Test Your Accounting Concepts Knowledge! Trivia Questions Quiz

Unearned revenue refers to the revenues that a company receives in advance before delivering goods or providing services. This means that the company has not yet earned the revenue, as the goods or services are yet to be provided. Therefore, the statement that "revenues that are received before the company delivers goods or provides services is called unearned revenue" is true.

Trademark or trade name has legal protection for indefinite number of 10-year renewal periods. This means that once a trademark or trade name is registered, the owner can renew the protection every 10 years without any limit. This allows the owner to maintain exclusive rights to use the trademark or trade name and prevent others from using it without permission. This protection helps to establish and maintain brand identity and prevent confusion among consumers.

Capital expenditures refer to costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset. These expenditures are typically long-term investments that provide future benefits to the company. Revenue expenditures, on the other hand, are costs that are incurred for the day-to-day operations of the business and are expensed immediately. Therefore, the correct answer is capital expenditures.

Copyrights give the owner the exclusive right to reproduce and sell an artistic or published work. Patents are exclusive rights granted for inventions, franchises or licenses are rights granted to operate a business using a certain brand or system, and trademarks or trade names are rights granted to protect brands or business names. Therefore, the correct answer is copyrights.

A patent grants the exclusive right to manufacture, sell, or control an invention for a specific period of time, usually 20 years from the date of the grant. This means that the inventor has the sole authority to profit from their invention and prevent others from using, making, or selling it without their permission. Patents are a form of intellectual property protection that encourages innovation and allows inventors to benefit from their creations. Copyrights protect original works of authorship, while franchises or licenses are different business arrangements and not directly related to the exclusive rights of an invention.

Depreciation is a method used to allocate the cost of intangible assets over their useful life. This process recognizes that these assets lose value over time and need to be expensed accordingly. By spreading the cost of the asset over its useful life, it allows for a more accurate representation of the asset's value on the balance sheet and the income statement. Therefore, the statement that "Depreciation is the process of allocating the cost of intangible assets to the expense" is true.

The given statement is false. Working capital is calculated by subtracting current liabilities from current assets, not by adding them. The formula for working capital is Working capital = Current assets - Current liabilities.

When a partner invests non-cash assets in a partnership, the assets should not be recorded at the book value. Instead, they should be recorded at their fair market value. This is because the fair market value represents the current worth of the assets and provides a more accurate reflection of their value in the partnership's financial records. Recording the assets at book value may result in an inaccurate representation of the partnership's financial position.

Partnerships are a type of business structure where two or more individuals share the ownership and management of a company. The characteristics of partnerships include co-ownership of property, mutual agency (where partners can act on behalf of the partnership), and limited life (where the partnership dissolves upon the death or withdrawal of a partner). However, partnerships do not have limited liability, meaning that partners are personally liable for the debts and obligations of the partnership. This means that their personal assets can be used to satisfy the partnership's debts.

When a contingent liability is probable to occur and the amount can be reasonably estimated, it should be recorded in the accounts. This means that there is a high likelihood that the liability will materialize, and the company has enough information to make a reasonable estimate of the potential financial impact. By recording the contingent liability, the company ensures that its financial statements reflect the potential obligation and provides transparency to stakeholders.