Practice Test Questions

Question 1

how should unearned rent that has already been paid by tenants for the next eight months of occupancy be reported in a landlord’s financial statements?

Answer 1

-as a current liability, since it’ll be satisfied within one year
-cash received in advance of earning the revenue is a liability, specifically unearned revenue
-this is asking from the landlord perspective –> tenant’s perspective would’ve been current asset

Question 2

is accumulated OCI reported in the stockholder equity section of the balance sheet?

Answer 2

yes

Question 3

how are losses recognized under the completed contract method?

Answer 3

-recognized in full in the year of discovery
-the additional estimated costs to complete are added to the recorded costs to date to arrive at the total estimated costs`

Question 4

according to the FASB conceptual framework, completeness is an ingredient of:

Answer 4

faithful representation