21 the magellan corporation recently acquired a specialized piece of machinery costi 4352182

21.The Magellan Corporation recently acquired a specialized piece of machinery costing $350,000 and having a six-year expected useful life. The company's bookkeeper properly recorded the expenditure as an asset. Which of the following is the conceptual basis for the manner in which the bookkeeper recorded the transaction?

a.going concern

b.operating activity

c.periodic measurement

d.cash basis accounting

22.The Rhinestone Company is finding it increasingly difficult to develop products that its customers want to buy. Furthermore, the firm's ability to produce their products at costs and prices that customers will accept is increasingly a problem. The company has experienced increasing losses during each of the last four years. These facts suggest that this company may not

a.be generating as much net income as it is generating cash flow

b.be able to continue as a going concern

c.be properly providing periodic measurement to interested parties

d.be engaging in legal activities

23.In accounting, the term “going concern” means that an organization is

a.operating effectively and efficiently

b.expected to continue operating indefinitely

c.regularly earning a profit

d.generating both positive cash flow and profits

24.Qualitative characteristics that would make accounting information useful include

a.revenues and expenses reported on the income statement

b.an outside audit

c.understandability and usefulness

d.preparation of a statement of cash flows

25.Management’s discussion and analysis:

a.provides an overview of a company’s financial performance

b.predicts the company’s stock price in the upcoming year

c.guarantees the financial results

d.assumes the position of leadership

26.A(n) ________ provides a systematic investigation of a company’s financial records and procedures


b.internal control system



27.Attestation occurs when:

a.the company issues stock

b.an auditor affirms the fairness of presentation of the financial statements

c.managers become certified

d.a contract is signed

28.The Public Companies Accounting Oversight Board (PCAOB):

a.develops generally accepted auditing standards

b.controls the AICPA

c.regulates upper management

d.provides accountants to companies to evaluate the financial statements

29.The issuance of quarterly financial statements by a company is an example of which of the following concepts?

a.going concern

b.accrual accounting

c.periodic measurement

d.transformation process

30.Internal controls are important in a company to ensure:

a.longevity as a going concern

b.proper distribution of dividends

c.that financial data is accurate

d.increase in assets

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