T OR F 5. Treasury stock is normally reported in the investment section of the b
ID: 2567737 • Letter: T
Question
T OR F
5. Treasury stock is normally reported in the investment section of the balance sheet.
6. Retained earnings represents the total amount of undistributed earnings of previous periods.
7. Events that take place during the "subsequent events" period may have an impact upon the balance sheet and the other basic financial statements for the preceding year, but these events cannot affect the amounts reported in the statements.
8. Costs of collection, bad debt losses from uncollectible receivables, and possible product warranty costs are examples of expenses that are directly related to revenues for the period.
9. Under generally accepted accounting principles and using accrual accounting, revenue recognition normally occurs when cash is received.
10. Extraordinary items are events and transactions that are both unusual in nature and infrequent in occurrence.
Explanation / Answer
Answer(5)- False, Treasury stock is reported in the Stockholder's equity section.
Answer(6)- True, Retained earnings represents the total amount of undistributed earnings of previous periods. It is the amount of profit, retained by company.
Answer(8)- True, Costs of collection, bad debt losses from uncollectible receivables, and possible product warranty costs are examples of expenses that are directly related to revenues for the period.
Answer(9)- False, Under generally accepted accounting principles and using accrual accounting, revenue recognition normally occurs when services are rendered, no matter if cash is received or not.
Answer(10)-True, Extraordinary items are events and transactions that are both unusual in nature and infrequent in occurrence.
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