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32.On December 31, 2015, the net assets of Martinez Manufacturing amounted to $40,000. Net income…

by | Sep 9, 2023 | accounting

32.On December 31, 2015, the net assets of Martinez Manufacturing amounted to $40,000. Net income calculated by using the financial capital maintenance concept amounted to $12,000. During the year, additional common stock was issued for $8,000, and $5,000 of dividends was paid. The net assets at January 1, 2015, amounted to

a.

$31,000.

b.

$37,000.

c.

$20,000.

d.

$25,000.

33.Georgio Company began 2015 with net assets of $80,000. Net income calculated by using the capital maintenance concept was $21,000. During 2015, owners contributed $26,000 of new capital. By year-end, the net assets totaled $78,000. Dividends to the owners during 2015 were

a.

$49,000.

b.

$28,000.

c.

$23,000.

d.

$2,000.

34.In general, revenue is recognized as being earned

a.

during the production process.

b.

upon completion of the production process.

c.

when cash is received.

d.

when goods are sold or services are rendered.

35.?To be recognized as revenue, an item must

a.

meet the definition of earned revenue.

b.

be earned revenue and be realized or realizable..

c.

be realized.

d.

be earned.

36.Which of the following is not recognized by the FASB as an expense recognition principle that properly matches expenses against revenues?

a.

immediate recognition

b.

systematic and rational allocation

c.

cash payment

d.

association of cause and effect

37.Examples of matching expenses against revenues using the association of cause and effect include all of the following except

a.

insurance costs.

b.

transportation costs for delivery of goods to customers.

c.

costs of products sold.

d.

sales commissions.

38.Depreciation is an example of which expense recognition principle?

a.

association of cause and effect

b.

systematic and rational allocation

c.

cost recovery

d.

immediate recognition

39.Which of the following expenses is an example of expense recognition under the immediate recognition principle?

a.

sales commissions

b.

depreciation

c.

management salaries

d.

transportation-out

40.In distinguishing between revenues and gains, which of the following statements is false?

a.

More gains than revenues are beyond the entity's control.

b.

Gains are associated more with peripheral, nonoperating activities than are revenues.

c.

GAAP does not provide precise distinctions between revenues and gains.

d.

Revenues are reported net (rather than gross) more often than gains.

  

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