Day 19 - 76% Flashcards
Under US GAAP what approach is used to determine income tax expense?
Asset and Liability approach
AKA balance sheet approach
MCQ-00776
How does the discount on bonds payable affect CL?
It is subtracted from CL total
MCQ-00360
Under the allowance method, an account previously written off was now collected. What are the effects on AR and the Allowance accounts?
No effect & Increase
JE: restore acct previously written off
DR - AR
CR - Allowance
JE: record cash collection
DR - Cash
CR - AR
MCQ-05679
How are stock dividends reported due the investor under the Cost and Equity method?
Rule: Stock Dividends and Stock Splits are NOT recorded as income to the recipient
The investor reallocates the dividends or splits over the Investment account balance
MCQ-01562
LCM
MCQ-05116
The sale of TS at less than cost impacts Stockholders Equity how?
Increase SH Equity
JE:
Cash
APIC - TS
RE
TS
As long as cash was received for the TS the overall is a net positive for Stockholders Equity
MCQ-08737
What is the Carrying amount of inventory under Lower of Cost or Net Realizable Value?
NRV = Cost - Disposal/Completion Costs
If NRV > Cost = Value Inventory @ Costs
If NRV < Cost = Value Inventory @ NRV
MCQ-06046
How should ABC report the change from the individual item approach to the aggregate approach in applying the lower of FIFO cost or market to inventories?
Change in Acctg Principal
RETROSPECTIVE ADJUSTMENT TO BEG. RE
MCQ-00225
Examples of Financing Activities:
Cash Flows include NON-CURRENT LIABILITY (creditor-oriented) and EQUITY ACTIVITIES (owner-oriented)
Equity (owner-oriented)
1. Issuing Stock (inflow)
2. Paying CASH dividends (outflow)
3. Repurchasing Stock (outflow)
Non-Current Liabilities (creditor-oriented)
1. Issuing Bonds, Notes, etc. (inflow)
2. Payments of Principal (outflow)
MCQ-08254
ABC owns 15% of Tesla but is able to have Significant Influence over Tesla what method should ABC use to account for this investment?
Equity Method
MCQ-07501
Ownership Influence
I. 10 percent No significant influence
II. 25 percent No significant influence
III. 40 percent Significant influence
IV. 55 percent Control
Where should the Fair Value Method be used?
I & II
When there is NO significant influence, the Fair Value Method should be used, regardless of %
MCQ-07501
Contribution Revenue for NFPs is defined as:
Transactions that are UNCONDITIONAL (not requiring a future event to occur)
MCQ-01248
ABC has two employees. Each employee receives two weeks of paid vacation each year. Vacation rights accumulate. One employee, whose weekly salary is $600, took a two-week vacation during the year, but the other employee, who earns $800 per week, took no vacation during the year. In its year-end financial statements, what amount should Elan report as vacation liability and expense?
Vacation Liability = $1,600
Vacation Expense = $2,800
Vacation Expense is recorded when it is EARNED regardless of whether it was take or not
MCQ-11125
For a troubled debt restructuring involving only a modification of terms, what would be compared to the carrying amount of the debt to determine if the debtor should report a gain on restructuring?
Total Future Cash Payments
Gain = Carrying Amount - Total Future Cash Payments
MCQ-00519
The cumulative effect of a change in accounting estimate should be shown separately:
It should not be recorded separately
Change in estimate is handled PROSPECTIVELY No cumulative effect adjustment is made
MCQ-00083
