A board of directors may declare a dividend higher than the balance of the retained earnings account, as long as the cash balance is adequate to pay the dividends
a. True
b. False
Indicate whether the statement is true or false
False
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What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for an insurance company?
a. Stockholders' equity increases and liabilities increase. b. Assets increase and stockholders' equity increases. c. Assets decrease and liabilities decrease. d. Liabilities decrease and stockholders' equity increases.
Which of the following is not correct regarding the provisions of IAS No. 8 on accounting changes and error corrections?
a. A change in accounting estimate is reflected in the current and future periods. b. A change in depreciation method (such as from an accelerated method to the straight-line method) is classified as a change in estimate. c. A change in depreciation method (such as from accelerated method to the straight-line method) is classified as a change in accounting principle. d. IAS No. 8 generally reflects a preference for restating prior results to improve comparability of financial statements.
Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012?
A) Sales commissions are charged to expense in 2012 on all sales revenue recognized in 2012 even though some of the commissions have not been paid. B) Insurance expense is recognized for the total cost of a 1-year policy purchased in May, 2012. C) Rent expenses are recognized as expenses in 2012 even though the last bill received in 2012 will not be paid until 2013. D) Sales commissions paid in 2012 for 2013 commissions are recorded as prepaid expenses for 2012.
Sales journals are used to record cash sales
Indicate whether the statement is true or false