QUESTION 2

Which of the following elements best demonstrates the full disclosure principle?

Audit report

Company tax return

Explanatory notes to the financial statements

Multi-step income statement

QUESTION 3

When using a periodic inventory system, the cost of goods sold can be computed with the following formula:

Opening inventory - net purchases + ending inventory

Initial inventory + accounts payable - net purchases

Net purchases + opening inventory - ending inventory

Net purchases + ending inventory - opening inventory

QUESTION 4

The way to report cash flows from operations favored by the FASB is

under the indirect method with a note disclosing the optional collections and disbursements.

under the indirect method.

under the direct method.

under the method of adjustments to net income.

QUESTION 5

ABC agrees to make 30 wheelies for an amusement park in Texas. Under the terms of the contract, the customer will pay ABC a total of $ 60,000, and can cancel the contract if they so choose as long as they pay for the completed work.

ABC believes that if the client cancels the contract, they could sell the wheelies to another amusement park and still make a profit. The manufacturing contract is expected to last six months. As of December 31, 2019, 80% of the wheelies were finished and stored in the ABC warehouse to be delivered when the order is completed. How much income can ABC recognize in 2019 from this contract?

$ 48,000

$ 12,000

$ 0

$ 60,000

QUESTION 6

Juan inherited $ 5,000,000 from an aunt who passed away this year. On June 1, 2020, Juan decided to collect the inheritance in monthly payments at the end of each month beginning on June 30 of this year. Payments will be received over the next forty years. Juan will receive 6% interest on money not yet received. To determine the amount he will receive in each monthly check, Juan must use the table of

Present Value of an annuity due of $ 1 to 0.5%.

Present Value of an ordinary annuity of $ 1 at 0.5%.

Present Value of an ordinary annuity of $ 1 to 6%.

Future Value of an ordinary annuity of $ 1 at 0.5%.

QUESTION 7

Confirmation value and information neutrality are both ingredients of the relevance (relevance) characteristic.

True

False

QUESTION 8

Trade receivables are generally reported on the Balance Sheet at their present value because they are amounts that will be received in the future.

True

False

QUESTION 9

Long-term construction contracts typically include multiple performance obligations due to all the different types of goods or services included for each project.

True

False

QUESTION 10

Adjusting entries or entries are not required in accrual accounting.

True

False