Day 12

Question 1

When going from cash basis expense to accrual basis expense, the cash basis expense must be reduced by the

Answer 1

Increase in prepaid expense

MCQ-05631

Question 2

Comprehensive Income includes

Answer 2

All changes in equity except those resulting from investments by owners

Treasury stock transactions are owner transactions

MCQ-15674

Question 3

Equation: AR Turnover

Answer 3

= Sales / Avg. AR

MAKE SURE TO SUBTRACT ALLOWANCE FOR DOUBTFUL ACCOUNTS FROM AR

MCQ-05460

Question 4

Compared to accrual basis, cash basis underestimates income by the beer decrease of:

Answer 4

AR but NOT Accrued Expenses

MCQ-00557

Question 5

Equation: Percentage Complete

Answer 5

= Cost Incurred to date / (Cost Incurred to date + Estimated Cost to Complete)

MCQ-00654

Question 6

On August 31, Year 10, Harvey Co. decided to
change from the FIFO periodic inventory system to
the weighted average periodic inventory system
Harvey uses U.S. GAAP is on a calendar year basis,
and does not present comparative financial
statements. The cumulative effect of the change is
determined:

Answer 6

As of January 1, year 10

Rule: the cumulative effect of an accounting principle change equals the difference in RE at the beginning of the period and what RE would have been

MCQ-00090

Question 7

The single step income Stmt will include:

Answer 7

Total revenues all sales of goods and services, and rentals

Purchase discounts are included in COGS

MCQ-06565

Question 8

How should the gains and losses from changes in fair value of foreign currency transactions be reported on the FS?

Answer 8

Fair Value = Current Income

Net Investment = OCI

MCQ-07436

Question 9

If an entity doesn’t file with the SEC, when does their subsequent event evaluation period end?

Answer 9

When the FS are available to be issued

MCQ-04890

Question 10

How is a change in depreciation method treated?

Answer 10

Is considered both a change in method and estimate

MCQ-00069

Question 11

The Five-Step Approach: Recognize Revenue

I STAR

Answer 11

1. Identify
2. Separate performance obligations
3. Transaction price
4. Allocate
5. Recognize revenue

MCQ-12659

Question 12

True or False: Cash balances in the same bank can be netted together for BS reporting

Answer 12

True

Balances in the same Bank can be netted together, however, negative bank accounts in different banks must be reported as a liability

MCQ-09010

Question 13

ABC, Inc. factored its receivables without recourse with XYZ Bank. ABC received cash as a result of this transaction. How is this transaction described?

Answer 13

Sale of ABC’s AR to XYZ, with the risk of uncollectible accounts transferred to XYZ

MCQ-00034