Day 33 / Test Day

Question 1

What FS are required by NFPs?

Answer 1

1. The Stmt of financial position
2. The Stmt of activity
3. The Stmt of Cash Flows

Question 2

A city levied $1 million in property taxes and estimated $100k would be Uncollectible. What is the JE to record this?

Answer 2

Dr - Property tax rec. $1 million
Cr - allowance for Uncollectible property tax $100k
Cr - Property tax revenue $900k

Question 3

How much of the subs Liabilities should be included in the parents consolidated FS?

Answer 3

Full amount of the subs Liabilities should be included in the parents consolidated FS

If the parent owns 50% or more of the sub

MCQ-08497

Question 4

What should you do when current market price for inventory is less than the fixed purchase price in a purchase commitment?

Answer 4

• Disclose a note in the FS
• Loss must be recognized at the time price declines on the IS
• Loss liability must be recognized on BS

MCQ-05942

Question 5

In an exchange leaving commercial substance and buyer receives boot how much of the gain is reported?

Answer 5

If boot is 25% or less than total consideration received = Recognize a portion of boot over total consideration

MCQ-14852

Question 6

ABC estimated it’s ending inventory using a method based on FS of prior periods in order to prepare qtrly interim FS. What type of inventory system and method is ABC using?

Answer 6

Periodic and Gross Profit Method

MCQ-08728

Question 7

ABC a cellphone manufacturer has to write down it’s inventory $200k bc a competitor decreased their price. How should ABC report this loss?

Answer 7

In the Section - Income from Continued Operations - Unusual or Infrequent Items section

MCQ-07483

Question 8

Assuming constant inventory quantities, what inventory costing method will produce the lower inventory turnover ratio in an inflationary economy?

Answer 8

FIFO

Inventory Turnover = COGS / Avg. Inventory

MCQ-06925

Question 9

What temporary difference creates a deferred tax asset?

Answer 9

Accruing warranty costs for financial reporting purposes

MCQ-04504

Question 10

What should you do if a loss is reasonably possible?

Answer 10

Disclose

Probable loss = accrue

MCQ-08510

Question 11

Define: Derived Tax Revenue

Answer 11

Represent taxes imposed on or derived from exchange transactions such as commercial sales
Ex: Sales Tax

MCQ-00904

Question 12

What would give an investor significant influence over an investee if the investor owns 20% or less:

Answer 12

1. Investor is on the board of directors
2. Participates in policy making
3. Any material transactions between the investor and investee
4. Technological dependence on the investor
5. If no other investor has material ownership in the investee