MCQ Practice

Question 1

Dividends are not reported as a liability until…

Answer 1

they are declared.

Question 2

How are gains and losses reported on the income statement?

Answer 2

Gains are recorded by increasing Additional PIC - Treasury Stock.

Losses are recorded by first eliminating any balance in Additional PIC - Treasury Stock and then decreasing R/E.

Question 3

Par Value and Stated Value receive the same treatment. True or False

Answer 3

True

Question 4

What are the three valuation techniques that can be used either separately or combined to measure the Fair Value (FV) of an asset or liability?

Answer 4

Market Approach
Income Approach
Cost Approach

Question 5

Which FV approach uses the prices associated with actual market transactions for similar or identical assets and liabilities to derive a fair value?

Answer 5

Market Approach

Question 6

Which FV approach use estimated future cash flows or earnings, adjusted by a discount rate that represents the time value of money and the risk of cash flows not being achieved, to derive a single discounted present value?

Answer 6

Income Approach

Question 7

Which