FAR

Question 1

FASB ASC 718-10-30-2 requires a method of accounting for stock-based compensation plans that is based on:

Answer 1

Fair Value

Question 2

The price-to-earnings ratio

Answer 2

the relationship between the stock price per share to the earnings per share

Question 3

A corporation issuing stock should charge retained earnings for the market value of the shares issued in:

Answer 3

a 10% stock dividend.

Question 4

Do liquidation preferences need to be disclosed?

Answer 4

Yes

Question 5

A deferred tax liability a deferred tax asset is a .

Answer 5

is a credit balance (a future taxable amount) and

Question 6

deferred tax asset

Answer 6

debit balance (a future deductible amount)

Question 7

Royalty expenses should be recognized in the income statement

Answer 7

as they accrue, as incurred.

Question 8

The retail inventory method includes which of the following in the calculation of both cost and retail amounts of goods available for sale?

Answer 8

Purchase returns

Question 9

The service cost component of Visor’s net periodic pension cost is measured using the:

Answer 9

projected benefit obligation.

Question 10

What cost should be included in the cost of manufactured goods?

Answer 10

Manufacturing overhead

Question 11

Should interest costs be capitalized to inventories manufactured routinely in large quantities?

Answer 11

Interest costs should not be capitalized to inventories manufactured routinely in large quantities.

Question 12

When a right to return is allowed, sales revenue is often?

Answer 12

deferred until the right of return lapses unless all six required conditions are met sooner than that

Question 13

Which is the most appropriate financial statement to use to determine if a company obtained financing during a year by issuing debt or equity securities?

Answer 13

Statement of cash flows

Question 14

Wren Co. sells equipment on installment contracts. Which of the following statements best justifies Wren’s use of the cost recovery method of revenue recognition to account for these installment sales?

Answer 14

There is no reasonable basis for estimating collectibility.

Question 15

What is the purpose of reporting comprehensive income?

Answer 15

To summarize all changes in equity from nonowner sources

Question 16

What are the Statements of Financial Accounting Concepts intended to establish?

Answer 16

The objectives and fundamental concepts that will be the basis for development of financial accounting and reporting guidance.

Question 17

Which of the following would be reported as a decrease in the statement of changes in net assets available for benefits of an employee benefits plan?

Answer 17

Benefits paid to participants

Question 18

For the purpose of estimating income taxes to be reported in personal financial statements, assets and liabilities measured at their tax bases should be compared to assets and liabilities measured at their:

Answer 18

estimated current value (assets) and historical cost (liabilities).

Question 19

According to the FASB conceptual framework, which of the following does relates to both relevance and faithful representation?

Answer 19

Comparability, Verifiability, Timeliness

Question 20

From the prior year to this year, service costs should usually be ________ because the employees are accruing more benefits with their additional service years.

Answer 20

increasing

Question 21

Service cost keeps track of the ___________ owed to employees from their additional year of service.

Answer 21

additional benefits

Question 22

From the prior year the funding of the benefits to the plan was made, but the projected benefit obligation had yet to be set up, and thus the plan was ________..

Answer 22

overfunded

Question 23

Interest expense is the carrying value of the bonds multiplied

Answer 23

effective rate

Question 24

Bond or premium amortization is the difference

Answer 24

in interest expense and cash interest paid.

Question 25

Donated assets should be recored at

Answer 25

fair value

Question 26

When are Organization costs are start-up costs and are required to be expensed

Answer 26

when incurred

Question 27

Liquidating dividends are distributions to shareholders from other contributed capital accounts rather than

Answer 27

Retained Earnings

Question 28

A liquidating dividend represents a return ___ the shareholders’ investment

Answer 28

of

Question 29

A cash dividend represents

Answer 29

return on investment to shareholders.

Question 30

A company should recognize goodwill in its balance sheet

Answer 30

Goodwill has been created in the purchase of a business.