Reference no: EM13573313
1. The term ''market'', as use in the expression "lower-of-cost-or-market", means replacement cost not retail price.
2. Amortization is the pro rata allocation of the cost of natural resource to expense.
3. Merchandise inventory is presented on the balance sheet in the intangible assests section.
4. If a plant asest is sold for less than its book value, a loss should be recorded.
5. The cost of a patent should be charged to expense over a period of 20 years or its useful life whicher period is longer.
6. The Financial statements of two companies in the same industry may not always be comparable because of differences in account methods used.
7. When the LIFO method is used, Cost of Merchandise Sold is charged with the most recently aquired goods.
8. Assest held under capital leases are presented on the balance sheet together with assests actually owned by the company.
9. The Maturity value of an interest-bearing note is the less then face value.
10. The Direct write off method of accounting for bad debt expense is not acceptable used for tax reporting.
11. When the "estimate based on sales" approach to esimating uncollectiable accounts (bad debts) Expsense is used, the existing balance in the allowance account is generally ignored.
12. When writing off individual customer accounts as uncollectible under the allowance method, the uncollectiable accounts (bad debts) expense account is debited.
13. Temporary investments that are expected to be realized in cash within a year are presentated in the current assests sectin of the balance sheet.
14. The depreciation system used for tax purposes is called MACRS.
15. The interest of 6%, 180 day note for $2,000 is $120.
16. The discounting of a note receivable creates a contingent liability that continues in effect until the due date of the note.
17. A note receivable due in 90 days would be listed on the balance in the current liabilites section.
18. A business enterprise's "income from operation" may be better pridictor of a company's future earnings prospects than its "net income"
19.The finacial statements of two companies in the same industry may not always be comparable because of differences in accounting methods used.
20. The most common example of an equity security is stock in corporation.
21. Losses on the exchange of similar plant assest are recognized, but gains are not.
22. The term amortization means that pro rate allocation of an intangible assest to expense.
23. A defined benefit typ pension plan requires that a fixed amount of money be invested for the employee's behalf during the employee's working years.
24. The cost of a machine to be recorded in the Machinery account includes any transportation and installation charges necessary to get the machin in place and ready for use.
25. The use of perpetual inventory system eliminates the need of taking a physical inventory.
26. Intangible assests include such items as patents, copyrights, and goodwill.
27. In most states, State uneploment compenstation taxes are paid entirely by the employer.
28. The term market, as used in the expression lower-of cost- or market means replacement cost.
27 FICA taxes are levied on both the employee and employer.
28. The cash basis of accounting produces a better matching of revenues and expenses that the accrual basis.