Financial Accounting > EXAM > AC302 Chapter Review Q &amp,100% CORRECT (All)

AC302 Chapter Review Q &amp,100% CORRECT

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1. Question: A change in accounting principle from one that is not generally accepted to one that is generally accepted should be treated as an error and corrected by prior period adjus... tment a change in accounting principle and the cumulative effect included in net income a change in accounting principle and prior period financial statements are restated a change in accounting principle and adjustments made prospectively \\ Points Received: 2 of 2 Comments: 2. Question: When making a retrospective adjustment, all of the following steps are included except computing the cumulative effect of the new accounting principle as of the beginning of the first period presented adjusting the current period net income for the cumulative effect of the change adjusting the carrying value of impacted assets and liabilities restating the financial statements of each period presented to reflect the effects of the change Points Received: 2 of 2 Comments: 3. Question: A retrospective adjustment requires a change in the prior period financial statements to look like the current period financial statements current period income to reflect the cumulative effect of new method prior period financial statements to reflect how they would have been presented had the new method been used in prior periods current period accounts in the financial statements to what they would have been had the previous method been used in the current period Points Received: 0 of 2 Comments: 4. Question: The mandatory adoption of a new accounting principle as a result of a new FASB statement requires footnote disclosure only a cumulative effect adjustment retrospective adjustment prospective restatement Points Received: 2 of 2 Comments: 5. Question: Which of the following statements does not properly state a basic principle for reporting an accounting change? retrospectively apply a change in accounting principle prospectively account for a change in accounting estimate retrospectively adjust for a change in reporting entity retrospectively apply a change in accounting estimate Points Received: 2 of 2 Comments: 6. Question: The Brown Company changed its method of determining inventories from LIFO to FIFO. This change represents a change in accounting estimate that should be treated prospectively change in accounting principle that should be treated prospectively change in accounting estimate for which the financial results of previous years are restated change in accounting principle for which the financial statements of prior periods included for comparative purposes are restated Points Received: 2 of 2 Comments: 7. Question: A change in accounting estimate effected by a change in accounting principle should be reported as a change in accounting principle a change in accounting estimate and a change in accounting principle a change in accounting estimate neither a change in accounting estimate nor a change in accounting principle Points Received: 0 of 2 Comments: 8. Question: The Tricia Co. presented financial statements for 2010 and 2011 that contained the following errors: 2011 2010 Ending merchandise inventory $700 understated $400 overstated Supplies expense 500 understated 100 overstated Assuming that no correcting entries were made, by how much would retained earnings be understated at January 1, 2012? $1,200 $1,100 $800 $700 Points Received: 0 of 2 Comments: 9. Question: Which of the following errors will normally result in overstatement of 2011 net income? failure to record merchandise purchases in 2010 understatement of 2010 ending merchandise inventory failure to record accrued salaries expense in 2010 overstatement of prepaid expense in 2010 Points Received: 2 of 2 Comments: 10. Question: During a year-end evaluation of the financial records of the Gretchen Company for the year ended December 31, 2010, the following was discovered: • Inventory on January 1, 2010, was understated by $6,000. • Inventory on December 31, 2010, was understated by $18,000. • Rent of $20,000 collected in advance on December 29, 2010, was included in income for 2010. • A probable, reasonably estimated contingent liability of $30,000 was not recorded as of December 31, 2010. Net income for 2010 (before any of the above items) was $100,000. The corrected net income, ignoring income taxes, for 2010 should be $50,000 $58,000 $62,000 $68,000 Points Received: 0 of 2 Comments: Grade for Heather Fehlman: Unit 8 Review Numeric grade: 12/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 7/30/2010 11:55:11 PM Time Spent: 0:24:03 (2:00 allowed) Points Received: 12 / 20 (60%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 6 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: In a statement of cash flows, the payment of a cash dividend on common stock outstanding should be classified as cash outflows for operating activities investing activities lending activities financing activities Points Received: 2 of 2 Comments: 2. Question: The Robinson Company reported net income of $90,000 in 2010. Additional information follows: Depreciation expense $18,000 Loss on sale of equipment 10,000 Gain on sale of land 17,000 Given just this information, what was the Robinson Company's net cash provided by operating activities in 2010? $79,000 $100,000 $101,000 $115,000 Points Received: 2 of 2 Comments: 3. Question: The following information relates to the Jordan, Inc: Depreciation expense $ 500 Increase in salaries payable 50 Purchased operating equipment 700 Net income 3,000 Paid long term note payable 600 Paid dividends 900 Increase in accounts receivable 400 What is the net cash provided by operating activities? $2,100 $2,650 $3,200 $3,150 Points Received: 0 of 2 Comments: 4. Question: Which of the following would be added to net income in computing cash flows from operating activities? an increase in accounts receivable an increase in inventories a decrease in deferred taxes payable a decrease in prepaid expenses Points Received: 2 of 2 Comments: 5. Question: Selected accounting information regarding the Jabbar Corporation in 2010 follows: Net cash provided by operating activities $900,000 Common stock issued as a result of a stock dividend (fair value) 100,000 Common stock issued for cash 400,000 Proceeds from sale of building 300,000 In 2010, Jabbar should report a net increase in cash of $1,100,000 $1,200,000 $1,600,000 $1,700,000 Points Received: 0 of 2 Comments: 6. Question: In a statement of cash flows prepared by the indirect method, which of the following events would be added to net income? receipt of dividends on an available-for-sale investment equity-method income from an investment in excess of dividends proceeds from the sale of an available-for-sale investment loss on the sale of plant assets Points Received: 2 of 2 Comments: 7. Question: Which of the following items would be deducted from net income to determine net cash provided by operating activities using the indirect method? loss on sale of plant assets and amortization of bond payable discount amortization of bond payable premium and gain on sale of equipment amortization expense and gain on sale of equipment decrease in income taxes payable and amortization of goodwill Points Received: 2 of 2 Comments: 8. Question: Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method? gain on sale of noncurrent assets and amortization of discount on investment in bonds amortization of bonds payable premium and amortization of intangibles loss on sale of noncurrent assets and amortization of investment credit gain on sale of noncurrent assets and amortization of premium on investment in bonds Points Received: 0 of 2 Comments: 9. Question: A company had an increase in interest payable during the year and also amortized discount on bonds payable. Under the direct method, the amount of interest paid during the year to be reflected in the statement of cash flows is interest expense plus the increase in interest payable minus the discount amortization interest expense plus the increase in interest payable plus the discount amortization interest expense minus the increase in interest payable minus the discount amortization interest expense minus the increase in interest payable plus the discount amortization Points Received: 0 of 2 Comments: 10. Question: In a statement of cash flows prepared by the indirect method, an increase in accounts receivable should be deducted from net income in the operating activities section added to net income in the operating activities section reported as an inflow in the investing activities section reported as an inflow in the financing activities section Points Received: 2 of 2 Comments: Grade for Heather Fehlman: Unit 7 Review Numeric grade: 14/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 7/26/2010 5:32:46 PM Time Spent: 0:52:35 (2:00 allowed) Points Received: 14 / 20 (70%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 7 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: From the lessor's standpoint, all of the following statements are true regarding leasing except that the lease may serve as a marketing tool and thereby increase sales if the residual value of the asset is not guaranteed, the lessor has transferred the risks of residual value decreases to the lessee for sales-type lease agreements, the lessor earns interest in addition to profit from the transfer of the asset the accounting procedures used by a lessor for a sales-type lease are similar to the accounting procedures used for a normal sale of merchandise under a perpetual inventory system Points Received: 2 of 2 Comments: 2. Question: For a lease that contains a bargain purchase option, minimum lease payments include any guarantee by the lessee of the residual value any payments on failure to renew or extend the lease executory costs minimum periodic rental payments required by the lease over the lease term Points Received: 2 of 2 Comments: 3. Question: If a lease qualifies as a capital lease, which of the following combinations of payments would be included? minimum periodic rental payments plus executory costs minimum periodic rental payments plus the payment required for a bargain purchase option minimum periodic rental payments minus any payment required for a guarantee of the residual value minimum periodic rental payments minus any payments required for failure to renew or extend the lease Points Received: 0 of 2 Comments: 4. Question: Which of the following criteria would not apply in determining if a lease is a capital lease if the beginning of the lease term falls within the last 25% of the total estimated economic life of the leased asset? the lease is noncancelable the lease contains a bargain purchase option the lease transfers ownership of the property to the lessee by the end of the lease term the lease term is equal to 75% or more of the estimated economic life of the leased property Points Received: 0 of 2 Comments: 5. Question: If a lease is classified as a capital lease because the present value of the minimum lease payments is equal to 90% or more of the fair value of the leased property, the time period to be used by the lessee to amortize the leased property is the lease term expected economic life of the property lease term or the expected economic life of the property, whichever is longer expected economic life of the property or the lease term, whichever is shorter Points Received: 0 of 2 Comments: 6. Question: If a lease is classified as a capital lease because the lease agreement contains a bargain purchase option, the time period to be used by the lessee to amortize the leased property is the lease term the expected economic life of the property the lease term or the expected economic life of the property, whichever is shorter the maximum amortization period for intangible assets Points Received: 2 of 2 Comments: 7. Question: Which of the following statements regarding the calculation of the lessee's depreciation expense for a capital lease is true? The bargain purchase option price is deducted from the original cost capitalized, and the difference is allocated over the estimated economic life of the asset. The guaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the estimated economic life of the asset. The unguaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the term of the lease. The guaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the term of the lease. Points Received: 2 of 2 Comments: 8. Question: The lessee should report capital lease obligations on the balance sheet as a current liability a long-term liability a current liability for the current portion and a long-term liability for the remaining amount a note to the financial statements only Points Received: 2 of 2 Comments: 9. Question: Which of the following is not a required disclosure by a lessor of a sales-type lease? the guaranteed residual value accruing to the benefit of the lessor total contingent rentals included in revenue for the period unearned income a general description of the lessor's leasing arrangements Points Received: 2 of 2 Comments: 10. Question: FASB’s rules concerning leases are an attempt to record in the financial statements the risks and benefits of being a lessee the risks and benefits of being a lessor the risks and benefits of leasing an asset the risks and benefits of asset ownership Points Received: 2 of 2 Comments: Grade for Heather Fehlman: Unit 6 Review Numeric grade: 16/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 7/20/2010 6:39:41 PM Time Spent: 1:18:12 (2:00 allowed) Points Received: 16 / 20 (80%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 8 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: GAAP for pension plans requires companies with defined benefit pension plans to recognize pension expense based on accrual-basis concepts recognize pension expense as an amount equal to the actual cash paid to retired employees for the current year recognize a pension liability based on the projected benefit obligation concept disclose annual pension cost in a footnote only; pension cost was not required to be reported on the income statement Points Received: 0 of 2 Comments: 2. Question: Which of the following pension-related definitions is not correct? Vested benefits are payments that are not contingent on the employee's continuing in the service of the employer. Present value is the current worth of an amount or amounts payable or receivable in the future. Actuarial assumptions are those made by actuaries concerning future events affecting pension costs. Service cost is the amount paid annually to a funding agency under an unfunded pension plan. Points Received: 2 of 2 Comments: 3. Question: If a pension plan amendment is adopted and retroactive benefits are granted to employees, the amount of the prior service cost at the date of grant is accounted for as an intangible asset and liability that are recognized on the plan amendment date as a prior period adjustment for the total amount of the prior service cost that is reported on the statement of retained earnings as the total amount of the prior service cost that is recognized as an expense on the current period's income statement initially as an unamortized amount to be included in the computation of pension expense over future periods Points Received: 2 of 2 Comments: 4. Question: Amortization of any unrecognized net gain or loss is included in pension expense of a given year if at the end of the year, the cumulative unrecognized net gain or loss exceeds 10% of the greater of the actual projected benefit obligation or the fair value of the plan assets beginning of the year, the cumulative unrecognized net gain or loss exceeds 10% of the greater of the actual accumulated benefit obligation or the fair value of the plan assets end of the year, the cumulative gain or loss exceeds 10% of the greater of the actual accumulated benefit obligation or the fair value of the plan assets beginning of the year, the unrecognized cumulative gain or loss exceeds 10% of the greater of the actual projected benefit obligation or the fair value of the plan assets Points Received: 2 of 2 Comments: 5. Question: In 2011, the Marsha Company closed a manufacturing plant. The resulting actuarial loss should be recognized over current and future periods using the straight-line method recognized over current and future periods through adjustments to the service cost and prior service cost included in income for 2011 matched to past results with a prior period adjustment Points Received: 2 of 2 Comments: 6. Question: Minnie Co. has an unfunded prepaid/accrued pension cost of $2,000 (debit balance) at December 31, 2010. The following information pertains to 2011: Pension expense $320,000 Projected benefit obligation, December 31, 2011 840,000 Contributions 330,000 Plan assets (fair value), December 31, 2011 810,000 The balance in Prepaid/Accrued Pension Cost at December 31, 2011 should be $30,000 debit $30,000 credit $8,000 credit $10,000 credit Points Received: 0 of 2 Comments: 7. Question: Current GAAP requires that the financial statements issued by a funding agency for a company's pension plan include all of the following except information about the net assets (at fair value) available for benefits at the end of the plan year a financial statement (on a cash basis) presenting information about the pension payments to retirees a financial statement containing information about the changes during the year in the net assets available for benefits information about the actuarial present value of accumulated plan benefits Points Received: 2 of 2 Comments: 8. Question: Which of the following statements is true? Funding for postretirement health care benefits is legally required, and contributions are tax deductible. Funding for postretirement health care benefits is legally required, but contributions are not tax deductible. Funding for postretirement health care benefits is not legally required, and contributions are not tax deductible. Funding for postretirement health care benefits is not legally required, but contributions are tax deductible. Points Received: 2 of 2 Comments: 9. Question: Which of the following is not a component of the net periodic pension expense to be reported on a company's income statement? interest cost unrecognized past service cost service cost expected return on plan assets Points Received: 2 of 2 Comments: 10. Question: A company's net periodic pension cost (expense) includes all of the following items except service cost employer's contribution to the pension fund amortization of unrecognized prior service cost interest cost on the projected benefit obligation Points Received: 2 of 2 Comments: Grade for Heather Fehlman: Unit 5 Review Numeric grade: 10/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 7/11/2010 4:12:42 PM Time Spent: 0:15:45 (2:00 allowed) Points Received: 10 / 20 (50%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 5 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: Differences between pretax financial income and taxable income in an accounting period that will not reverse in a later accounting period are called temporary differences permanent differences deductible temporary differences deferred tax consequences Points Received: 2 of 2 Comments: 2. Question: On December 31, 2009, Fort Stockton, Inc. had no temporary differences that created deferred income taxes. On January 2, 2010, a new machine was purchased for $30,000. Straight-line depreciation over a four-year life (no residual value) was used for financial accounting. Depreciation expense for tax purposes was $11,000 in 2010, $9,000 in 2011, $6,000 in 2012, and $4,000 in 2013. In each year, the income tax rate was 20% and Fort Stockton had no other items that created differences between pretax financial income and taxable income. Fort Stockton reported the following pretax financial income for 2010 through 2013: 2010 $50,000 2011 40,000 2012 30,000 2013 60,000 The entry to record income taxes on December 31, 2011, would include a debit to Deferred Tax Liability for $300 credit to Income Taxes Payable for $8,000 debit to Income Tax Expense for $7,700 credit to Deferred Tax Liability for $300 Points Received: 0 of 2 Comments: 3. Question: Which of the following statements regarding current and deferred income taxes is not correct? The amount of income tax expense must be allocated to various components of comprehensive income. The income tax obligation is determined by applying the historical tax rates to the taxable income for the year. The valuation allowance account is subtracted from the deferred tax asset account on the balance sheet. Rent received in advance that will be earned within the next 12 months results in the creation of a current deferred tax asset. Points Received: 0 of 2 Comments: 4. Question: All of the following involve a temporary difference for purposes of income tax allocation except interest on municipal bonds gross profit on installment sales for tax purposes MACRS depreciation for tax purposes and straight-line for accounting purposes product warranty expenses Points Received: 0 of 2 Comments: 5. Question: Temporary differences arise when revenues or gains are included in pretax financial income Prior to the Time They Are Included in Taxable Income After the Time They Are Included in Taxable Income Yes Yes Yes No No Yes No No Points Received: 2 of 2 Comments: 6. Question: A deferred tax asset would result if a company recorded a tax penalty in 2010 that it paid in 2011 a company recorded more taxable depreciation in 2010 for an asset acquired in 2008 a company recorded more warranty expense in 2010 than cash paid in 2010 for warranty repairs a company recorded more interest expense in 2010 than cash paid in 2010 for interest Points Received: 0 of 2 Comments: 7. Question: The Channelview Company incurred the following expenses in 2010, which are reported differently for financial reporting purposes and taxable income: Estimate of bad debts expense (but not written off) $40,000 Estimated product warranty costs (but not paid) 20,000 If the tax rate is 40%, the total temporary difference is $20,000 $24,000 $60,000 $150,000 Points Received: 0 of 2 Comments: 8. Question: An operating loss carryforward occurs when prior pretax financial income is insufficient to offset the current period operating loss prior taxable income is insufficient to offset the current period operating loss future pretax financial income is insufficient to offset a current period operating loss future taxable income is insufficient to offset a current period operating loss Points Received: 2 of 2 Comments: 9. Question: At the end of its first year of operations on December 31, 2010, the Belton Company reported taxable income of $100,000 and had a pretax financial loss of $60,000. Differences between taxable income and pretax financial income included interest revenue received from municipal obligations of $20,000 and warranty expense accruals of $180,000. Warranty expenses of $90,000 are expected to be paid in 2011 and $110,000 in 2012. The enacted income tax rates for 2010, 2011, and 2012 are 30%, 35%, and 40%, respectively. The journal entry to record income tax expense on December 31, 2010, would be Deferred Tax Asset 75,500 Income Taxes Payable 30,000 Income Tax Benefits from Operating Loss Carryforward 45,500 Deferred Tax Asset 30,000 Income Taxes Payable 30,000 Income Tax Expense 30,000 Income Taxes Payable 30,000 Deferred Tax Asset Income Taxes Payable 105,500 30,000 Income Tax Benefit from Operating Loss Carryforward 75,500 Points Received: 2 of 2 Comments: 10. Question: Intraperiod tax allocation would be appropriate for an extraordinary gain a loss from operations of a discontinued segment the cumulative effects of changes in accounting principles all of these Points Received: 2 of 2 Comments: Grade for Heather Fehlman: Unit 3 Review Numeric grade: 6/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 6/28/2010 12:21:26 AM Time Spent: 0:25:25 (2:00 allowed) Points Received: 6 / 20 (30%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 3 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: Which of the following items would not be included in a basic earnings per share calculation? undeclared dividends on noncumulative preferred stock declared dividends on noncumulative preferred stock undeclared dividends on cumulative preferred stock declared dividends on cumulative preferred stock Points Received: 2 of 2 Comments: 2. Question: On January 1, a corporation had 10,380 shares of common stock outstanding. On August 1, it sold an additional 6,000 shares. During the year, dividends of $4,800 and $56,000 were declared and paid on the common and preferred stock, respectively. Net income for the year was $240,000. The basic earnings per share for the year was $10.56 $11.23 $14.29 $18.63 Points Received: 0 of 2 Comments: 3. Question: Which one of the following statements concerning earnings per share amounts is true? Earnings per share related to discontinued operations must be reported on the income statement. Earnings per share related to extraordinary items must be reported on the income statement. Earnings per share related to continuing operations must be reported on the income statement. Earnings per share related to the cumulative effect of a change in accounting principle must be reported on the income statement. Points Received: 0 of 2 Comments: 4. Question: When a corporation has contingently issuable common stock for which the conditions have not been met for issuance, the shares are included in basic earnings per share diluted earnings per share both basic and diluted earnings per share calculations neither basic nor diluted earnings per share calculations Points Received: 0 of 2 Comments: 5. Question: How will a company's retained earnings and total stockholders' equity be affected by the recording of the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.) Retained Earnings Total Stockholders' Equity decrease decrease decrease no effect no effect no effect no effect decrease Points Received: 2 of 2 Comments: 6. Question: If a corporation appropriates retained earnings for treasury stock transactions, the appropriation will affect total amounts for retained earnings and stockholders' equity as Total Retained Earnings Total Stockholders' Equity : decrease decrease decrease no effect no effect no effect no effect decrease Points Received: 0 of 2 Comments: 7. Question: How may a corporation report its types of comprehensive income? It may report the amount of accumulated other comprehensive income for each item as part of stockholders' equity. It may report the total amount of accumulated other comprehensive income for all the items as part of stockholders' equity. It may make footnote disclosures of totals only. It may report the amount of accumulated other comprehensive income for each item or in total as part of stockholders’ equity. Points Received: 2 of 2 Comments: 8. Question: The following information is provided for the Columbus Company: Deferred compensation payable-stock appreciation rights $ 10 Bonds payable 120 Additional paid-in capital on common stock 20 Donated capital 16 Treasury stock (at cost) 8 Common stock, $1 par 100 Common stock option warrants 40 Unrealized increase in value of available for sale securities 28 Additional paid-in capital from treasury stock 3 Retained earnings 57 What is the total stockholders' equity of Columbus Company? $212 $228 $256 $272 none of these Points Received: 0 of 2 Comments: 9. Question: The Farmer Company has issued 10%, fully participating, cumulative preferred stock with a total par value of $300,000 and common stock with a total par value of $900,000. Dividends for one previous year are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $222,000 are distributed at the end of the current year? $85,500 and $136,500 $78,000 and $144,000 $60,000 and $162,000 $55,500 and $166,500 Points Received: 0 of 2 Comments: 10. Question: On October 1, 2010, Black Company declared a property dividend payable in the form of marketable equity securities classified as "available for sale" for financial accounting purposes. The marketable equity securities will be distributed to the common stockholders on December 1, 2010. The investment in equity securities originally cost Black $410,000 on August 1, 2010. The investment's fair value on various dates is as follows: October 1, 2010 $430,000 December 1, 2010 435,000 December 31, 2010 440,000 The amount credited to Realized Gain on Disposal of Investments resulting from this dividend transaction should be $0 $20,000 $25,000 $30,000 Points Received: 0 of 2 Comments: Grade for Heather Fehlman: Unit 4 Review Numeric grade: 8/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 7/6/2010 10:19:19 AM Time Spent: 0:19:01 (2:00 allowed) Points Received: 8 / 20 (40%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 4 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: Net assets increase from cost to selling price when revenue is recognized During Production | At Time of Sale | At Time of Cash Receipt Yes Yes Yes Yes Yes No Yes No No No No No Points Received: 2 of 2 Comments: 2. Question: The importance the economic substance of an event taking precedence over the legal form refers to revenue being earned and recognized earned and realizable earned and realized realized and recognized Points Received: 2 of 2 Comments: 3. Question: The installment method is usually associated with revenue recognition in the period of sale revenue recognition prior to the period of sale revenue recognition after the period of sale revenue recognition delayed until a future event occurs Points Received: 0 of 2 Comments: 4. Question: Under the completed-contract method of revenue recognition, the partial billings account is closed out against the construction in progress account construction revenue account income summary account construction expense account Points Received: 0 of 2 Comments: 5. Question: A Provision for Loss on Contract is reported in the financial statements as a(n) contra-asset account other expense account operational expense account contra-liability account Points Received: 0 of 2 Comments: 6. Question: When there is not assurance that the buyer can be expected to satisfy its obligations under a contract, which of the following revenue recognition methods is preferable? percentage-of-completion method installment method deposit method completed-contract method Points Received: 0 of 2 Comments: 7. Question: In 2010, Alpha Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: 2010 2011 2012 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Under the percentage-of-completion method of revenue recognition, the net amount reported for construction in progress inventory at the end of 2011 would be $87,600 $189,600 $210,000 $312,000 Points Received: 0 of 2 Comments: 8. Question: The percentage-of-completion method does not recognize profit each period during the life of the contract in proportion to the portion of the contract completed during the period value the inventory at cost less any partial billings give precedence to economic substance over legal form value the inventory at the costs incurred plus the profit recognized to date less any partial billings Points Received: 2 of 2 Comments: 9. Question: Givens, Inc. repossessed an item it sold in 2010 with a gross profit of 40%. The fair value of the repossessed item was $140. The remaining receivable amounted to $400. What account had the smallest amount debited to it? Allowance for Doubtful Installment Accounts Receivable Accounts Receivable Repossessed Inventory Deferred Gross Profit Points Received: 0 of 2 Comments: 10. Question: In real estate sales, what method of revenue recognition must be used if the sale is not consummated? deposit method cost recovery method installment method completed-contract method Points Received: 2 of 2 Comments: Grade for Heather Fehlman: Unit 2 Review Numeric grade: 14/20 Letter grade: Comments: (none) <Close Window Autograde Summary Date Taken: 6/22/2010 6:09:27 PM Time Spent: 0:39:25 (2:00 allowed) Points Received: 14 / 20 (70%) These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: # Questions: # Correct: Multiple choice 10 7 JavaScript is required for your course. Please ensure JavaScript is enabled in your browser preferences. Grade Details 1. Question: The corporate form of organization is important to the U.S. economy because there are more corporations than sole proprietorships there are more corporations than partnerships there are more sales of goods and services by corporations than other business forms corporations provide more donations to the economy than other business forms due to the many tax incentives geared toward corporations Points Received: 2 of 2 Comments: 2. Question: Which of the following is not a characteristic of the corporate form of business entity? It is a separate legal entity. Owners have unlimited liability. It has an indefinite life span. Owners often are not an active part of management. Points Received: 2 of 2 Comments: 3. Question: Shares of capital stock issued to and held by stockholders as of a specific date are Authorized Issued Outstanding Capital Stock Yes Capital Stock Yes Capital Stock No Authorized Issued Outstanding Capital Stock Yes Capital Stock Yes Capital Stock Yes Authorized Issued Outstanding Capital Stock No Capital Stock No Capital Stock Yes Authorized Issued Outstanding Capital Stock No Capital Stock No Capital Stock No Points Received: 2 of 2 Comments: 4. Question: The Securities and Exchange Commission requires that Subscriptions Receivable be disclosed on the financial statements filed with it as a(n) current asset as long as collection is to be made within one year or the normal operating cycle, whichever is longer other asset if collection is to be made beyond one year from the date of the financial statements contra-accounts receivable account contra-stockholders' equity account Points Received: 2 of 2 Comments: 5. Question: When accounting for a fixed compensatory stock option plan, a company must make which of the following on the date of grant? journal entry recognizing the common stock issued journal entry recognizing the compensation expense memorandum entry explaining the terms of the compensatory stock option plan memorandum entry of the expected annual compensation expense amount Points Received: 0 of 2 Comments: 6. Question: On January 1, 2010, Marvel, Inc., grants a compensatory stock option plan to 10 of its executives. The plan allows each executive to buy 1,000 shares of its $1 par common stock at $30 a share after a three-year service period. The value of each option is estimated to be $8. The company estimates it will have an annual 2% employee turnover rate during the service period. What is the compensation expense for the year ended December 31, 2011? $0 $25,098 $50,197 $75,295 Points Received: 0 of 2 Comments: 7. Question: For a stock appreciation rights (SAR) compensation plan, the measurement date is the date on which the options (SARs) are granted to the employees when the employees may first exercise the options (SARs) on which the options (SARs) are exercised of the adoption of the plan Points Received: 2 of 2 Comments: 8. Question: Preferred stockholders share with common stockholders in any "extra" dividends when the preferred stock is cumulative callable participating convertible Points Received: 0 of 2 Comments: 9. Question: Mercury Corp. has 10,000 shares of $10 par, cumulative, 6% preferred stock and 10,000 shares of common stock outstanding since being organized at the beginning of 2010. It declared its first dividend of $40,000 at the end of 2012. This means that all of the $40,000 dividends available are paid to the preferred stockholders all of the $40,000 dividends available are paid to the common stockholders an equal dollar amount is paid to each class of shareholder 3 years™ worth of dividends will be paid to preferred stockholders prior to paying anything to common stockholders Points Received: 2 of 2 Comments: 10. Question: When a company acquires treasury stock, what effect does this transaction have on earnings per share and legal capital, respectively? increase, decrease increase, increase decrease, decrease increase, none Points Received: 2 of 2 Comments: [Show More]

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