Financial Statements

Question 1

The fair value option may be elected for AFS securities. TF

Answer 1

True

Question 2

What is the formula for NI?

Answer 2

Income from ops before taxes - Income tax expense +/- discontinued ops net of tax +/- extraordinary gains or losses

Question 3

Administrative expenses are included in Income from Ops. TF

Answer 3

True. They are a reduction.

Question 4

Gains and losses from asset sales are shown on the income statement net of tax. TF

Answer 4

False. They are shown in full in income before income taxes.

Question 5

What should be assumed in the development of fair value measurements?

Answer 5

Highest and best use of the asset.

Question 6

The fair value option applies to pensions. TF

Answer 6

False

Question 7

Changes in accounting principles REQUIRE RETROactive application. TF

Answer 7

True

Question 8

Changes in accounting estimates REQUIRE RETROactive application. TF

Answer 8

False. PROspective application is required.

Question 9

Where should accumulated OCI be reported on the balance sheet?

Answer 9

As a separate item under stockholders equity

Question 10

A separate statement of comprehensive income is required. TF

Answer 10

False. AOCI is reported in the SE section of the BS.

Question 11

The fair value option must be applied to all interests in the same entity. TF

Answer 11

True

Question 12

A change in depreciation method is a change in accounting principle. TF

Answer 12

False. It is a change in an accounting estimate.

Question 13

What two attributes must be had to make an item “extraordinary”

Answer 13

Unusual and infrequent

Question 14

The preparation of PROSPECTIVE financial information is required by GAAP. TF

Answer 14

False. Prospective fin info is used by management for internal reasons and is not required by GAAP.

Question 15

Extraordinary gains increase NI. TF

Answer 15

True