Reference no: EM13356482

Choose the correct option in the questions.

1. A company issued rights to its existing shareholders to acquire, at $15 per share, 5,000 unissued shares of common stock with a par value of $10 per share. Common stock will be credited at

a.         $15 per share when the rights are exercised.

b.        $15 per share when the rights are issued.

c.         $10 per share when the rights are exercised.

d.        $10 per share when the rights are issued.

2. Under which approach does a company record all earnings from a project to the current period even though only a percentage of these earnings were actually realized during this period?

a.         proportional performance method

b.        Efforts-expected method

c.         Completed-contract method

3. Jane likes to shop at the Gap upon occasion. Last week she bought a sweater because it was just the right color to match another item in the wardrobe. Once she got the sweater home, it didn't match at all. So Jane revisited her local Gap store to return the sweater, which of the following indicates the accounts that would be affected by Jane's return?

a.         sales return and allowance and cost of goods sold

b.        accounts receivable

c.         sales return and allowances, costs of goods sold, inventory, and accounts receivable.

4. How should the balances of progress Billings and Construction in Progress be shown at reporting dates prior to the completion of a long-term contract?

a.         Progress Billings as income, Construction in progress as inventory.

b.        Net, as income from construction if credit balance, and a loss from construction if debit balance.

c.         Progress Billings as deferred income, construction in Progress as a current asset

d.        Net , as a current asset if debit balance, and current liability if credit balance