mcq Flashcards
Should you include the insurance premium for shipping consignment goods in inventory costs?
Yes, its included because its a necessary cost to bring the goods to their location.
How should advanced commission on goods held on consignment be recorded?
as a pre paid expense, NOT part of inventory cost
Inventory Turnover =
Cost of goods sold / average inventory
When calculating for the gain/loss on an equity security when sold should you include the brokerage commission and taxes in the loss amount?
Yes, it should be included.
In a troubled debt restructuring when calculating the gain to be reported should you use the fair value or the carrying value?
the fair value
how do you calculate the unrealized profit regarding consolidated financial statements?
inter-company profit on inventory x % of inventory still on hand
when calculating COGS should you include freight out or freigt in?
You should include freight in but dont include freight out
Debenture bonds are
unsecured bonds
serial bonds are
redeemed pro-rata over the life of the issue
When an investment is classified under the equity method investment income is equal to
the investors proportional share of net income
a firm can capitalize interest on assets when
special order goods are held for customers
what are the 3 conditions that are necessary to begin capitalizing interest?
- expenditures for the building have been made
- interest cost is being incurred
- permits have been filed
when calculating the operating cash flows if there is a increase in a Asset you should:
subtract it from net income
when calculating the operating cash flows if there is a decrease in a Asset you should:
add it to net income
when calculating the operating cash flows if there is a decrease in a liability you should:
subtract it from net income
when calculating the operating cash flows if there is a increase in a liability you should:
add it to net income
COGS formula =
beginning inventory
(+) purchases
(-) ending inventory
_______________________
COGS
When figuring out the market value of inventory how do you do it?
Its the middle amount of these 3 things :
Replacement cost:
Market ceiling- which is net realizable value
Market floor - which is = market ceiling - (selling price * profit margin)
NRV =
selling price less cost to complete and sell
(including cost of disposal)
periodic inventory system is
only counted at the end of each period
4 step approach of determining Dollar-value LIFO
step 1) determine the ending inventory at base year
step 2) determine the increase without inflation (base year)
step 3) determine the dollar value lifo layer
step 4) determine the ending dollar value LIFO inventory
When a material “infrequent in occurrence” and/or “unusual in nature” should be presented
separately as a component of “income from continuing operations” when the transaction results in a gain or loss.
what are the steps to follow when calculating the amount of profit to be recognized for a long-term contract that is not fully completed
Step 1) compute the gross profit of the total contract
step 2) compute % of completion
step 3) compute gross profit earned to date
when calculating the parents % of a subsidiary’s earnings you need to:
multiply the net income x % of ownership
when a purchase option is given with a lease you need to
capitalize it (PV of of 1)
Under the percentage-of-receivables method the ending balance in the allowance account is equal to the
total estimated uncollectible amount.
A contingent liability that is probable but cannot be reasonably estimated should be
disclosed in the financial statements but not recorded as an adjustment in the financial statements.
In a 10-Q if a company operates in an industry that is not subject to seasonal fluctuations what period of the balance sheet is the company required to present?
- the most recent quarter end AND the end of the preceding fiscal year
a change in depreciation is a change in principle and estimate so you handle
prospectively
permanent fund are used to report resources that are
legally restricited to the extent income and not principle
amortization of a bond discount is reported in what section of the statement of cash flows?
the operating
How should notes payable be reported on the financial statements?
the face amount less a discount on the liability
How do you calculate the double declining method?
purchase price x (2/n)
Whenever stock is donated would stockholders equity decrease?
No, because there is no cost to the corporation
How do you calculate the book value per common share?
common stockholder equity / common shares outstanding
valuation allowance is recognized when
it is more likely then not that a deferred tax asset will no be realized
a change in depreciation is considered a change in
in method and estimate and should be treated as a change in estimate which is treated prospectievly
any costs incured to acquire and make ready a plant asset should be-
capitalized
