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Costs of goods sold

6. Under STATEMENT OF FINANCIAL ACCOUNTING CONCEPTS NO. 5, which of the

following, in the most precise sense, means the process of convert-

ing noncash resources and rights into cash or claims to cash?

a. Recognition

b. Measurement

c. Realization

d. Allocation

7. The accounting principle of matching is best demonstrated by

a. not recognizing any expense unless some revenue is realized.

b. associating effort (expense) with accomplishment (revenue).

c. recognizing prepaid rent received as revenue.

d. establishing an Appropriation for Contingencies account.

8. The following information is available for Bass Company for 1999:

Disbursements for purchases $700,000

Increase in trade accounts payable 50,000

Decrease in merchandise inventory 20,000

Costs of goods sold for 1999 was

a. $770,000.

b. $730,000.

c. $670,000.

d. $630,000.

9. Adjusting entries are necessary to

1. obtain a proper matching of revenue and expense.

2. achieve an accurate statement of assets and equities.

3. adjust assets and liabilities to their fair market value.

a. 1

b. 2

c. 3

d. 1 and 2

10. When an item of expense is paid and recorded in advance, it is

normally called a(n)

a. prepaid expense.

b. accrued expense.

c. estimated expense.

d. cash expense.

11. Year-end net assets would be overstated and current expenses would

be understated as a result of failure to record which of the

following adjusting entries?

a. Expiration of prepaid insurance

b. Depreciation of fixed assets

c. Accrued wages payable

d. All of these

Solution Preview

6. Under STATEMENT OF FINANCIAL ACCOUNTING CONCEPTS NO. 5, which of the

following, in the most precise sense, means the process of convert-

ing noncash resources and rights into cash or claims to cash?

a. Recognition

7. The accounting principle of matching is best demonstrated by

b. associating ...

Solution Summary

Response provides help in computing the Costs of goods sold

$2.19