31. Revenue and expense accounts
A. are permanent accounts.
B. are temporary accounts.
C. reflect cumulative changes in each account since the organization of the firm.
D. record all cash receipts and cash disbursements.
E. none of the above
32. Which of the following is/are true?
A. Cost is the economic sacrifice made to acquire goods or services
B. When the good or service acquired has reliably measurable future benefits to a firm, the cost is an asset.
C. When the firm consumes the good or service, the cost is an expense.
D. All of the above are true.
E. None of the above are true.
33. When assets and income from operations that a firm has decided to discontinue (and dispose of or abandon), separating the two income components allows users to form better predictions of
A. past earnings.
B. current earnings.
C. future earnings.
D. all of the above
E. none of the above
34. Income statements contain which of the following sections or categories, depending on the nature of a firm’s earnings for the period?
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. all of the above
E. none of the above
35. Income statements prepared under IFRS contain which of the following sections or categories, depending on the nature of a firm’s earnings for the period?
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. separate disclosure of material income items
D. all of the above
E. none of the above
36. Income statements prepared under U.S. GAAP contain which of the following sections or categories, depending on the nature of a firm’s earnings for the period?
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. all of the above
E. none of the above
37. U.S. GAAP and IFRS distinguish between revenues and expenses on the one hand and gains and losses on the other. Which of the following is/are true?
A. Revenues and expenses result from the recurring, primary operating activities of a business.
B. Income items include the ordinary, recurring operating activities of the firm.
C. Gains and losses result from either peripheral activities or nonrecurring activities.
D. The reporting of revenues and expenses are at gross amounts, and firms report gains and losses at net amounts.
E. all of the above
38. What criteria must sales transactions meet in order for the seller to recognize revenues before collecting cash?
A. The revenues must be earned (the firm must have achieved substantial performance).
B. The amount to be received must qualify as an asset (there must be a future economic benefit and the amount must be measured with sufficient reliability).
C. The firm must have a reasonable expectation that it will collect the amount owed from the customer.
D. all of the above
E. none of the above
39. _____ arise from relatively infrequent transactions, and there can be no assurance that they will recur in any future period.
A. Gains/Losses
B. Revenues
C. Expenses
D. Assets
E. Liabilities
40. Which of the following is/are false?
A. Firms do not necessarily recognize revenues when they receive cash
B. Firms do not necessarily recognize expenses when they disburse cash.
C. Net income will not necessarily equal cash flow from operations each period.
D. A profitable firm will likely borrow funds in order to remain in business, but eventually operations must generate cash to repay the borrowing.
E. None of the above are false