31.

When reporting depreciation, the amounts shown on the balance sheet and those on the income statement will differ. Why?

• The amount of depreciation reported on the income statement is calculated using the straight-line method, whereas that reported on the balance sheet is calculated using the double declining balance method.
• The amount of depreciation reported on the balance sheet includes the annual amount of depreciation, whereas the amount reported on the income statement only covers a certain period of time.
• The amount of depreciation reported on the balance sheet only covers a certain period of time, whereas the amount reported on the income statement includes the annual amount of depreciation.
• The amount of depreciation reported on the income statement is calculated using the units of production method, whereas that reported on the balance sheet is calculated using the straight-line method.

32.

Why should liability contingencies be included in a company's balance sheet?

It keeps the company prepared for a worst-case scenario.

It is a requirement under Federal law.

It is needed to balance out the gain contingencies.

It effectively prevents the risk from ever occuring.

33.

The _____ is the report that lists all the accounts of a company and their balances after all adjustments and closing entries have been made.

• post-adjustment trial balance
• adjusted trial balance
• post-closing trial balance
• trial balance

34.

Let's suppose that you are an investor who likes to take risks, who is a bit of a control freak, and who is attracted to the potential of unlimited profit. Which of the following bonds would best suit your needs?

• unsecured bonds
• bearer bonds
• serial bonds
• convertible bonds

35.

Which method allows the cost of an asset to be spread over its expected useful life?

Indirect

Capitalizing

Expensing

Cost plus