Norris Company uses the installment basis of accounting. On September 1, 2011, it sold a refrigerator for $1,600. The cost of the refrigerator was $960. Payments from the customer were to be received over a 10-month period beginning September 30, 2011. The amount of gross margin realized in 2012 is:

$256

$320

$284

$384

Flag this Question

Question 2 1 pts

The practice of overstating expenses in the current period to avoid handicapping future periods is acceptable:

a	) if fully disclosed.

b) if done consistently.

c	) only if the amounts are immaterial.

d) because it is conservative.

Which of the following is considered a major principle of accounting?

Entity

Going concern (continuity)

Matching

Periodicity (time periods)

Flag this Question

Question 4 1 pts

The major underlying assumptions or concepts of accounting are so theoretical that they are not very useful.

True

False

Flag this Question

Question 5 1 pts

In most instances, when the substance and form of a transaction conflict, accountants should record the transaction in accordance with its legal form.

True

False

Flag this Question

Question 6 1 pts

Which of the following situations indicates the application of substance over form?

Recording cost of goods sold as the difference between cost of goods available for sale and the amount of ending inventory determined through a physical count.

Recording an automobile as an asset when the automobile is being leased for five years with a bargain purchase option of $1 at that time.

Recording a purchased building at purchase price rather than listed selling price.

Recording research and development expenses on the income statement rather than on the balance sheet as an intangible asset.

Flag this Question

Question 7 1 pts

Which of the following statements is NOT true? Product costs are costs that are:

carried in the accounts while the goods are still on hand.

incurred in the acquisition or manufacture of goods.

charged to expense in the accounting period in which incurred.

charged to expense only when the goods are sold.

Flag this Question

Question 8 1 pts

When economic substance and legal form conflict, the accountant records legal form because one must obey the law.

True

False

Flag this Question

Question 9 1 pts

As part of their annual reports, companies include summaries of their significant accounting policies.

False

True

Flag this Question

Question 10 1 pts

For information to be reliable, it must possess predictive value, feedback value, and must be timely.

False

True