Deck23

Question 1

When Collections are in doubt, the most conservative Income Recognition method is what?

Answer 1

The Cost Recovery Method - it recognizes no income until the cash exceeds the cost of the equipment

Question 2

What is Deferred Gross Profit?

Answer 2

Gross Profit remaining on uncollected sales accounted for under the installment method.

Question 3

When is the effect of estimated returns recognized?

Answer 3

Month of Sale

Question 4

Under IFRS, for long term contract revenue recognition, what should be used when Percentage-of-Completion method is not appropriate?

Answer 4

Cost Recovery Method

Question 5

What is a disadvantage of the Periodic Inventory System?

Answer 5

The COGS amount used for Financial Reporting includes both the Cost of Inventory Sold and the Inventory Shortages.

Question 6

Under the Equity Method of Accounting for Investments in Common Stock, is market value taken into consideration when reporting Investment Income?

Answer 6

No - under the Equity Method, the Investor’s share of the reported Income is used.

Question 7

Under the Equity Method of Accounting for Investments, are dividends counted as Income?

Answer 7

No - they are a Debit to Cash and Credit(Reduction) in Investment in X Company.

Question 8

If an investor can exert Significant Influence over and Investee, which method of Accounting should be used?

Answer 8

Equity Method - don’t claim dividends. Recognize % of the investee’s income

Question 9

Which of these two is not an Other Comprehensive Basis for Income?(a)Pure Cash Basis (b)Pure Accrual Basis

Answer 9

(b)Pure Accrual Basis

Question 10

The quality of information that increases the likelihood of forecasting past or present events is called:

Answer 10

Predictive Value

Question 11

For a Joint Venture, and Investor should record its investment at (a) Carrying Value (b) Fair Value

Answer 11

Carrying Value

Question 12

Which concepts are used in preparing Personal Financial Statements? (a)Accrual Accounting (b)Fair Value Measurement (c) Both

Answer 12

(c) Both

Question 13

Is Land “Held for Sale” considered Plant, or a Current Asset?

Answer 13

Current Asset

Question 14

When a firm is in Liquidation, should they value assets at Historical Cost or NRV?

Answer 14

NRV - at liquidation, historical cost is no longer relevant.

Question 15

If a company has a Defined Benefit Plan for their employees, it should report a liability of what on its Balance Sheet?

Answer 15

Unfunded Projected Benefit Obligation

Question 16

For Pensions, are Projected Benefit Obligations(PBO’s) and Plan Assets netted together on the Balance Sheet?

Answer 16

Yes - e.g. ($23 million (Plan Assets) - $20 milion (PBO’s)) would report a $3 million asset.

Question 17

Defined Benefit Plan Investments are reported on the Balance sheet at:

Answer 17

Fair Value

Question 18

As far a disclosures of a Defined Benefit Plan, are estimates of future contributions required?

Answer 18

No - just (1)description of plan (2) amount of pension expense by component and (3) weighted average discount rate

Question 19

What is PBO(Pension Benefit Obligation)?

Answer 19

Pension Plan Assets - Pension Liabilities (Could be either positive or negative)

Question 20

What is the equation for Pension Expense?

Answer 20

Service Cost + Interest Cost - Expected Return = Pension Expense