This Website Has Been Moved To A New Address

Loading

When an item of expense is paid and recorded in advance

Price: $12.99


1) When an item of expense is paid and recorded in advance, it is normally called a(n)

A. prepaid expense.
B. estimated expense.
C. accrued expense.
D. cash expense.

2) When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.

A. accrued
B. cash
C. prepaid
D. unearned

3) Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?

A. To reduce the federal income tax liability
B. To adhere to the accounting constraint of conservatism
C. To aid management in cash-flow analysis
D. To match the costs of production with revenues as earned

4) One objective of financial reporting is to provide

A. information about the investors in the business entity.
B. information that will attract new investors.
C. information about the liquidation values of the resources held by the enterprise.
D. information that is useful in assessing cash flow prospects.

5) General-purpose financial statements are the product of

A. financial accounting.
B. managerial accounting.
C. both financial and managerial accounting.
D. neither financial nor managerial accounting.

6) The information provided by financial reporting pertains to

A. individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.
B. business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers.
C. individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers.
D. an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries.

7) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the

A. FASB.
B. AICPA.
C. SEC.
D. APB.

8) The Financial Accounting Standards Board (FASB) was proposed by the

A. American Institute of Certified Public Accountants.
B. Accounting Principles Board.
C. Study Group on the Objectives of Financial Statements.
D. Special Study Group on establishment of Accounting Principles (Wheat Committee).

9) The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

A. the FASB issues exposure drafts of proposed standards.
B. all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.
C. all members of the FASB possess extensive experience in financial reporting.
D. a majority of the members of the FASB are CPAs drawn from public practice.

10) The occurrence which most likely would have no effect on 2007 net income (assuming that all amounts involved are material) is the

A. sale in 2007 of an office building contributed by a stockholder in 1983.
B. collection in 2007 of a receivable from a customer whose account was written off in 2006 by a charge to the allowance account.
C. settlement based on litigation in 2007 of previously unrecognized damages from a serious accident which occurred in 2005.
D. worthlessness determined in 2007 of stock purchased on a speculative basis in 2003.

11) Which of the following is not a generally practiced method of presenting the income statement?

A. The single-step income statement
B. The consolidated statement of income
C. Including prior period adjustments in determining net income
D. Including gains and losses from discontinued operations of a component of a business in determining net income



12) The single-step income statement emphasizes

A. total revenues and total expenses.
B. extraordinary items and accounting changes more than these are emphasized in the multiple-step income statement.
C. the gross profit figure.
D. the various components of income from continuing operations.

13) In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

A. the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable.
B. the method commonly used by the contractor to account for other long-term construc-tion contracts.
C. the terms of payment in the contract.
D. the inherent nature of the contractor's technical facilities used in construction.

14) Which of the following is not an accurate representation concerning revenue recognition?

A. Revenue from services rendered is recognized when cash is received or when services have been performed.
B. Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used.
C. Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers.
D. Revenue from disposing of assets other than products is recognized at the date of sale.

15) Which of the following is not a reason why revenue is recognized at time of sale?

A. The sale is the critical event.
B. Title legally passes from seller to buyer.
C. Realization has occurred.
D. All of these are reasons to recognize revenue at time of sale.

16) The correct order to present current assets is

A. Cash, accounts receivable, inventories, prepaid items.
B. Cash, inventories, accounts receivable, prepaid items.
C. Cash, accounts receivable, prepaid items, inventories.
D. Cash, inventories, prepaid items, accounts receivable.


17) One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

A. the extensive use of separate classifications.
B. an extensive use of estimates.
C. failure to reflect current value information.
D. failure to include items of financial value that cannot be recorded objectively.

18) The balance sheet is useful for analyzing all of the following except

A. solvency.
B. financial flexibility.
C. profitability.
D. liquidity.

19) If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the

A. nature of any future transactions planned between the parties and the terms involved.
B. amounts due from or to related parties as of the date of each balance sheet presented.
C. dollar amount of the transactions for each of the periods for which an income state-ment is presented.
D. nature of the relationship between the parties to the transactions.

20) Which of the following should be disclosed in a Summary of Significant Accounting Policies?

A. Amount for cumulative effect of change in accounting principle
B. Depreciation method followed
C. Claims of equity holders
D. Types of executory contracts

21) Events that occur after the December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be

A. disclosed only in the Notes to the Financial Statements.
B. used to record an adjustment directly to the Retained Earnings account
C. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008.
D. discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.

22) The MD&A section of an enterprise's annual report is to cover the following three items:

A. income statement, balance sheet, and statement of cash flows.
B. changes in the stock price, mergers, and acquisitions.
C. liquidity, capital resources, and results of operations.
D. income statement, balance sheet, and statement of owners' equity.

23) The required approach for handling extraordinary items in interim reports is to

A. prorate them over the current and remaining quarters.
B. disclose them only in the notes.
C. charge or credit the loss or gain in the quarter that it occurs.
D. prorate them over all four quarters.

24) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be

A. qualified.
B. exceptional.
C. adverse.
D. unqualified.

25) Which of the following ratios measures long-term solvency?

A. Receivables turnover
B. Current ratio
C. Debt to total assets
D. Acid-test ratio

26) The calculation of the number of times interest is earned involves dividing

A. net income plus income taxes by annual interest expense.
B. none of these.
C. net income plus income taxes and interest expense by annual interest expense.
D. net income by annual interest expense.

27) Theoretically, in computing the receivables turnover, the numerator should include

A. net credit sales.
B. credit sales.
C. sales.
D. net sales.

28) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by

A. estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.
B. re-recording all income statement transactions that directly affect cash in a separate cash flow journal.
C. eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.
D. eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.

29) The primary purpose of the statement of cash flows is to provide information

A. that is useful in assessing cash flow prospects.
B. about the operating, investing, and financing activities of an entity during a period.
C. about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.
D. about the cash receipts and cash payments of an entity during a period.

30) An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as a(n)

A. deduction from net income in arriving at net cash flow from operating activities.
B. addition to net income in arriving at net cash flow from operating activities.
C. cash outflow from financing activities.
D. cash outflow from investing activities.

31) Riley Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Wood Co. during the current year, even though no dividends were declared or paid by Wood during the year. On Riley's statement of cash flows (indirect method), the $25,000 should

A. be shown as cash inflow from investing activities.
B. not be shown.
C. be shown as a deduction from net income in the cash flows from operating activities section.
D. be shown as cash outflow from financing activities.


32) Which of the following would be classified as a financing activity on a statement of cash flows?

A. Deposit to a bond sinking fund
B. Declaration and distribution of a stock dividend
C. Payment of interest to a creditor
D. Sale of a loan receivable

33) In determining net cash flow from operating activities, a decrease in accounts payable during a period

A. requires an addition adjustment to net income under the indirect method.
B. means that income on an accrual basis is less than income on a cash basis.
C. requires a decrease adjustment to cost of goods sold under the direct method.
D. requires an increase adjustment to cost of goods sold under the direct method.

34) Which of the following tables would show the smallest factor for an interest rate of 10% for six periods?

A. Present value of an ordinary annuity of 1
B. Future value of an ordinary annuity of 1
C. Present value of an annuity due of 1
D. Future value of an annuity due of 1

35) Which table would you use to determine how much you would need to have deposited three years ago at 10% compounded annually in order to have $1,000 today?

A. Future value of an annuity due of 1
B. Future value of 1 or present value of 1
C. Present value of an ordinary annuity of 1
D. Future value of an ordinary annuity of 1

36) Which of the following tables would show the smallest value for an interest rate of 5% for six periods?

A. Present value of 1
B. Future value of 1
C. Present value of an ordinary annuity of 1
D. Future value of an ordinary annuity of 1

No comments:

Post a Comment