Day 4 - 67% FAIL

Question 1

How should an error be corrected if cash expenses for repairs and maintenance were incorrectly recorded in Capital expenditures on the cash flow Stmt?

Answer 1

Increase cash flow from investing and decrease operating

Note: you are making the correcting AJE so it needs to be reversed

Question 2

If a contingent liability becomes probable and you can estimate the loss, what is the journal entry?

Answer 2

DR Expense
CR Liability

Question 3

Income recognized for FS but not for tax purposes creates what?

Answer 3

DTL

MCQ-00829

Question 4

Lower of cost or market

Answer 4

MCQ-05116

Question 5

Return on Assets

Answer 5

Net Income / Avg Total Assets

MCQ-04950

Question 6

The sale of Treasury stock at less than the cost would cause Stockholders Equity to:

Answer 6

Increase

MCQ-08737

Question 7

When you successfully defend your patent in a lawsuit where should the legal costs be recorded?

Answer 7

Record to the patent account and amortized

Do not setup a separate account

MCQ-14838

Question 8

How should ABC report it’s decision to change from cash basis to actual basis accounting?

Answer 8

As an error correction (net of tax), by adjusting beg. Balance of RE

A change from non GAAP method to GAAP method = error correction

MCQ-14613