2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate solutions|Already graded A+|Get it 100% correct.

2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate solutions|Already graded A+|Get it 100% correct. Practice questions for this set Learn 1 / 7 Study with Learn Company A will report lower net income than company B. Company A will report lower net income than company B. Yes: This occurs because Company A will report higher cost of goods sold and thus lower gross profit, and thus lower net income. Company A reports higher cost of goods sold because the most recently purchased inventories are the ones that are recognized first in COGS, and more recent inventories are priced higher than older inventories. Company A will report higher PP&E than company B. No: LIFO/FIFO impacts inventory not PP&E. Company A will report higher total assets than company B. No: Company A carries inventory at lower value on the balance sheet and this lower total assets. Company A and Company B will have identical shareholders equity balances. No: Because company A will report lower net income, retained earnings will be lower for company A and thus lower shareholders equity. Choose matching term 1 The "matching principle" states that: Costs associated with making a product must be recognized at the end of the production process. Costs associated with making a product must be recognized immediately as incurred. Costs associated with making a product must be recognized during the same period as revenue generated from that product. 12/13/24, 9:53 AM 2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate soluti… Terms in this set (27) Costs associated with making a product must be recorded during the same period as the sales, general, and administrative expenses that are also associated with the product. 2 Imagine two identical companies, with only one difference - Company A reports using LIFO, while Company B reports using FIFO. Assume that prices of inventories steadily rise over time. Which of the following is correct? Company A will report lower net income than company B. Company A will report higher PP&E than company B. Company A will report higher total assets than company B. Company A and Company B will have identical shareholders equity balances. 3 Which of these items are current liabilities? Cash. Money owed to suppliers within 30 days. Taxes owed and due. A 5-year bank loan due this year. 1, 2 and 3 1, 3 and 4 2 and 3 only 2, 3 and 4 3 and 4 only 4 Warren Corporation purchased a truck at a cost of $60,000. It has an estimated useful life of five years and estimated residual value of $5,000. At the beginning of year three, Warren's managers concluded that the total useful life would be four years, rather than five years. There was no change in the estimated residual value. What is the amount of depreciation that Warren should record for year 3 under the straight-line depreciation method? $15,500 $16,500 $8,250 $11,000 Don't know? 12/13/24, 9:53 AM 2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate soluti… The regulating body that oversees the development of accounting standards in the U.S. is: SFAS GAAP FASB IASB FASB formulates accounting standards through the issuance of Statements of Financial Accounting Standards (SFAS). These statements make up the body of accounting rules known as the Generally Accepted Accounting Principles (GAAP). IASB oversees international financial reporting standards (IFRS). Which of the following statements is TRUE? GAAP requires that firms show recorded values for acquired intangible assets such as patents and trademarks on their financial statements. GAAP requires that firms show recorded values for intangible assets such as employee and customer loyalty. GAAP requires that financial statements accurately reflects the market value of internally- developed trademarks such as the value of the Coca-Cola brand name. All of the above. GAAP requires that firms show recorded values for acquired intangible assets such as patents and trademarks on their financial statements. GAAP requires that firms only show measurable activities, such as the value of acquired intangible assets. Assets such as employee, customer loyalty and internally- developed trademarks are not shown on financial statements because they're difficult to quantify. 12/13/24, 9:53 AM 2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate soluti… Which of the following statements is TRUE? Publicly traded US companies are required to file four 10-Q's and one 10- K annually. All US companies are required to file three 10- Q's and one 10-K annually. Publicly traded US companies are required to file three 10-Q's and one 10-K annually. Publicly traded US companies are required to file one 10-K annually; 10- Q's are typically filed but are technically voluntary. Publicly traded US companies are required to file three 10-Q's and one 10-K annually. Publicly-traded US companies must file three quarterly (10-Q) reports at the end of their 1Q, 2Q and 3Q, and a 10-K at the end of their fiscal year. he income statement is designed to measure: The liquidity of a firm. How solvent a company has been. The income of a firm at a point in time. Cash inflows/outflows generated over a period of time. The profits of a firm over a period of time. The profits of a firm over a period of time. The income statement is designed to show the profitability of a business (revenues less expenses) over a period of time (usually a quarter or year). The income statement is an accrual measure of profits and thus not the best measure of cash flows. It is also a poor measure of a company's liquidity or solvency, which involves an analysis of a company's short term and long term assets and liabilities, respectively. The balance sheet is designed to show a firm's financial position, while the cash flow statement shows the amount of cash generated by a firm. 12/13/24, 9:53 AM 2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate soluti… The "matching principle" states that: Costs associated with making a product must be recognized at the end of the production process. Costs associated with making a product must be recognized immediately as incurred. Costs associated with making a product must be recognized during the same period as revenue generated from that product. Costs associated with making a product must be recorded during the same period as the sales, general, and administrative expenses that are also associated with the product. Costs associated with making a product must be recognized during the same period as revenue generated from that product. Jones Company has provided the following information: Cash sales totaled $255,000. Credit sales totaled $479,000. Interest income was $7,700. Interest expense was $19,900. Cost of goods sold was $336,000. Rent expense was $36,000. Salaries expense was $49,000. Other operating expenses totaled $79,000. How much was Jones' operating income? 234,000 Operating revenues = $734,000 = $255,000 + $479,000. Operating expenses = $500,000 = $336,000 + $36,000 + $49,000 + $79,000. Operating income = $234,000 = $734,000 - $500,000. 12/13/24, 9:53 AM 2024/25|Accounting Crash Course | most recent version|Comprehensive questions and verified answers/accurate soluti… Which of the following statements is FALSE? Revenue is not recognized at the time of delivery of goods and services if cash is received after delivery of the goods and services. Collecting cash after delivery of a good or service does not create revenue on the income statement on the date of collection. Revenue is recognized at the time of delivery of the goods or services regardless of if cash is received. A liability is created when cash is received prior to delivery of the goods or services. Revenue is not recognized at the time of delivery of goods and services if cash is received after delivery of the goods and services. Revenue is recognized at the time of delivery of goods and services regardless of when the cash is received. Clayton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Clayton's gross profit margin? 40% 61.3% 62% 155% 62% Gross profit ($620,000) equals sales (X) minus cost of goods sold ($380,000). Therefore, Sales = Gross profit ($620,000) plus Cost of goods sold ($380,000). Sales = $1,000,000. Gross profit percentage = Gross profit divided by Sales = $620,000 ÷ $1,000,000 = 62%.