ACC 556 - Midterm part 1
· Question 1
Source documents can provide evidence that a transaction has occurred
· Question 2
Expense recognition is tied to revenue recognition.
· Question 3
To obtain maximum benefit from a bank reconciliation, the reconciliation should be
prepared by the employee authorized to sign checks.
· Question 4
An aging of accounts receivable schedule is based on the premise that the longer the period
an account remains unpaid, the greater the probability that it will eventually be collected.
· Question 5
A concentration of credit risk is a threat of nonpayment from a single customer or class of
customers that could adversely affect the financial health of the company.
· Question 6
Which of the following is not a common way that managers use the balance sheet?
· Question 7
Financing activities include the purchase or sale of long-lived assets or the purchase or sale
of investment securities.
· Question 8
Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinks‘s
financial statements that
· Question 9
Owners of business firms are the only people who need accounting information.
· Question 10
Marvin Services Corporation had the following accounts and balances:
If the balance of the Buildings account was $45,000 and the equipment was sold for
$21,000, what would be the total of stockholders' equity?
· Question 11
Consistent use of the same accounting principles and methods is necessary for meaningful
analysis of trends within a company.
· Question 12
Requiring employees to take vacations is a weakness in the system of internal controls
because it does not promote operational efficiency.