51. A firm sells its headquarters building at a gain. This means that at the time of sale
A. the cash or other assets received were greater than the building’s book value.
B. the cash or assets received in a transaction were less than the carrying value of the assets given up.
C. the cash or other assets received were greater than the building’ carrying value.
D. the cash or assets received in a transaction were less than the building’s book value.
E. both choices a and c are correct.
52. As a general principle, under the accrual basis of accounting, the firm recognizes revenue when the transaction meets which of the following conditions?
A. completion of the earnings process, only
B. receipt of assets from the customer, only
C. completion of the earnings process and receipt of assets from the customer
D. expiration of the warranty period, only
E. receipt of the final payment, only
53. Which of the following is/are true?
A. The seller measures revenue as the amount of cash, or the cash-equivalent value of other assets, that it receives from customers.
B. The seller measures revenue amounts as the exchange price between buyer and seller at the time of sale.
C. If the firm has not performed all of its obligations, it may make adjustments in the form of sales discounts and allowances.
D. If the firm has not performed all of its obligations, it may make adjustments in the form of sales returns.
E. all of the above are true
54. Which of the following is/are not a period expense?
A. administrative expenditures
B. expenditures on advertising
C. rent on a warehouse for the current month
D. cost of goods sold
E. all of the above are period expenses
55. A manufacturing firm has manufacturing costs which become product costs. These manufacturing costs do not include:
A. direct material costs (or raw material costs)
B. direct labor costs
C. manufacturing overhead costs (sometimes called indirect manufacturing costs)
D. expenditures for administrative staff
E. expenditures for supervisors’ salaries, factory utilities, property taxes, insurance, and depreciation on manufacturing plant and equipment
56. Which of the following is/are not examples of a period expense?
A. the president’s salary
B. accounting and information systems costs
C. accounting and information systems costs
D. support activity costs such as legal services, employee training, and corporate planning.
E. the factory foreman’s salary
57. Which of the following is/are not a period expense?
A. salaries and commissions of the sales staff
B. costs to produce catalogs
C. marketing costs, such as advertising
D. costs to produce sales literature
E. direct labor
58. Which of the following is/are not true?
A. Net income or profit for a period is the difference between revenues from selling goods and services and the expenses incurred to generate those revenues, plus some gains or losses of the period.
B. If the expenses plus losses exceed the revenues plus gains, the result is a net loss.
C. U.S. GAAP and IFRS require the accrual basis of accounting, which detaches the recognition of revenue from the receipt of cash.
D. A seller recognizes revenues when it has performed all, or nearly all, of its obligations to the customer and when it has received cash or an asset that is convertible to cash.
E. The firm recognizes and reports expenses that have a causal link with revenues, such as cost of sales, in the next accounting period.
59. Which of the following is/are true?
A. Interpreting the income statement involves studying the relations among revenues, expenses, and net income both over time and across firms.
B. Comparisons are likely more valid for the same firm over time than across firms because of the difficulty in identifying truly similar firms.
C. In evaluating over-time performance of a given firm, the user must understand both current economic conditions and how those conditions may have changed over the period of analysis.
D. In evaluating across-firm performance, the user should control for the underlying business model by selecting peer firms that are similar, economically, to the firm being analyzed.
E. All of the above are true.
60. Under the accrual method, the timing of revenue recognition is influenced by
A. where the purchaser gets funds to pay the seller.
B. whether the buyer pays with cash or a promise.
C. when the services or product are provided.
D. when the seller has received a form of payment in settlement of a purchaser's promise.
E. the nature of the services or product provided.