PRETEST

Corrected choice
tracks and records an organization's business
1 B transactions
2 D Entity concept
3 C Materiality concept

Oliver should record the new machine asset for

4 B $10,000, the most reliable amount
Revenue of $2,000 has been realized but it has not
5 C been earned
6 A As each item is purchased Choice C
7 C A balance sheet
8 D Investing
9 B An investing activity
10 C Selling merchandise
11 A The operating section
12 C Independence
13 C Owners' equity
14 D Expenses
the usefulness of the reported information for
15 D economic decisions

16 D The difference between assets and liabilities

17 A $17,000
The item must have been acquired at a measurable
18 D cost

19 B It reduces the market value of the company

Make no record at this time; record revenue

20 D and receipt of cash on delivery of TV Choice C
21 B $18,000
22 A $46,000
23 C $3,500
24 A $24,500
25 A $4,000
26 B $140,000
27 C $144,000
28 A $4,000
29 A $7,000
This is Torrington's indirect method statement of cash
30 C flows
31 C A net inflow of $40,000 Choice B

Spinner's 2014 cost of goods sold was $42,000; its

32 C 2014 inventory purchases were $47,000
33 C Conservatism concept Choice B
34 C 18000
35 A 46000
 Record a gain of $10,000 on the stamping
36 D machine

Be included in the investing activities section of

37 B Suntory's 2016 statement of cash flows
38 D A net outflow of $46,000
39 D A net inflow of $7,000
40 C A net inflow of $68,000
Debit cash $50,000; credit short-term debt
41 D $50,000
42 C Debits on the left; credits on the right
Debit accumulated depreciation $12,000; credit
43 D plant assets $12,000
44 B 370000
Debit interest expense $2,500; debit long-term
45 D loan $1,000; credit cash $3,500
Debit tax expense $30,000; credit cash
46 B $20,000; credit taxes payable $10,000
47 A A credit balance of $20,000
Debit inventory $100,000; credit cash $42,000;
48 B credit accounts payable $58,000
Debit cash $100; debit accounts receivable $50;
49 A credit cost of good sold $150 Choice B
Debit cost of goods sold expense $90; credit
50 C inventory $90
51 B 160000 Choice C
52 B 170000 Choice D
FIFO has a higher inventory balance and a
53 D higher net income than LIFO
54 A 1900000
55 C make no journal entry
56 B 115000
Total assets and shareholder's equity will
57 A decrease by the same amount
58 C 10000
The lease term is 90% of the asset's estimated
59 D useful life

The company is reasonably assured of

collecting the receivable and titles and risks of
60 A ownership have been exchanged
61 B $ 8,200 and $ 77,600
62 C 15040
internally generated goodwill is recorded as an
63 A asset.
64 A $ 1,800 liability
Both interest incurred and dividends declared
65 A reduce net income. Choice C
 Unrealized gains and losses on trading
66 A securities are recognized in income.
67 C $ 0, $ 0 and $ 60,000 Choice B

68 D be tested for impairment and not amortized