1. Which of the following is not an example of an uncertainty companies face in
ID: 2356061 • Letter: 1
Question
1. Which of the following is not an example of an uncertainty companies face in their financial reporting?a. Sales that have not yet been collected in cash
b. Warranties
c. A loan due to a bank
d. A lawsuit that has been filed against the company
2. Which of the following is true about U.S. GAAP?
a. U.S. GAAP has been developed over the past ten years.
b. U.S. GAAP allows financial statement users to compare the financial information of companies around the world.
c. U.S. GAAP helps accountants achieve an exact presentation of a company’s financial results.
d. U.S. GAAP helps investors and creditors evaluate the financial health of a company.
Questions 3, 4, and 5 are based on the following:
Mike Gomez owns a music store called Mike’s Music and More. The store has inventory that includes pianos, guitars, and other musical instruments. Mike rents the building in which his store is located, but owns the equipment and fixtures inside it. Last week, Mike’s Music made sales of $3,000. Some of the sales were made in cash. Some were made to customers who have an account with Mike’s Music and are billed at the end of the month. Last month, Mike’s Music borrowed $10,000 from a local bank to expand.
3. Which of the following is not an asset owned by Mike’s Music?
a. The inventory of musical instruments
b.The building in which the store is located
c. The amount owed to Mike’s Music by its customers
d. The equipment and fixtures in the store
4. Which of the following is a liability to Mike’s Music?
a. The loan amount that must be repaid to the bank
b. The amount owed to Mike’s Music by its customers
c. The sales Mike’s Music made last week
d. The cash collected from customers on the sales made last week
5. Which of the following is a true statement?
a. Mike’s Music is too small for anyone to care about its financial information.
b. The sales Mike’s Music made last week are considered revenue.
c. The intent of Mike’s Music to expand is an asset.
d. The sales Mike’s Music made on credit last week cannot be considered revenue.
Explanation / Answer
1.) C 2.) D 3.) B 4.) A 5.) B
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.