Description
Test Bank for Loose Leaf Intermediate Accounting 10th Edition
Intermediate Accounting, 10e (Spiceland)
Chapter 3 The Balance Sheet and Financial Disclosures
1) The balance sheet reports a company’s financial position at a point in time.
Answer: TRUE
Difficulty: 1 Easy
Topic: Balance sheet―Usefulness – Limits – Elements
Learning Objective: 03-01 Describe the purpose of the balance sheet and understand its usefulness and limitations.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
2) A company’s market value is generally less than its book value.
Answer: FALSE
Difficulty: 1 Easy
Topic: Balance sheet―Usefulness – Limits – Elements
Learning Objective: 03-01 Describe the purpose of the balance sheet and understand its usefulness and limitations.
Bloom’s: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
3) All current assets are either cash or assets that will be converted into cash or consumed within 12 months or the operating cycle, whichever is longer.
Answer: TRUE
Difficulty: 1 Easy
Topic: Classify assets―Current assets
Learning Objective: 03-02 Identify and describe the various asset classifications.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
4) The balance of net receivables represents the amount expected to be collected.
Answer: TRUE
Difficulty: 1 Easy
Topic: Classify assets―Current assets
Learning Objective: 03-02 Identify and describe the various asset classifications.
Bloom’s: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
5) Prepaid expenses are classified as current assets if the services purchased are expected to expire within 12 months or the operating cycle, whichever is longer.
Answer: TRUE
Difficulty: 1 Easy
Topic: Classify assets―Current assets
Learning Objective: 03-02 Identify and describe the various asset classifications.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
6) Assets classified as property, plant, and equipment include machinery, equipment, and inventory.
Answer: FALSE
Difficulty: 1 Easy
Topic: Classify assets―Current assets
Learning Objective: 03-02 Identify and describe the various asset classifications.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
7) Intangible assets usually are reported in the balance sheet as current assets.
Answer: FALSE
Difficulty: 1 Easy
Topic: Classify assets―Current assets
Learning Objective: 03-02 Identify and describe the various asset classifications.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
8) Accrued salaries and wages in a balance sheet represent salaries that have been earned by employees but not yet paid.
Answer: TRUE
Difficulty: 1 Easy
Topic: Classify liabilities―Current liabilities
Learning Objective: 03-03 Identify and describe the various liability and shareholders’ equity classifications.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking; FN Measurement / Keyboard Navigation
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