Earnings per share is calculated

for ordinary and preference shares

for ordinary and preference shares

only for treasury shares.

only for treasury shares.

only for preference shares.

only for preference shares.

only for ordinary shares.

only for ordinary shares .

Question 2

Which of the following statements is true?

Debits decrease liabilities and decrease assets.

Debits decrease liabilities and decrease assets.

Debits increase assets and increase liabilities.

Debits increase assets and increase liabilities.

Credits decrease assets and decrease liabilities.

Credits decrease assets and decrease liabilities.

Credits decrease assets and increase liabilities.

Credits decrease assets and increase liabilities.

Question 3

An accumulated depreciation account

increases on the debit side.

increases on the debit side.

is offset against total assets on the balance sheet.

is offset against total assets on the balance sheet.

is a contra-liability account.

is a contra-liability account.

has a normal credit balance.

has a normal credit balance.

Question 4

The proprietorship form of business organization

combines the records of the business with the personal records of the owner.

combines the records of the business with the personal records of the owner.

is characterized by a legal distinction between the business as an economic unit and the owner.

is characterized by a legal distinction between the business as an economic unit and the owner.

must have at least three owners in most states.

must have at least three owners in most states.

requires that the owner be personally liable for all debts of the business.

requires that the owner be personally liable for all debts of the business.

Question 5

Accrued revenues are

earned and recorded as liabilities before they are received.

earned and recorded as liabilities before they are received.

earned and already received and recorded.

earned and already received and recorded.

received and recorded as liabilities before they are earned.

received and recorded as liabilities before they are earned.

earned but not yet received or recorded.

earned but not yet received or recorded.

Question 6

Ayala Company showed the following balances at the end of its first year:

Cash $11,000

Prepaid insurance 500

Accounts receivable 2,500

Accounts payable 2,000

Notes payable 6,000

Share capital-ordinary 4,000

Dividends 500

Revenues 15,000

Expenses 12,500

What did Ayala Company show as total credits on its trial balance?

$27,500

$27,500

$28,000

$28,000

$26,500

$26,500

$27,000

$27,000

Question 7

Prepaid expenses are

paid and recorded in an asset account after they are used or consumed.

paid and recorded in an asset account after they are used or consumed.

paid and recorded in an asset account before they are used or consumed.

paid and recorded in an asset account before they are used or consumed .

incurred but not yet paid or recorded.

incurred but not yet paid or recorded.

incurred and already paid or recorded.

incurred and already paid or recorded.

Question 8

Accounts receivable arising from sales to customers amounted to 800,000 and 700,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was 3,100,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

3,000,000.

3,000,000.

3,100,000.

3,100,000.

3,200,000.

3,200,000.

3,800,000.

3,800,000.

Question 9

The historical cost principle requires that companies record assets at their

cost.

cost.

market price.

market price.

appraisal value.

appraisal value.

list price.

list price.

Question 10

Which of the following statement regarding depreciation is false?

The three factors affecting the computation of depreciation include cost, useful life, and residual value.

The three factors affecting the computation of depreciation include cost, useful life, and residual value.

The concept of depreciation is inconsistent with the going concern assumption.

The concept of depreciation is inconsistent with the going concern assumption.

Recognizing depreciation on an asset does not result in an accumulation of cash for replacement of the asset.

Recognizing depreciation on an asset does not result in an accumulation of cash for replacement of the asset.

Accumulated depreciation is reported on the statement of financial position as a deduction from plant assets.

Accumulated depreciation is reported on the statement of financial position as a deduction from plant assets.