Question 1

Justification for having both intangible assets and other assets listed on a balance sheet include

Accepted Answer

A) that intangible assets have no physical existence and other assets are deferred charges 
B) that having more items listed on the balance sheet improves the users' understanding of the company 
C) that the intangible assets are more important than the tangible assets 
D) that the other asset classification is important because goodwill cannot be amortized, so it needs to be recorded on the balance sheet 
A) that intangible assets have no physical existence and other assets are deferred charges 
B) that having more items listed on the balance sheet improves the users' understanding of the company 
C) that the intangible assets are more important than the tangible assets 
D) that the other asset classification is important because goodwill cannot be amortized, so it needs to be recorded on the balance sheet

Question 2

The rationale for disclosing material subsequent events include all of the following except

Accepted Answer

A) these events may affect the users predictions about future cash flows 
B) without the disclosures the financial information may be misleading 
C) such disclosures will help convict management of hiding significant economic transactions 
D) reporting such events is consistent with the concept of full disclosure 
A) these events may affect the users predictions about future cash flows 
B) without the disclosures the financial information may be misleading 
C) such disclosures will help convict management of hiding significant economic transactions 
D) reporting such events is consistent with the concept of full disclosure

Question 3

Current assets are cash or other assets that are reasonably expected to be converted into cash, sold, or consumed within one year or a normal operating cycle.An operating cycle is defined as the company's ability to

Accepted Answer

A) spend cash to payoff the company's liabilities 
B) spend cash to acquire inventory, which is sold and returned to cash 
C) spend cash to acquire inventory, which is sold to customers in the normal course of business 
D) spend cash in the generation of services, which can result in an increase in revenue and net income from operations 
A) spend cash to payoff the company's liabilities 
B) spend cash to acquire inventory, which is sold and returned to cash 
C) spend cash to acquire inventory, which is sold to customers in the normal course of business 
D) spend cash in the generation of services, which can result in an increase in revenue and net income from operations

Question 4

A deficit occurs when a company's

Accepted Answer

A) retained earnings are less than it's common stock 
B) dividends distributed are greater than comprehensive income 
C) dividends and cumulative losses are greater than cumulative net income 
D) retained earnings are less than assets minus liabilities 
A) retained earnings are less than it's common stock 
B) dividends distributed are greater than comprehensive income 
C) dividends and cumulative losses are greater than cumulative net income 
D) retained earnings are less than assets minus liabilities

Question 5

State law may require that capital stock have which of the following values?

Accepted Answer

A) stated value 
B) market value 
C) no-par value 
D) present value 
A) stated value 
B) market value 
C) no-par value 
D) present value

Question 6

GAAP requires that all derivative financial instruments be reported at their

Accepted Answer

A) historical cost 
B) fair value 
C) present value 
D) par value 
A) historical cost 
B) fair value 
C) present value 
D) par value

Question 7

If the balance sheet lists liabilities and stockholders' equity sequentially under the assets, the format being used is the

Accepted Answer

A) account form 
B) report form 
C) working capital form 
D) financial position form 
A) account form 
B) report form 
C) working capital form 
D) financial position form

Question 8

Which is not a characteristic of an asset?

Accepted Answer

A) The resource must be useful only in the entity's activities and have been acquired by purchase, production, or stockholder investment. 
B) The entity must be able to obtain the future benefit and control others' access to it. 
C) The transaction or event giving rise to the entity's right to or control over the benefit must have already occurred. 
D) The resource must singly, or in combination with other resources, have the capacity to contribute directly, or indirectly, to the entity's future net cash inflows. 
A) The resource must be useful only in the entity's activities and have been acquired by purchase, production, or stockholder investment. 
B) The entity must be able to obtain the future benefit and control others' access to it. 
C) The transaction or event giving rise to the entity's right to or control over the benefit must have already occurred. 
D) The resource must singly, or in combination with other resources, have the capacity to contribute directly, or indirectly, to the entity's future net cash inflows.

Question 9

The residual interest in a company's assets is represented by its

Accepted Answer

A) net assets 
B) stockholders' equity 
C) ownership interest 
D) all of these 
A) net assets 
B) stockholders' equity 
C) ownership interest 
D) all of these

Question 10

A client of your accounting firm is impressed with the precision and detail in the financial statements that you have just prepared for his company.However, he wants to know if there are any limitations to the information contained in them.
Required:
Describe four limitations of the balance sheet.

Accepted Answer

Limitations of the balance sheet include

Question 11

Match between columns
                        Premises: Receivables net of allowance for doubtful accounts
Prepaid expenses
Investment securities available for sale
Patents
Raw materials inventory adjusted downward to lower of cost or market
Capital lease obligations
Financial instruments
Property, plant, and equipment
Bonds payable
Trading securities

Accepted Answer

The Answer of historical cost and current cost and exit is...

Question 12

Which of the following would typically be recorded as an intangible asset?

Accepted Answer

A) computer software costs 
B) bond issue costs 
C) idle fixed assets 
D) prepaid pension costs 
A) computer software costs 
B) bond issue costs 
C) idle fixed assets 
D) prepaid pension costs

Question 13

In preparing a statement of changes in stockholders' equity, the company includes land given to a stockholder as a dividend.This transaction is included in the statement because it represents

Accepted Answer

A) an investment by an owner that increases equity. 
B) an investment by an owner that decreases equity. 
C) a distribution to an owner that increases equity. 
D) a distribution to an owner that decreases equity. 
A) an investment by an owner that increases equity. 
B) an investment by an owner that decreases equity. 
C) a distribution to an owner that increases equity. 
D) a distribution to an owner that decreases equity.

Question 14

According to APB Opinion No.22, the initial note to the financial statements should describe

Accepted Answer

A) the calculation of comprehensive income 
B) the significant concentrations of credit risk 
C) the significant accounting policies 
D) the objectives of holding derivatives and the strategies for achieving them 
A) the calculation of comprehensive income 
B) the significant concentrations of credit risk 
C) the significant accounting policies 
D) the objectives of holding derivatives and the strategies for achieving them

Question 15

The amount of cash (or equivalent)that currently would be required to replace the service capacity of the asset is called the asset's

Accepted Answer

A) historical cost 
B) current cost 
C) current exit value 
D) present value 
A) historical cost 
B) current cost 
C) current exit value 
D) present value

Question 16

The SEC established integrated disclosures to

Accepted Answer

A) establish full disclosure 
B) demonstrate its legal authority to establish GAAP 
C) satisfy the form 10-K disclosure requirements 
D) control Management's Discussion and Analysis 
A) establish full disclosure 
B) demonstrate its legal authority to establish GAAP 
C) satisfy the form 10-K disclosure requirements 
D) control Management's Discussion and Analysis

Question 17

A reader might find information about gain contingencies in an annual report by examining

Accepted Answer

A) a contingent account receivable 
B) an accrued revenue 
C) a deferred revenue 
D) footnote disclosures 
A) a contingent account receivable 
B) an accrued revenue 
C) a deferred revenue 
D) footnote disclosures

Question 18

All of the following items would appear on the balance sheet except

Accepted Answer

A) an investment in another company's bonds 
B) an investment in marketable securities 
C) a realized gain on the sale of a patent 
D) the premium related to a bond liability that is still two years from maturity 
A) an investment in another company's bonds 
B) an investment in marketable securities 
C) a realized gain on the sale of a patent 
D) the premium related to a bond liability that is still two years from maturity

Question 19

A friend of the family has just received her first set of financial statements from her accountant.When she finds out that you are an accounting major, she asks you the following question: "Why aren't my employees listed as an asset on my company's balance sheet?"
Required:
Write an explanation describing the characteristics that an economic resource must possess in order to be considered an asset.Include in your discussion the primary reason why "human resources" are not recognized as assets.

Accepted Answer

To be considered an asset, an economic r

Question 20

According to a recent issue of Accounting Trends and Techniques, the most frequently used balance sheet format is the

Accepted Answer

A) financial position form 
B) report form 
C) account form 
D) combined form 
A) financial position form 
B) report form 
C) account form 
D) combined form

Exam 4: The Balance Sheet and the Statement of Changes in Stockholders Equity

Justification for having both intangible assets and other assets listed on a balance sheet include

The rationale for disclosing material subsequent events include all of the following except

Current assets are cash or other assets that are reasonably expected to be converted into cash, sold, or consumed within one year or a normal operating cycle.An operating cycle is defined as the company's ability to

A deficit occurs when a company's

State law may require that capital stock have which of the following values?

GAAP requires that all derivative financial instruments be reported at their

If the balance sheet lists liabilities and stockholders' equity sequentially under the assets, the format being used is the

Which is not a characteristic of an asset?

The residual interest in a company's assets is represented by its

A client of your accounting firm is impressed with the precision and detail in the financial statements that you have just prepared for his company.However, he wants to know if there are any limitations to the information contained in them. Required: Describe four limitations of the balance sheet.

Which of the following would typically be recorded as an intangible asset?

In preparing a statement of changes in stockholders' equity, the company includes land given to a stockholder as a dividend.This transaction is included in the statement because it represents

According to APB Opinion No.22, the initial note to the financial statements should describe

The amount of cash (or equivalent)that currently would be required to replace the service capacity of the asset is called the asset's

The SEC established integrated disclosures to

A reader might find information about gain contingencies in an annual report by examining

All of the following items would appear on the balance sheet except

According to a recent issue of Accounting Trends and Techniques, the most frequently used balance sheet format is the

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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