Homewoek Number 2 Acctg

650 Words3 Pages
1. (TCO A) Which of the following is an advantage of the corporation relative to sole proprietorships and partnerships? (Points : 5) Simple to establish Lower taxes Unlimited personal liability of investors Easier to raise funds 2. (TCO A) Dividends _____. (Points : 5) represent an expense and are an operating activity represent an obligation and are an operating activity represent a distribution of earnings and are a financing activity represent an asset and are an investing activity 3. (TCOs A, B) Below is a partial list of account balances for Langton Company: Cash $10,000 Prepaid insurance 700 Accounts receivable 3,500 Accounts payable 2,800c Notes payable 4,200c Common stock 1,400c Dividends 700 Revenues 21,000c Expenses 17,500 What did Langton Company show as total credits? (Points : 5) $32,400 $34,500 $35,200 $29,400 4. (TCOs B, E) Why is the accrual basis of accounting preferred by GAAP? (Points : 5) The Accrual basis is easier to use. The Accrual basis is also preferred by the Internal Revenue Service. The Accrual basis complies with the revenue recognition and matching principles. The Accrual basis requires fewer accounting resources. 5. (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the highest amount of net income? (Points : 5) LIFO The average cost method FIFO Income tax expense for the period will be the same under all assumptions. 6. (TCOs A, E) Equipment with a cost of $212,000 has an estimated salvage value of $12,000 and an estimated life

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