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Question(s) / Instruction(s):

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management and financial management are called:

a)            Cost of goods sold

b)            Non-operating activities

c)            Purchasing expenses

d)            General and administrative expenses

e)            Selling expenses



Dividends are a type of business expense.

a)            True

b)            False



Accounting is an information and measurement system that identifies records and communicates financial information to users.

a)            True

b)            False



According to the cost principle, it is preferable for managers to report the most current estimate of an assets value.

a)            True

b)            False



A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

a)            True

b)            False



If a customer owes interest on accounts receivable, the Interest Revenue account is debited and Accounts Receivable is credited.

a)            True

b)            False



Adjusting entries result in a better matching of revenues and expenses.

a)            True

b)            False



Given the following items and costs as of the balance sheet date, determine the value of Faltron Companys merchandise inventory.

§ $1,000 goods sold by Faltron to another company. The goods are in transit and shipping terms are FOB destination.

§ $2,000 goods sold by another company to Faltron. The goods are in transit and shipping terms are FOB destination.

§ $3,000 owned by Faltron but in the possession of another company the consignee.

§ Damaged goods owned by Faltron which originally cost $4,000, but which now have a $500 net realizable value.

a)            $5,000

b)            $10,000

c)            $4,500

d)            $5,500

e)            $6,500




The advantage of the allowance method of accounting for uncollectible accounts is that it identifies the specific customers who do not pay their bills.

a)            True

b)            False



Prior to recording adjusting entries at the end of an accounting period, some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.

a)            True

b)            False

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