Module 9A Part 1

Question 1

Cash Collections X Gross Profit %

Answer 1

Realized Gross Profit

Question 2

Ending Accounts Receivable X Gross Profit %

Answer 2

Deferred Gross Profit

Question 3

Beginning Accounts Receivable for that Year

Answer 3

Installment Sales

Question 4

Installment Sales - Cost

Answer 4

Gross Profit

Question 5

Gross Profit / Installment Sales

Answer 5

Gross Profit %

Question 6

When to use Installment Sale method?

Answer 6

Cannot estimate collectibility

Question 7

When to use Cost Recovery Method?

Answer 7

Can’t determine collectibility of receivables

Question 8

Definition of Conservatism

Answer 8

Bias in all U.S. GAAP - The accountant, when confronted with alternative methods of accounting treatment, will choose the one that does not overstate assets or earnings

Question 9

3 part Definition of Assets

Answer 9

1. Obtain it or control it today
2. It will provide benefits in the future
3. It occurred as a result of a past transaction

Question 10

3 part Definition of Liabilities

Answer 10

1. Owe it as of today
2. You will sacrifice something in the future
3. It occurred as a result of a past transaction

Question 11

Comprehensive Income SFAC Definition

Answer 11

Any change in Shareholder’s Equity that does not involve the owners (investments or distributions)

Question 12

Normal Balance for Assets on T Account

Answer 12

Debit

Question 13

Normal Balance for Liabilities on T Account

Answer 13

Credit

Question 14

Normal Balance for Shareholder’s Equity on T Account

Answer 14

Credit

Question 15

Normal Balance for Revenue on T Account

Answer 15

Credit

Question 16

Normal Balance for Expenses on T Account

Answer 16

Debit

Question 17

In calculating present value in a situation with a range of possible outcomes all discounted using the same interest rate, the expected present value would be…

Answer 17

the sum of probability-weighted present values

Question 18

The two fundamental qualitative characteristics of accounting information are…

Answer 18

Relevance and Faithful Representation

Question 19

According to the Statement of Financial Accounting Concepts, neutrality is part of:
Faithful Representation?
Relevance?

Answer 19

Faithful Representation - Yes

Relevance - No

Question 20

According to the FASB conceptual framework, which of the following is an enhancing quality that relates to both relevance and faithful representation?

a. Comparability
b. Confirmatory Value
c. Predicative Value
d. Freedom from error

Answer 20

a. Comparability