Money measurement concepts
| Financial Accounting Exam 2 | ||
| 1) | The fundamental accounting equation is a reflection of the: | |
| Money measurement concept | ||
| Conservatism concept | ||
| Dual-aspect concept | ||
| Historical cost concept | ||
| 2) | ||
| The historical cost concept reflects the fact that financial accounting practice favors: | ||
| Reliability over relevance | ||
| Management’s best guess over historical financial information | ||
| Relevance over reliability | ||
| Consensus market values over historical financial information | ||
| 3) | ||
| Jon Sports’ inventory account increased from $25,000 on December 31, 2003 to $30,000 on December 31, 2004. Which one of the following items would be included in the operating section of its 2004 indirect method statement of cash flows? | ||
| Add increase in inventory $5,000 | ||
| Subtract increase in inventory ($5,000) | ||
| Add inventory balance $20,000 | ||
| Subtract inventory balance ($20,000) | ||
| 4) | ||
| Turnkey Systems, Inc. began the month of June, 2004 with a prepaid expenses balance of $240,000. During the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. What was the June, 2004 ending balance of prepaid expenses? | ||
| A debit balance of $210,000 | ||
| A credit balance of $210,000 | ||
| A debit balance of $270,000 | ||
| A credit balance of $270,000 | ||
| 5) | ||
| Pentex and Marbro, small companies in the stationery business, each had a dollar gross margin of $20,000 during September 2004. Pentex’s September sales were twice that of Marbro’s. If Pentex’s gross margin as a percentage of sales for September was 10%, Marbro’s gross margin as a percentage of sales for the same period was: |
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