《会计专业英语》习题答案人大版chapter 7.docxVIP

Chapter 7 Revenues, Expenses, and Profit Multiple Choice Questions C 2. D 3. A 4. A 5.C 6. D 7. C 8. C 9. C 10. D 11. A 12. B 13. C 14. B 15. D 16. C 17. B 18. D 19. A 20. C Discussion Questions Distinguish between capital expenditure and revenue expenditure. Give examples for each of them. The expenditure that will benefit several accounting periods is considered a capital expenditure. Accounts often use the verb capitalize to mean charging an expenditure to an asset account rather than an expense account. For example, purchase of a computer system is a capital expenditure. Any expenditure that will benefit only the current period or that is not material in amount is treated as revenue expenditure and is recorded in expense accounts. Charging an expenditure directly to an expense account is often called expensing” the item. For example, expenditures for ordinary repairs, maintenance, fuel, and other items necessary to the ownership and use of plant and equipment are treated as revenue expenditures. A business may purchase many small items that will benefit several accounting periods but have relatively low costs. For the reasons of convenience and economy, expenditures that are not material in amount are treated in accounting periods as expenses of the current period. The Income Statement of a merchandising company includes a major type of cost that does not appear in the Income Statement of a service company. Identify this cost and explain what it represents. Cost of Goods Sold is the cost incurred by the seller to acquire the merchandise inventory it sells to customers. Companies deduct cost of goods sold from sales revenue to determine gross profit; often referred to as gross margin. In essence, cost of goods sold is an expense. However, in many cases, it is a companys largest expense and has a significant effect on the financial statement subtotals and ratios used to evaluate the liquidity and performance of the business. Therefore, it is shown separately from