solution

1) ___________ is the type of audit report given when it is determined that financial statements have not been presented fairly?

a)A disclaimer of opinion.

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b) An unqualified report.

c) A qualified report.

d) An adverse opinion.

2) A firm’s sales and earnings can be impaired by which of the following?

a) Using the matching principle when recording revenues and expenses.

b) Deferring repairs and maintenance on equipment.

c) Investing in research and development.

d) Increasing discretionary expenses.

3) Accounts receivable is recorded on the Balance Sheet at its net realizable value, which of the following best describes this value?

a) The gross amounts owed by customers for credit purchases.

b) Total accounts receivable plus an amount estimated for bad debts.

c) The allowance for doubtful accounts less bad debt expense.

d) Actual amounts of accounts receivable less an allowance for doubtbul accounts.

4)A deferred tax account on the balance sheet is created by __________.

a) permanent differences in income tax accounting.

b) the use of the straight-line method of depreciation for both reporting and tax purposes.

c) temporary differences in the recognition of revenue and expense for taxable income relative to reported income.

d) municipal bond revenue and life insurance premiums on officers.

5) What is retained earnings?

a) The retained earnings account is equal to the cash account less dividends paid.

b) Retained earnings are funds a company has chosen to reinvest in the operations of a business rather than pay out to stockholders in dividends.

c) Retained earnings represent unused cash of a firm.

d)The retained earnings account is the measurement of all distributed earnings.

 
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