CH 1.7 Flashcards
The Percentage-of-Completion Revenue Method entry
Contract Priceminus cost incurred to dateminus est costs to complete= est total gross profit
IFRS which long-term revenue method is not used?
completed-contract method
How should the balances of progress billings and construction in progress be shown at reporting dates prior to the completion of a long-term contract?
Net, as a current asset if debit balance and current liability if credit balance.
T or F?The percentage-of-completion method recognizes gross profit or revenue based on the ratio of costs to date to estimated total costs.
True
The calculation of the income recognized in the third year of a 5-year construction contract accounted for using the percentage-of-completion method includes the ratio of
Total costs incurred to date to total estimated costs.
percentage of completion method to calculate gross profit
ratio: cost to date / total est cost = %% x gross profit
T or FThe amount recognized as gross profit under the installment method each period is the gross profit percentage (gross profit divided by selling price) on the sale multiplied by the cash collected.
True
T or FFinancial statement users with indirect interests usually invest in or manage the business.
False,indirect users influence direct users
T or FOn the statement of cash flows, the proceeds from the sale of a piece of obsolete equipment would be reported under cash flows from investing activities.
TrueInvesting activities include the effects of transactions involving long-lived assets
An undistributed stock dividend declared by the Board of Directors should be reported as a(n)
Item in the shareholders’ equity section.
Which one of the following transactions does not affect the balance of retained earnings?A quasi-reorganization.Declaration of a property dividend.Declaration of a stock split.Declaration of a stock dividend
Stock split
In preparing a statement of cash flows, an item included in determining net cash flow from operating activities is theAmortization of a bond premium.Purchase of treasury stock.Proceeds from the sale of equipment for cash.Cash dividends paid.
Amortization of a bond premium.The purchaser’s cash inflow is greater than interest income, so it must add the difference (premium amortization) to net income to arrive at net cash flow from operating activities.
T of FThe indirect method reconciles net income for the period to cash flow from operating activities. Thus, operating cash flow is calculated by adjusting the net income for the period.
True
The sale of available-for-sale securities should be accounted for on the statement of cash flows as a(n)
Investing activities
The purchase of treasury stock is recorded on the statement of financial position as a(n)
Decrease in shareholders’ equity.
