Which of the following expenditures should be expended in full in the current period resulting in an
Question:
Which of the following expenditures should be expended in full in the current period resulting in an immediate reduction in the income statement?
a. | An expense that extends the life of the asset | |
b. | an expense that increases the capacity of the asset | |
c. | An expense that improves the efficiency of the asset | |
d. | An expense to maintain the asset's current production |
If a the chance of a liability occurring is reasonably possible then the company must ______ that liability in its financial statements.
a. | not record or disclose | |
b. | only disclose | |
c. | record and disclose | |
d. | none of the choices is correct |
Which of the following is generally the best indicator that a seller can recognize revenue on a transaction?
a. | The buyer has paid for the good ro services | |
b. | The seller has transferred control of the product to the customer | |
c. | The right to return the product has expired | |
d. | The buyer and seller have signed a contract that obligates both parties to perform |
If a customer is offered the right to return a good or product purchased (i.e., variable consideration), then this will always preclude the seller from recognizing revenue until the right to return expires.
True
False
In order for a contract between two parties to be considered valid for revenue recognition purposes it must be in writing.
True
False
Depreciation expenses is generally calculated by the following formula:
Cost- Residual Value
Expected useful life of the asset
If a company wanted to overstate their fixed assets balance, ho would they manipulate depreciation expense?
a. | Increase the residual value of the asset | |
b. | Decrease the residual value of the asset | |
c. | Decrease the useful life of the asset | |
d. | Any one of the above methods will result in an overstatement of the fixed asset balance |
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach