Accounting H.W help. please.?
1. The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue. Current accounting practice does not strictly apply this principle to expenditures for
a. Natural resources.
b. Research and development.
2. Madden Company paid $500,000 to acquire a piece of real estate consisting of land and an office building with a parking lot. In this situation:
a. The purchase price should be apportioned among the Land, Land Improvement, and Building accounts.
b. The entire purchase price should be debited to the Plant and Equipment account.
c. Land, Land Improvement, and Building accounts should each be debited for the respective appraisal value of each item.
d. Allocation of the entire $500,000 to Land results in an understatement of net income in the current and future accounting periods.
3. Which of the following will cause net income to be overstated for the following year?
a. Current year's ending inventory is understated.
b. Current year's ending inventory is overstated.
c. Next year's beginning inventory is overstated.
d. Next year's ending inventory is understated.
4. In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:
a. Have been adopted by Congress or approved by the voters in a general election.
b. Are acceptable to the Internal Revenue Service.
c. Are understood and observed by all the participants in the financial reporting process.
d. Have been approved by a majority of the members of the Financial Accounting Standards Board.
5. At the start of the current year, Excelsior Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,600. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $400,000, and $5,400 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:
a. Uncollectible accounts expense of $13,400.
b. Allowance for Doubtful Accounts with a credit balance of $4,200.
c. Allowance for Doubtful Accounts with a credit balance of $7,000.
d. Uncollectible accounts expense of $5,400.