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Accounting 301 ch 5 study guide
Intermediate Accounting I (ACCU 301)
Brandman University
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BE2-6 For each item below, indicate to which category of elements of financial statements it belongs.
(a) Retained earnings (b) Sales (c) Additional paid-in capital (d) Inventory (e) Depreciation (f) Loss on sale of equipment (g) Interest payable (h) Dividends (i) Gain on sale of investment (j) Issuance of common stock BRIEF EXERCISE 2-
(a) Equity (b) Revenues (c) Equity (d) Assets (e) Expenses (f) Losses (g) Liabilities (h) Distributions to owners (i) Gains (j) Investments by owners
BE2-7 Identify which basic assumption of accounting is best described in each item below.
(a) The economic activities of FedEx Corporation are divided into 12-month periods for the purpose of issuing annual reports.
(b) Solectron Corporation, Inc. does not adjust amounts in its financial statements for the effects of inflation. (c) Walgreen Co. reports current and noncurrent classifications in its balance sheet. (d) The economic activities of General Electric and its subsidiaries are merged for accounting and reporting purposes. BRIEF EXERCISE 2-
(a) Periodicity (b) Monetary unit (c) Going concern (d) Economic entity
BE2-8 Identify which basic principle of accounting is best described in each item below.
(a) Norfolk Southern Corporation reports revenue in its income statement when the performance obligation is satisfied instead of when the cash is collected. (b) Yahoo! recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. (c) Oracle Corporation reports information about pending lawsuits in the notes to its financial statements. (d) Eastman Kodak Company reports land on its balance sheet at the amount paid to acquire it, even though the estimated fair value is greater. BRIEF EXERCISE 2-
(a) Revenue recognition (b) Expense recognition (c) Full disclosure (d) Measurement (historical cost)
(c) Would not be disclosed. Depreciation would be inappropriate if the going concern assumption no longer applies.
(d) Net realizable value.
(e) Net realizable value (i., redeemable value).
BE2-11 What accounting assumption, principle, or constraint would Target Corporation use in each of the situations below?
(a) Target was involved in litigation over the last year. This litigation is disclosed in the financial statements. (b) Target allocates the cost of its depreciable assets over the life it expects to receive revenue from these assets. (c) Target records the purchase of a new Dell PC at its cash equivalent price. BRIEF EXERCISE 2-
(a) Full disclosure (b) Expense recognition (c) Historical cost
Accounting 301 ch 5 study guide
Course: Intermediate Accounting I (ACCU 301)
University: Brandman University
