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8.2   Questions 1) When determining the cost of a plant asset, GAAP requires the use of the market value principle. 2) Neither land nor land improvements are depreciated. 3) When a company pays a single price for a group of assets, the purchase is referred to as a basket purchase. 4) Whether a building.
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6.2   Questions 1) An organization's employees are responsible for the design and implementation of the internal control system. 2) One objective of an internal control system is to safeguard the assets of a company. 3) Ensuring compliance with laws and regulations is an example of what following GAAP can do for a company. 4).
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8.3   Questions 1) Depreciation is a process of valuation of an asset. 2) Depreciation is based upon cost, useful life and salvage value. 3) A fixed asset's useful life may be short due to obsolescence. 4) Straight-line depreciation is calculated by the formula (cost - salvage value) divided by useful life (generally in years). 5).
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11) An overstatement of earnings can inflate a company's stock price and may also be used to: A) deflate the amount of taxes the corporation pays. B) avoid paying raises to employees. C) ensure larger bonuses to upper management at year-end. D) avoid paying dividends to stockholders. 12) The primary form of fraud committed against.
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8.5   Questions 1) Disposal of a plant asset always occurs after the asset has been fully depreciated. 2) When an asset is disposed of, the current period's depreciation expense account must be updated to the time of the disposal. 3) The first step in recording a disposal transaction is to figure the gain.
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5.8   Questions 1) Inventory is the most important asset in a service business. 2) Inventory turnover equals average ending inventory divided by cost of goods sold. 3) Inventory turnover measures the amount of times a company turns over its beginning inventory during a period. 4) Other than the cost of purchasing the inventory, another.
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6.3   Questions 1) In a broad sense, fraud is the use of deception or trickery for personal gain. 2) Fraud is always committed against an organization. 3) Fraud is one of the less perpetrated business crimes today. 4) An organization's employees are usually responsible for fraud that is committed by a business organization. 5) For.
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21) Allied Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1. Its estimated life is 5 years. To the nearest dollar, what is the equipment's depreciation using double-declining-balance for year 2? A) $ 26,000 B) $ 20,000 C) $ 15,600 D) $ 12,000 22) Digital Solutions.
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11) Inventory errors cancel out at the end of ________ accounting periods. A) 1 B) 2 C) 3 D) 4 12) Which of the following is an INCORRECT statement if ending inventory is overstated? A) Cost of goods sold is overstated. B) Gross profit is overstated. C) Net income is overstated. D) Income tax is overstated. 13) Which of the.
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21) Which of the following would NOT be considered a control activity? A) Keeping accounting records B) Having written job descriptions C) Not having employees take vacations D) Changing passwords regularly 22) Which of the following would NOT be considered part of the control environment? A) Having integrity and ethical values B) Assessing chances of fraud C) Having.
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7.2   Questions 1) Cash is listed first on the balance sheet because it is the least liquid asset. 2) Each cash account is listed separately on the balance sheet. 3) Cash equivalents may include money orders and traveler's checks. 4) Ninety-day U.S. Treasury notes are considered cash equivalents. 5) Cash consists of anything that a.
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11) A properly designed internal control system can guarantee that fraud will not occur. 12) Internal control is a comprehensive system that helps an organization do all of the following EXCEPT: A) safeguard assets. B) safeguard liabilities. C) operate efficiently and effectively. D) ensure compliance with applicable laws and regulations. 13) Internal control systems: A) are the.
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11) Which intangible asset is recorded only when an acquiring company purchases another company? A) Franchise B) Goodwill C) Brand name D) Trademark 12) According to GAAP, goodwill is: A) amortized every year. B) recorded as a gain only when the goodwill is gaining value. C) recorded as a loss only when the goodwill is losing value. D) amortized.
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11) Streamlined payment procedures now involve the use of electronic data interchange and electronic funds transfer between and among suppliers and merchandisers. 12) Bank reconciliations are an important part of internal control that should be performed daily. 13) In a bank reconciliation, the bank balance and the book balance must be adjusted.
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7.4   Questions 1) The simplest way to account for an uncollectible account is to use the allowance method. 2) When writing off an account using the direct write-off method, the journal entry would include a debit to Bad Debt Expense. 3) GAAP generally allows the direct write-off method for accounting for bad debts. 4).
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6.5   Questions 1) Behaving ethically and behaving legally are the same. 2) Ethical conduct refers to how society requires people to act. 3) A person who reports unethical behavior is called a whistleblower. 4) The Sarbanes-Oxley Act requires a company's stockholders to be more responsible. 5) The Sarbanes-Oxley Act only applies to publically traded.
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5.7   Questions 1) If a company experiences a loss of inventory for fire, there is no way to estimate the inventory. 2) The first step in using the gross profit method to estimate ending inventory is to: A) calculate the cost of goods available for sale. B) estimate the ending inventory. C) estimate the beginning.
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5.5   Questions 1) An example of full disclosure would be a footnote to the financial statements indicating what method was used to value inventory. 2) Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism. 3) Shrinkage refers to the loss of inventory due.
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7.5   Questions 1) Accounts Receivable are reported at current market value in the current assets sections of the balance sheet. 2) Accounts receivable may be reported net of Allowance for Doubtful Accounts. 3) Accounts Receivable should be reported at ________ in the ________ section of a company's balance sheet. A) Market value; Long-Term Assets B).
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7.7   Questions 1) Another name for the quick ratio is the acid-test ratio. 2) The formula for the quick ratio is quick assets divided by non-current assets. 3) Accounts receivable turnover measures the ability to collect cash from a company's credit customers. 4) The account receivable turnover is computed by taking the average net.
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5.4   Questions 1) Under the conservatism principle, liabilities and expenses would be overstated, rather than understated. 2) The LCM rule compares original cost to current replacement cost to determine the amount at which inventory should be valued. 3) A material amount of value is one large enough to cause someone to change a.
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8.8   Questions 1) Equity securities which management intends to hold for less than one year would be considered other long-term assets. 2) Investments in debt securities, such as bonds, may be classified as either current or long-term assets. 3) Increases in the value of a security while the company still owns it are.
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8.7   Questions 1) The process of allocating the cost of natural resources is called depletion. 2) Computing depletion expense is much like computing depreciation under the straight-line method. 3) In computing depletion expense, salvage value is not part of the computation. 4) Items such as minerals are considered natural resources. 5) Pegasus Corporation purchased a.
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21) The period end adjusting entry for bad debt expense under the allowance method is: A) Bad Debt Expense, debit; Allowance for Uncollectible Accounts, credit. B) not required. C) Cash, debit; Accounts Receivable/customer name, credit. D) Bad Debt Expense, debit; Accounts Receivable/customer name, credit. 22) The journal entry to write off a customer's account under.
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41) The factor that might make a person steal money because "The company has more than its fair share," would be: A) realization. B) perceived opportunity. C) rationalization. D) perceived pressure. 42) Brian is stealing money because the cash registers are not always locked away at night. This is an example of: A) realization. B) perceived opportunity. C).
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8.6   Questions 1) The process of allocating the cost of intangible assets to expense is called amortization. 2) Amortization is computed over the useful life of the intangible asset using the double-declining-balance method. 3) Instead of using an accumulated amortization account similar to accumulated depreciation, the expense of amortization is directly credited to.
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21) Receiving something from a supplier in exchange for authorizing payments for goods not delivered to the employer would be an example of a: A) cash receipts scheme. B) cash register scheme. C) bribe or kickback. D) check tampering scheme. 22) Cash register schemes are a form of: A) employee embezzlement. B) bribe. C) fraudulent financial reporting. D) management.
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21) Which would NOT be included in the recorded price of a piece of machinery? A) Installation costs B) Maintenance costs C) Delivery charges D) Sales taxes 22) Action Motorsports made a basket purchase involving four assets. Their market values were A: $45,000; B: $37,500; C: $41,000; and D: $53,000. The price Jim paid for.
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31) Committing a fraud because of a drug habit or living beyond your means is an example of: A) realization. B) perceived opportunity. C) rationalization. D) perceived pressure. 32) Committing a fraud because of easy access to a company's assets is an example of: A) realization. B) perceived opportunity. C) rationalization. D) perceived pressure. 33) An employee's moral beliefs make.
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6.4   Questions 1) Audits confirm the validity and reliability of accounting information. 2) Employees conduct external audits of a business. 3) Generally Accepted Auditing Standards are developed by the Securities and Exchange Commission. 4) Certified Public Accountants perform external audits of a company to confirm that the financial statements are fairly presented according to.
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11) There are two methods for accounting for uncollectible receivables. 12) Receivables of a company CANNOT be long-term assets. 13) Which is NOT a benefit to extending credit to customers? A) Bad debt expenses B) Increased revenues C) Increased profits D) Wider range of customers 14) When a customer fails to pay on their account, it creates.
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8.1   Questions 1) Plant assets can be called fixed assets, physical assets, or tangible assets. 2) Patents and copyrights can be seen, held or touched. 3) Timber, coal, and other minerals are long-term assets called natural resources. 4) The cost of long-term assets must be allocated to an expense as the asset is.
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8.4   Questions 1) Expenditures incurred, such as changing the oil and filter on a delivery truck, would be considered ordinary repairs. 2) Replacing an engine on a delivery truck would be considered a betterment. 3) Adding on 30 rooms to an existing hotel would be considered a betterment because the addition added to.
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11) Juarez & Co. reported sales of $515,000; beginning net accounts receivable of $212,000 and ending net accounts receivable of $224,000. Juarez & Co.'s accounts receivable turnover is: A) 2.30. B) 2.36. C) 2.43. D) 3.44. 12) Maxell Company reported sales of $343,000; beginning net accounts receivable of $89,000 and ending net accounts receivable of $111,000..
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5.3   Questions 1) The choice of inventory costing method does not have an effect on net income. 2) The average cost method generates gross profit, net income, and income tax amounts that fall between the extremes of FIFO and LIFO. 3) In order to pay the least income tax possible in periods of.
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7.3   Questions 1) Accounts receivable are more formal and usually longer in terms than notes receivable. 2) Notes receivable generally include a charge for interest. 3) A company may have receivables such as loans to employees and interest receivable. 4) Accounts receivable are classified as current assets. 5) Which of the following would indicate poor.
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8.9   Questions 1) Long-term assets usually begin with the listing of natural resources first. 2) GAAP does not allow property, plant, and equipment to be shown at net book value on the balance sheet. 3) Intangibles, such as patents and copyrights, are generally listed after property, plant, and equipment and after natural resources.
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6.1   Questions 1) The process CPAs use to confirm that financial reports conform to GAAP is called a review. 2) U.S. GAAP has been organized into what is called the Accounting Standards Code. 3) Currently, most European countries are using International Financial Reporting Standards. 4) The U.S. is now using International Financial Reporting.
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5.6   Questions 1) The ending inventory of one year becomes the beginning inventory of the next year. 2) Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation. 3) An ending inventory error in one.
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7.1   Questions 1) Credit sales are the most desirable form of sales. 2) The most common credit cards issued by financial institutions are Discover and American Express. 3) The most common types of financial institution credit cards are MasterCard and Visa. 4) MasterCard and Visa sales are treated like cash sales. 5) Most financial institutions.
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