Unearned rent, representing rent paid for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n) (Points: 4) asset. liability. capital stock. revenue. 12. Current liabilities are usually due within (Points: 4) one month or less. one week or less. one year or less. more than one year. 13. Gross profit is determined by subtracting the cost of merchandise sold from what? (Points: 4) The cost of merchandise purchased Fees earned Accounts receivable Net sales 14. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points: 4) As a revenue As the cost of merchandise sold It does not appear on the Balance Sheet As a current asset 15. Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n) (Points: 4) increase in Sales. increase in Merchandise Inventory. decrease in Merchandise Inventory. decrease in Sales. 16. Apple Co. sells merchandise on credit to Zea Co. in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount, and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? (Points: 4) $160, September 30 $160, September 25 $80, September 30 $80, September 25 17. Separating the custody of assets from accounting for assets is a part of which element of internal control? (Points: 4) Information and communication Monitoring Control procedures The control environment 18. A bank reconciliation should be prepared periodically because (Points: 4) the depositor's records and the bank's records are in agreement. the bank has not recorded all of its transactions. any differences between the depositor's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected. the bank must make sure that its records are correct. 19. Which of the following would be deducted from the balance per books on a bank reconciliation? (Points: 4) Service charges Outstanding checks Deposits in transit Notes collected by the bank 20. Which of the following would be added to the balance per books on a bank reconciliation? (Points: 4) Service charges Outstanding checks Deposits in transit Notes collected by the bank 21. One of the weaknesses of the direct write-off method is that it (Points: 4) understates accounts receivable on the balance sheet. violates the matching principle. is too difficult to use for many companies. is based on estimates. 22. Allowance for Doubtful Accounts is listed on the balance sheet under the caption (Points: 4) stockholders' equity. investments. fixed assets. current assets. 23. When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory method is called (Points: 4) first-in, last-out. last-in, first-out. first-in, first-out. average cost. 24. If the cost of an item of inventory is $60 and the current replacement cost is $65, the amount included in inventory according to the lower of cost or market is (Points: 4) $5. $60. $65. $125. 25. A capital expenditure would appear on the (Points: 4) income statement under operating expenses. balance sheet under fixed assets. balance sheet under current assets. income statement under other expenses. 26. Which of the following expenditures would NOT be included in the cost of an asset? (Points: 4) Freight costs Vandalism Sales tax Surveying fees 27. Expenditures that add to the utility of fixed assets for more than one accounting period are (Points: 4) committed expenditures. revenue expenditures. current expenditures. capital expenditures. 28. Depreciable cost equals (Points: 4) cost less accumulated depreciation. book value less residual value. cost less residual value. market value less residual value. 29. Where is interest expense listed on the income statement? (Points: 4) Other expense section Cost of merchandise sold Operating expenses Interest expense is on the balance sheet, not the income statement. 30. The cost of a product warranty should be included as an expense in the (Points: 4) period the cash is collected for a product sold on account. future period when the cost of repairing the product is paid. period of the sale of the product. future period when the product is repaired or replaced. 31. When are contingent liabilities required to be recorded? (Points: 4) When the liability is probable When the amount is reasonably estimable When the liability becomes legally enforceable Both the liability must be probable and the amount must be reasonably estimable before the contingent liability is recorded. 32. The par value per share of common stock represents (Points: 4) the minimum selling price of the stock established by the articles of incorporation. the minimum amount the stockholder will receive when the corporation is liquidated. the monetary amount assigned to each share of stock in the articles of incorporation. the amount of dividends per share to be received each year. 33. The liability for a dividend is recorded on which of the following dates? (Points: 4) The date of record The date of payment The date of announcement The date of declaration 34. Which of the following accounts is reported in the noncurrent liabilities section of the corporate balance sheet? (Points: 4) Bonds Payable Common Stock Dividends Payable Cash 35. Significant changes in stockholders' equity are reported in the (Points: 4) statement of stockholders' equity. income statement. retained earnings statement. statement of cash flows