Test Question Muliple Choice Flashcards

1
Q

I realized holding gains/losses would be included in earnings for which of the following securities?

Trading?

Held-to-maturity

A

YES - Trading

NO - held-to-maturity

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2
Q

Which of the following would be considered an element of comprehensive income?

Operating losses?

Revenue?

Foreign Currency Translation Adjustment?

A

YES to all

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3
Q

Under IFRS, when a change in accounting principle is made in the current period, the cumulative effect adjustment for the change is shown as an adjustment to the beginning retained earnings on the balance sheet:

A

At the BEGINNING of the prior period

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4
Q

In computing the weighted-average number of shares outstanding during the year, which of the following mid year events must be treated as if it had occurred at the beginning of the year?

A. Declaration and distribution of stock dividend.
B. Sale off additional common stock.
C. Purchase of treasury stock
D. Sale of preferred convertible stock.

A

A.

Declaration of distribution of stock dividend.

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5
Q

Which of the following is NOT a disclosure requirement related to risks and uncertainties under US GAAP?
A. Disclosure of vulnerability due to all indentured concentrations.
B. Disclosure of the relative importance of each business when an entity operates multiple businesses.
C. A statement that actual results could differ form the estimates included in the financial statements.
D. Estimates of the effects of changes in significant estimates.

A

A.

Disclosure of vulnerability due to all identified concentrations.

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6
Q

On 03/31/X15, an entity adopted IFRS. Which of the following inventory methods will not be allowed under IFRS?

A. Specific identification
B. LIFO
C. Lower the cost or net realizable value
D. FIFO

A

B. LIFO

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7
Q

At 05/31/97 Quay owned a$10,000 whole-life insurance policy with a cash surrender value of $4,500, net of loans of $2,500. In Quay’s 05/31/97 personal statement of financial condition, what amount should be reported as investment in life insurance?

A

$4,500

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8
Q

Which of the following SEC forms is not a periodic filing?

A. Form 10-k
B. Form 11-k
C. Form 8-k
D. Form 6-k

A

Form 8-k

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9
Q

Jessie Inc. manufacturing company owns 80% of the common stock of Seigels Inc an investment company. Siegel own 65% of the common stock Pell Inc. a manufacturing company. In Jessie’s consolidated financial statements should consolidation accounting or equity method accounting be used for Siegel and Pell?

A

Consolidation used for both

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10
Q

Quinten university is organized as a non-for profit organization. The University reaches out to its alumni each year in a mass telephonic fundraising appeal their includes scriptEd dinner hour calls appealing for ongoing support.. In year one the University used untrained student volunteers to make the calls. Hey near to an alumnus who owns a successful telemarketing company offer support and the task. The University excepts the offer and provides the alumnus with the script along with appropriate phone numbers in contribution accounting forms. Based on the usual and customary charges used in his business deal on this anticipates that the value of the services is $10,000 for each year can contributed revenue associated with the transaction would be

A

Year 1 = $0

Year 2 = $0

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11
Q

According to the FASB conceptual framework, which of the following would cause earnings to differ from comprehensive income?

A

Unrealized holding loss from available-for-sale securities.

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12
Q

The Bygone Historical Society, a non-for-profit organization, received a donation of 15 metal photos of Bygone’s riverfront from a family estate. The photos were not suitable for display but were accepted by the historical society for their potential value to researchers and historians. The photos have no alternative use. The Bygone Historical Society adopted a policy of capitalizing its contributed works of art and historical treasures. Under these circumstances, Bygone Historical Society would:

A. Recognize the photos as assets (historical treasures) and contribution revenue in the amount of their fair market value.

B. Not recognize the contributed photos as assets and contribution revenue.

C. Recognize the photos as assets and contribution revenue in the amount of the. Alice of the metal.

D. Disclose the receipt of historical treasures not eligible for display.

A

B. Not recognize the contribution photos as assets and contribution revenue.

Note: Regardless of Bygone’s policies, no asset or contribution revenue will be recognized since the contributed photos are subject to major uncertainties with regard to their value and have no alternative use.

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13
Q

According to the Statement of Financial Accounting Concepts #8, which of the following is an entity-specific aspect of relevance?

A

Materiality

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14
Q

A company used the percentage-of-completion method of accounting for a four year construction contract. Which of the following items would be used to calculate the income recognized in the second year?

Income previously recognized

Progress billings to date

A

YES = income previously recognized

NO = Progress billings to date

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15
Q

During year 1, Tidal Co. Began construction on a project scheduled for completion in Year 3. At 12/31/X1, an overall loss was anticipated at contract completion. What would be the effect of the project on Year 1 operating income under percentage of completion method and the completed contract method under US GAAP?

A

Decrease for both

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16
Q

Vadis Co. Sells appliances that include a 3 year warranty. Service calls under the warranty are performed by an independent mechanic under a contract with Vadis. Based on experience, warranty costs are estimated a $30 for each machine sold. When should Vadis recognize the warranties?

A

When the machines are sold

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17
Q

The IASB’s conceptual framework includes one fundamental assumption. Which is it?

A

Going concern

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18
Q

Which of the following is NOT a comprehensive basis of accounting other than GAAP?

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.
B. Cash receipts and disbursements basis of accounting
C. Basis of accounting used by an entity to file its income tax return.
D. Basis of accounting used by an entity to comply with the financial reporting requirements of a government regulatory agency.

A

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.

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19
Q

The original cost of an inventory item is below the net realizable value and above the net realizable value less a normal profit margin. The inventory items replacement cost is below the net realizable value less he normal profit margin. Under the lower of cost or market method, the inventory item should be valued at:

A

Net realizable value less normal profit margin.

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20
Q

Which of the following is a common modification used to prepare modified cash basis financial statements?

A. Matching expenses to related revenues.
B. Capitalizing inventory
C. Recognizing revenues when earned
D. Recognizing expenses based on the methods and principles and used to prepare the tax return.

A

B. Capitalizing Inventory

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21
Q

On 12/31/X1 an entity revalued its equipment. On that date , the entity gathered the following info to aid in the revaluation:
Historical cost = $365,000
Accumulated Depreciation- $105,000
Fair Value - $275,000

On 12/31/X1 the entity will report:

A

A revaluation gain of $15,000 in OCI

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22
Q

The Lester Corp. prepares its second quarter interim under US GAAP. In preparing the reports , Lester will most likely…

A. Book revenue based on when cash is received, with a reconciliation to accrual numbers at year-end.
B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster
C. Have its auditors review and sign off on the report
D. Book expenses based on when the company pays its vendors

A

B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster

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23
Q

How would a 5% stock dividend affect each of the following?

Assets

Total stockholders equity

Retained earnings

A

No effect on all

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24
Q

How would the purchase of treasury stock affect each if he following?

Total stockholders equity

Earnings per share

A

Decrease - total stockholders equity

Increase - Earnings per share

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25
Q

In a statement of cash flows if used equipment is sold at a gain the amount shown as a cash inflow form investing activities equals he carrying amount of the equipment

A

Plus the gain

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26
Q

Which of the following info should be disclosed as supplemental info in the statement of cash flows?

Cash flows per share

Conversion of debt to equity

A

No - cash flow per share

Yes - conversion of debt to equity

27
Q

First commercial bank received a cash contribution to establish an irrevocable charitable trust for the sole benefit of he Olde Towne Museum, a non-for-profit organization. The terms of the trust name First Commercial as the trustee, require distribution of income earned on the trust each year for 3 years and at the end of the 3 year period require distribution of the principal to the museum. The museum would account for this transaction by?

A

Recognizing a beneficial interest in there assets of the trust at fair value as a temporarily restricted contribution.

28
Q

Able, Baker, and Cone form a partnership on 01/01. Cone contributes his pickup truck with a book value of $10,000 and a fair market value of $20,000 to the partnership in exchange for a one-third interest, properly accounted for using the bonus method. Able and Baker both contribute $10,000. The asset has a projected useful life of 10 years. At the time the partnership is formed, the asset will be recorded at:

A

$20,000

Contributed assets are recorded at fair market value

29
Q

The Bygone Historical Society, a non-for-profit organization, received a donation of 15 metal photos of Bygone’s riverfront from a family estate. The photos were not suitable for display but were accepted by the historical society for their potential value to researchers and historians. The photos have no alternative use. The Bygone Historical Society adopted a policy of capitalizing its contributed works of art and historical treasures. Under these circumstances, Bygone Historical Society would:

A. Recognize the photos as assets (historical treasures) and contribution revenue in the amount of their fair market value.

B. Not recognize the contributed photos as assets and contribution revenue.

C. Recognize the photos as assets and contribution revenue in the amount of the. Alice of the metal.

D. Disclose the receipt of historical treasures not eligible for display.

A

B. Not recognize the contribution photos as assets and contribution revenue.

Note: Regardless of Bygone’s policies, no asset or contribution revenue will be recognized since the contributed photos are subject to major uncertainties with regard to their value and have no alternative use.

30
Q

According to the Statement of Financial Accounting Concepts #8, which of the following is an entity-specific aspect of relevance?

A

Materiality

31
Q

A company used the percentage-of-completion method of accounting for a four year construction contract. Which of the following items would be used to calculate the income recognized in the second year?

Income previously recognized

Progress billings to date

A

YES = income previously recognized

NO = Progress billings to date

32
Q

During year 1, Tidal Co. Began construction on a project scheduled for completion in Year 3. At 12/31/X1, an overall loss was anticipated at contract completion. What would be the effect of the project on Year 1 operating income under percentage of completion method and the completed contract method under US GAAP?

A

Decrease for both

33
Q

Vadis Co. Sells appliances that include a 3 year warranty. Service calls under the warranty are performed by an independent mechanic under a contract with Vadis. Based on experience, warranty costs are estimated a $30 for each machine sold. When should Vadis recognize the warranties?

A

When the machines are sold

34
Q

The IASB’s conceptual framework includes one fundamental assumption. Which is it?

A

Going concern

35
Q

Which of the following is NOT a comprehensive basis of accounting other than GAAP?

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.
B. Cash receipts and disbursements basis of accounting
C. Basis of accounting used by an entity to file its income tax return.
D. Basis of accounting used by an entity to comply with the financial reporting requirements of a government regulatory agency.

A

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.

36
Q

The original cost of an inventory item is below the net realizable value and above the net realizable value less a normal profit margin. The inventory items replacement cost is below the net realizable value less he normal profit margin. Under the lower of cost or market method, the inventory item should be valued at:

A

Net realizable value less normal profit margin.

37
Q

Which of the following is a common modification used to prepare modified cash basis financial statements?

A. Matching expenses to related revenues.
B. Capitalizing inventory
C. Recognizing revenues when earned
D. Recognizing expenses based on the methods and principles and used to prepare the tax return.

A

B. Capitalizing Inventory

38
Q

On 12/31/X1 an entity revalued its equipment. On that date , the entity gathered the following info to aid in the revaluation:
Historical cost = $365,000
Accumulated Depreciation- $105,000
Fair Value - $275,000

On 12/31/X1 the entity will report:

A

A revaluation gain of $15,000 in OCI

39
Q

The Lester Corp. prepares its second quarter interim under US GAAP. In preparing the reports , Lester will most likely…

A. Book revenue based on when cash is received, with a reconciliation to accrual numbers at year-end.
B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster
C. Have its auditors review and sign off on the report
D. Book expenses based on when the company pays its vendors

A

B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster

40
Q

How would a 5% stock dividend affect each of the following?

Assets

Total stockholders equity

Retained earnings

A

No effect on all

41
Q

How would the purchase of treasury stock affect each if he following?

Total stockholders equity

Earnings per share

A

Decrease - total stockholders equity

Increase - Earnings per share

42
Q

In a statement of cash flows if used equipment is sold at a gain the amount shown as a cash inflow form investing activities equals he carrying amount of the equipment

A

Plus the gain

43
Q

Which of the following info should be disclosed as supplemental info in the statement of cash flows?

Cash flows per share

Conversion of debt to equity

A

No - cash flow per share

Yes - conversion of debt to equity

44
Q

First commercial bank received a cash contribution to establish an irrevocable charitable trust for the sole benefit of he Olde Towne Museum, a non-for-profit organization. The terms of the trust name First Commercial as the trustee, require distribution of income earned on the trust each year for 3 years and at the end of the 3 year period require distribution of the principal to the museum. The museum would account for this transaction by?

A

Recognizing a beneficial interest in there assets of the trust at fair value as a temporarily restricted contribution.

45
Q

Able, Baker, and Cone form a partnership on 01/01. Cone contributes his pickup truck with a book value of $10,000 and a fair market value of $20,000 to the partnership in exchange for a one-third interest, properly accounted for using the bonus method. Able and Baker both contribute $10,000. The asset has a projected useful life of 10 years. At the time the partnership is formed, the asset will be recorded at:

A

$20,000

Contributed assets are recorded at fair market value

46
Q

The Bygone Historical Society, a non-for-profit organization, received a donation of 15 metal photos of Bygone’s riverfront from a family estate. The photos were not suitable for display but were accepted by the historical society for their potential value to researchers and historians. The photos have no alternative use. The Bygone Historical Society adopted a policy of capitalizing its contributed works of art and historical treasures. Under these circumstances, Bygone Historical Society would:

A. Recognize the photos as assets (historical treasures) and contribution revenue in the amount of their fair market value.

B. Not recognize the contributed photos as assets and contribution revenue.

C. Recognize the photos as assets and contribution revenue in the amount of the. Alice of the metal.

D. Disclose the receipt of historical treasures not eligible for display.

A

B. Not recognize the contribution photos as assets and contribution revenue.

Note: Regardless of Bygone’s policies, no asset or contribution revenue will be recognized since the contributed photos are subject to major uncertainties with regard to their value and have no alternative use.

47
Q

According to the Statement of Financial Accounting Concepts #8, which of the following is an entity-specific aspect of relevance?

A

Materiality

48
Q

A company used the percentage-of-completion method of accounting for a four year construction contract. Which of the following items would be used to calculate the income recognized in the second year?

Income previously recognized

Progress billings to date

A

YES = income previously recognized

NO = Progress billings to date

49
Q

During year 1, Tidal Co. Began construction on a project scheduled for completion in Year 3. At 12/31/X1, an overall loss was anticipated at contract completion. What would be the effect of the project on Year 1 operating income under percentage of completion method and the completed contract method under US GAAP?

A

Decrease for both

50
Q

Vadis Co. Sells appliances that include a 3 year warranty. Service calls under the warranty are performed by an independent mechanic under a contract with Vadis. Based on experience, warranty costs are estimated a $30 for each machine sold. When should Vadis recognize the warranties?

A

When the machines are sold

51
Q

The IASB’s conceptual framework includes one fundamental assumption. Which is it?

A

Going concern

52
Q

Which of the following is NOT a comprehensive basis of accounting other than GAAP?

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.
B. Cash receipts and disbursements basis of accounting
C. Basis of accounting used by an entity to file its income tax return.
D. Basis of accounting used by an entity to comply with the financial reporting requirements of a government regulatory agency.

A

A. Basis of accounting used by an entity to comply with the financial reporting requirements of a lending institution.

53
Q

The original cost of an inventory item is below the net realizable value and above the net realizable value less a normal profit margin. The inventory items replacement cost is below the net realizable value less he normal profit margin. Under the lower of cost or market method, the inventory item should be valued at:

A

Net realizable value less normal profit margin.

54
Q

Which of the following is a common modification used to prepare modified cash basis financial statements?

A. Matching expenses to related revenues.
B. Capitalizing inventory
C. Recognizing revenues when earned
D. Recognizing expenses based on the methods and principles and used to prepare the tax return.

A

B. Capitalizing Inventory

55
Q

On 12/31/X1 an entity revalued its equipment. On that date , the entity gathered the following info to aid in the revaluation:
Historical cost = $365,000
Accumulated Depreciation- $105,000
Fair Value - $275,000

On 12/31/X1 the entity will report:

A

A revaluation gain of $15,000 in OCI

56
Q

The Lester Corp. prepares its second quarter interim under US GAAP. In preparing the reports , Lester will most likely…

A. Book revenue based on when cash is received, with a reconciliation to accrual numbers at year-end.
B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster
C. Have its auditors review and sign off on the report
D. Book expenses based on when the company pays its vendors

A

B. Prepare the interim report with less due diligence that it would use for the annual report in order to issue it faster

57
Q

How would a 5% stock dividend affect each of the following?

Assets

Total stockholders equity

Retained earnings

A

No effect on all

58
Q

How would the purchase of treasury stock affect each if he following?

Total stockholders equity

Earnings per share

A

Decrease - total stockholders equity

Increase - Earnings per share

59
Q

In a statement of cash flows if used equipment is sold at a gain the amount shown as a cash inflow form investing activities equals he carrying amount of the equipment

A

Plus the gain

60
Q

Which of the following info should be disclosed as supplemental info in the statement of cash flows?

Cash flows per share

Conversion of debt to equity

A

No - cash flow per share

Yes - conversion of debt to equity

61
Q

First commercial bank received a cash contribution to establish an irrevocable charitable trust for the sole benefit of he Olde Towne Museum, a non-for-profit organization. The terms of the trust name First Commercial as the trustee, require distribution of income earned on the trust each year for 3 years and at the end of the 3 year period require distribution of the principal to the museum. The museum would account for this transaction by?

A

Recognizing a beneficial interest in there assets of the trust at fair value as a temporarily restricted contribution.

62
Q

Able, Baker, and Cone form a partnership on 01/01. Cone contributes his pickup truck with a book value of $10,000 and a fair market value of $20,000 to the partnership in exchange for a one-third interest, properly accounted for using the bonus method. Able and Baker both contribute $10,000. The asset has a projected useful life of 10 years. At the time the partnership is formed, the asset will be recorded at:

A

$20,000

Contributed assets are recorded at fair market value

63
Q

Which of the following statements is correct regarding related party disclosures required under IFRS?

A. Disclosures should contain that the related party transactions were completed at arm’s length.
B. Disclosure of key management compensation arrangements is not required.
C. Control relationships only need to be disclosed if there are transactions between related parties.
D. Disclosures should be made separately for each category of related party.

A

D. Disclosures should be made separately for each category of related party.

64
Q

Pinellas company owns 30% of he voting common stock of sanibel company. Pinellas will probably use the equity method of accounting to account for this invention because:

A

Pinellas is assumed to be able to exercise significant influence over the affairs of sanibel co.