from year to year within a
company.
b. Faithful representation is the quality of information that gives assurance that it is free of error.
c. Relevant accounting information must be capable of making a difference in the decision.
d. The primary objective of financial reporting is to provide financial information that is useful to
investors and creditors for making decisions.
: A,
178. A company can change to a new method of accounting if management can justify that the
new method results in
a. more meaningful financial information.
b. a higher net income.
c. a lower net income for tax purposes.
d. less likelihood of clerical errors.
:A
179. An item is considered material if

a. it doesn't costs a lot of money.
b. it is of a tangible good.
c. its size is likely to influence the decision of an investor or creditor.
d. the cost of reporting the item is greater than its benefits.
: C,
185. Which of the following is a constraint in accounting?

a. Comparability
b. Cost
c. Consistency
d. Relevance
: B,
186. The accounting concept that indicates assets should be reported at the price received to
sell an asset is the
a. economic entity assumption.
b. monetary unit assumption.
c. fair value principle.
d. historical cost principle.
: C,
187. For accounting information to have relevance, it must be

a. consistent.
b. timely.
c. verifiable.
d. understandable.
:B

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Chapter 2 The Recording Process

What was the amount of revenue for July?

MULTIPLE CHOICE QUESTIONS

57. On a classified balance sheet, short-term investments are classified as

58. A current asset is

59. Which of the following is not classified properly as a current asset?

60. An intangible asset

64. Which of the following would not be classified as a long-term liability?

65. Which of the following is not a current liability?

69. On a classified balance sheet, companies usually list current assets

70. Intangible assets are

71. Which statement about long-term investments is not true?

72. These are selected account balances on December 31, 2014.

Cash $ 130,000 Accounts payable $ 140,000

Cash $ 130,000 Accounts payable $ 140,000

Cash $ 130,000 Accounts payable $ 140,000

Cash $ 130,000 Accounts payable $ 140,000

79. Use the following data to calculate the current ratio.

Cash $ 130,000 Accounts payable $ 140,000

Solution: ($130,000 + $100,000 + $110,000 + $60,000) ÷ ($140,000 + $20,000) = 2.50:1

Cash $ 35,000 Accounts payable $ 65,000

Cash $ 35,000 Accounts payable $ 65,000

Cash $ 35,000 Accounts payable $ 65,000

Solution: $3,000,000 − $780,000 − $475,000 = $1,745,000

Cash $ 84,000 Accounts payable $ 110,000

161. What organization issues U.S. accounting standards?

163. All of the following are qualities of useful information except

164. The two fundamental qualities of useful information are

165. The convention of consistency refers to consistent use of accounting principles

166. The quality of consistency enhances

168. In order for accounting information to be relevant, it must

169. Accounting information should be verifiable in order to enhance

170. Accounting information is relevant to business decisions because it

171. If accounting information has relevance, it is useful in making predictions about

172. Relevant accounting information

175. Characteristics associated with relevant accounting information are

176. Characteristics associated with faithfully representative accounting information are

177. Which of the following statements is not true?

179. An item is considered material if

185. Which of the following is a constraint in accounting?

187. For accounting information to have relevance, it must be

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