The state legislature is currently debating a bill that, if passed, would require the Sandiken Company to go out of business. Which of the following principles or assumptions related to the preparation of Sandiken's financial statements is most directly affected by this impending vote of the legislature?

		going concern
		verifiability principle
		entity concept
		materiality concept

3.5 points

QUESTION 15

The organization that presently has the primary responsibility to establish generally accepted accounting principles that are applicable to the financial statements of entities in the U.S. private sector is the

		Accounting Principles Board
		Securities and Exchange Commission
		Financial Accounting Standards Board
		Committee on Accounting Procedure

3.5 points

QUESTION 16

Prior to preparing the organization's financial statements, the accountant prepares

		a balance sheet
		a trial balance
		an adjusted trial balance
		a closed trial balance

3.5 points

QUESTION 17

A company reports the following amounts at the end of the current year: Sales revenue $860,000 Selling expenses 250,000 Gain on the sale of land 30,000 Interest expense 10,000 Cost of goods sold 520,000 Under normal circumstances (ignoring tax effects), operating income would be computed as:

		$80,000.
		$50,000.
		$110,000.
		$90,000.

3.5 points

QUESTION 18

Current assets include cash and all other assets expected to become cash or be consumed:

		Within one year or one operating cycle, whichever is shorter.
		Within one year or one operating cycle, whichever is longer.
		Within one operating cycle.
		Within one year.

3.5 points

QUESTION 19

The principle of revenue recognition results in

		recording revenue in the income statement
		recording realized revenue when it is earned
		measuring relevant and reliable information whenever a transaction has occurred
		assuring the existence of all amounts recorded as net income

3.5 points

QUESTION 20

Which of the following is false with regard to the element "comprehensive income"?

		It is more inclusive than the traditional notion of net income.
		It includes net income and all other changes in equity exclusive of owners' investments and distributions to owners.
		This concept is not yet being applied in practice.
		It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

3.5 points

QUESTION 21

The purpose of closing entries is to

		update a periodic inventory account for credit sales
		update the retained earnings account on a daily basis
		apportion prepaid expenses and unearned revenues to bring the accounts up to date
		reduce all temporary accounts to zero

3.5 points

QUESTION 22

Hickory Corporation issued 400,000 shares of $2 par value capital stock at its date of incorporation for cash at a price of $8 per share. During the first year of operations, the company earned $80,000 and declared a dividend of $20,000. At the end of this first year of operations, the balance of the Common Stock account is:

		$3,200,000.
		$3,280,000.
		$ 800,000.
		$3,260,000.

3.5 points

QUESTION 23

The Collins Corporation shows the following dividends, revenue, and expense account balances before closing:

	Debit	Credit		Debit	Credit
Dividends distributed	$250		Salaries expense	$300
Sales revenue		$2,400	Utilities expense	130
Cost of goods sold	1,350		Miscellaneous expenses	120
Gain on sale of land		300	Income tax expense	180

Please prepare closing entries.