a. Administrative expenses. c. Selling expenses. b. Sales revenues. d. Loss on d

ID: 2447397 • Letter: A

Question

a.Administrative expenses. c.Selling expenses.

b.Sales revenues. d.Loss on disposal of a business division.

D. If a company decides to record an expenditure as anasset rather than as an expense, how will this decision affect netincome in the current period?

a.Net income will behigher.

b.Net income will be lower.

c.Net income will not be affected by this decision.

d.It’s a mystery; nobody really knows.

E. When should a company report the cost of an insurancepolicy as an expense?

a.When the company first signs the policy.

b.When the company pays for the policy.

c.When the company receives the benefits from the policy, over itsperiod of coverage.

d.When the company receives payments from the insurance company forits insurance

claims.

F. When expenses exceed revenues in a given period (andthere are no gains or losses),

a.Stockholders’ equity will not be impacted.

b.Stockholders’ equity will be increased.

c.Stockholders’ equity will be decreased.

d.One cannot determine the impact on stockholders’ equitywithout additional information.

G. Which account is least likely to be debitedwhen revenue is recorded?

a.Accounts payable c.Cash

b.Accounts receivable d.Unearned revenue

C d D a E c F c G a

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