Overview of Accounting

PROBLEM 1: TRUE OR FALSE

1. FALSE
2. FALSE - measuring
3. TRUE
4. TRUE
5. FALSE
6. FALSE
7. FALSE
8. TRUE
9. FALSE
10. TRUE

PROBLEM 2: MULTIPLE CHOICE

1. A
2. D
3. B
4. B
5. C
6. C
7. C
8. D
9. C
10. B
PROBLEM 3: MULTIPLE CHOICE
1. D
2. D
3. A
4. B
5. B
6. B
7. E
8. B
9. D
10. B

PROBLEM 4: FOR CLASSROOM DISCUSSION

1. D
2. C
(a) Depreciation necessarily takes into account estimates of useful
life and residual value.
(b) Cost of goods sold may be affected by write-downs of
inventory to net realizable value. NRV is estimated selling price
less estimated costs of completion and costs to make the sale. Thus,
COGS may be valued by opinion.
(c) Discount on share capital represents the excess of par value of
shares issued over the fair value of the consideration received.
This is valued by fact because it is not affected by estimates.
(d) Various estimated expenses and income are closed to retained
earnings. Thus, retained earnings is affected by estimates.

3. D
4. C
5. D
6. D
7. A
8. D
9. A
10. C - equal authority