Question 1

Today's fair market value would be the same as:

Accepted Answer

A) the cash price of the asset when it was originally purchased. 
B) the current price paid for an item in the input market. 
C) the value of an item in the output market or sales price. 
D) the discounted future cash flows from input and output markets. 
A) the cash price of the asset when it was originally purchased. 
B) the current price paid for an item in the input market. 
C) the value of an item in the output market or sales price. 
D) the discounted future cash flows from input and output markets.

Question 2

During 2003, Jeter Company purchased property for its plant for $90,000. During December of 2018, a similar neighboring plot of land was sold for $120,000. At what amount would land be measured on Jeter Company's December 31, 2018 balance sheet?

Accepted Answer

The answer of During 2003, Jeter Company purchased property for...

Question 3

Match between columns
                        Premises: Inventory
Plant and equipment (book value)
Land used for plant site
Current liabilities
Long-term notes receivable

Accepted Answer

The Answer of Present value and Fair market value and is...

Question 4

The monetary unit that a company uses to measure economic transactions is primarily determined by the:

Accepted Answer

A) stable dollar concept adjusted for inflationary effects. 
B) markets in which a company operates. 
C) fiscal period a company has chosen. 
D) decision by management to elect to use a given currency. 
A) stable dollar concept adjusted for inflationary effects. 
B) markets in which a company operates. 
C) fiscal period a company has chosen. 
D) decision by management to elect to use a given currency.

Question 5

For each financial concept listed in 1 through 5 below, identify in which category (listed in a through f) it should be matched. You may use each letter more than once or not at all.
 Categories
a. Similar events are measured using identical accounting methods from one period to the next.
b. Expense is recognized in the same period that its generated revenue is recognized.
c. Different firms use identical accounting methods to measure similar events.
d. Present value of future cash flows.
e. Significant portion of effort made; major portion of cost incurred, objectively measured, and reasonably assured of ultimate cash receipt. 
____ 1. Comparability
____ 2. Objectivity
____ 3. Revenue recognition principle
____ 4. Matching principle
____ 5. Consistency

Accepted Answer

1. c 2. f

Question 6

Large public accounting firms employ graduates from state-supported universities, many of who are graduates with accounting degrees. These firms' reliance on and use of the product of subsidized educational institutions seem to imply that these colleges and universities are important assets. However, they are not recognized as assets on the balance sheets of these public accounting firms. Which one of the four basic assumptions might be used to justify the exclusion of educational assets from the balance sheets of the public accounting firms?

Accepted Answer

Although the lack of ownership or other

Question 7

Which one of the following is violated when a company records cost of goods sold expense at the time when inventory is purchased?

Accepted Answer

A) Relevance 
B) Historical cost 
C) Matching 
D) Revenue recognition criteria 
A) Relevance 
B) Historical cost 
C) Matching 
D) Revenue recognition criteria

Question 8

During January of 2018, Barry Corporation purchased five acres of land for cash of $120,000 from Foley Company. On December 31, 2018, after Barry built its plant, it was estimated that the land's fair market value was $140,000. At what amount would land be measured on Barry's December 31, 2018 balance sheet?

Accepted Answer

The answer of During January of 2018, Barry Corporation purchased...

Question 9

The valuation basis used to measure accounts receivable is:

Accepted Answer

A) the original cost of the goods sold. 
B) current input cost 
C) Present value. 
D) replacement cost. 
A) the original cost of the goods sold. 
B) current input cost 
C) Present value. 
D) replacement cost.

Question 10

When in doubt, financial statements should:

Accepted Answer

A) understate assets, overstate liabilities, delay the recognition of gains, and accelerate the recognition of losses. 
B) understate assets and liabilities and delay the recognition of gains and losses. 
C) understate assets, overstate liabilities, and delay the recognition of gains and losses. 
D) overstate assets and understate liabilities. 
A) understate assets, overstate liabilities, delay the recognition of gains, and accelerate the recognition of losses. 
B) understate assets and liabilities and delay the recognition of gains and losses. 
C) understate assets, overstate liabilities, and delay the recognition of gains and losses. 
D) overstate assets and understate liabilities.

Question 11

On March 1, 2018, $60,000 of annual magazine subscriptions were sold by Traveler's Monthly Magazines. The subscribed magazines are delivered on the first day of each month beginning on March 1, 2018. The total cost of the subscribed magazines is $30,000 or $2,500 per month. How much profit will the company recognize during 2018?

Accepted Answer

A) $60,000 
B) $33,000 
C) $25,000 
D) $5,000 
A) $60,000 
B) $33,000 
C) $25,000 
D) $5,000

Question 12

On December 31, 2018, total assets and liabilities are measured at $24,000 and $16,000, respectively. The total market value of the company's common stock is $9,000. At what amount would shareholders' equity be measured on the December 31, 2018 balance sheet?

Accepted Answer

$24,000 -

Question 13

Solution:
$\begin{array}{llll}
&\text { Cash Inflows } & \text { Cash Outflow } & \text { Future } & \text { Total } \
&\text { From Sale } & \text { for Replacement } & \text { Cash Flows } & \text { Cash Flows } \
\hline\text { Asset C: }\\text { Option } 3&3,500&(4,000)&6,000&5,500
\end{array}$
-Three years ago, Astro Masters, Inc. purchased the three assets listed in the following table. The chief financial officer, Bill Moss, is presently trying to decide what to do with each asset. He has three options for each asset: (1) sell it; (2) keep it; and (3) sell it and replace it with an equivalent asset. The following information is provided to aid his decision.
$\begin{array}{|c|c|c|c|c|c|}
\hline \text { Asset } & \begin{array}{c}
\text { Original } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Replacement } \
\text { Cost }
\end{array} & \begin{array}{c}\text { Fair }\
\text { Market } \
\text { Value }
\end{array} & \begin{array}{c}
\text { PresentValue of Future } \
\text { Cash Flows Produced } \
\text { by Old Asset }
\end{array} & \begin{array}{c}
\text { Present Value of } \
\text { Future Cash Flows } \
\text { of Equivalent Asset }
\end{array} \\hline \mathrm{A} & \$ 4,500 & \$ 1,500 & \$ 2,000 & \$ 3,000 & \$ 5,000 \
\hline \mathrm{B} & \$ 2,000 & \$ 2,500 & \$ 1,000 & \$ 3,000 & \$ 4,500 \
\hline \mathrm{C} & \$ 2,500 & \$ 4,000 & \$ 3,500 & \$ 3,000 & \$ 6,000 \
\hline
\end{array}$
Based on your calculations of total cash flows, which of the following options is the best for Bill to pursue with respect to Asset B?

Accepted Answer

A) Option 1 
B) Option 2 
C) Option 3 
D) Both Options 2 & 3 provide the same total cash flows. 
A) Option 1 
B) Option 2 
C) Option 3 
D) Both Options 2 & 3 provide the same total cash flows.

Question 14

When preparing the financial statements, we assume that the life of the entity will continue beyond the current period. Which assumption are we most likely following?

Accepted Answer

A) Stable dollar theory. 
B) Going concern assumption. 
C) Economic entity assumption. 
D) Fiscal period assumption. 
A) Stable dollar theory. 
B) Going concern assumption. 
C) Economic entity assumption. 
D) Fiscal period assumption.

Question 15

Match between columns
                        Premises: Cash
Short-term investments
Accounts receivable
Long-term liabilities
Office building

Accepted Answer

The Answer of Residual value and Present value and Original is...

Question 16

Original cost may be defined as the:

Accepted Answer

A) cash price of the asset when purchased. 
B) discounted future cash flows. 
C) selling price. 
D) price paid by the consumer when it was first released for consumer sales. 
A) cash price of the asset when purchased. 
B) discounted future cash flows. 
C) selling price. 
D) price paid by the consumer when it was first released for consumer sales.

Question 17

Which one of the following statements best describes objectivity?

Accepted Answer

A) When uncertainty exists, understating assets, overstating liabilities, accelerating recognition of losses, and delaying recognition of gains is preferred. 
B) The measurement of an event is verifiable and reliable. 
C) Different firms use identical accounting measurement methods for similar events. 
D) Objectives are laid out that are conservative or too aggressive by management. 
A) When uncertainty exists, understating assets, overstating liabilities, accelerating recognition of losses, and delaying recognition of gains is preferred. 
B) The measurement of an event is verifiable and reliable. 
C) Different firms use identical accounting measurement methods for similar events. 
D) Objectives are laid out that are conservative or too aggressive by management.

Question 18

Which one of the following is violated when a sole proprietorship records its magazine stand at the present value of the cash flows expected to be earned from the sale of magazines over the expected life of the stand?

Accepted Answer

A) Original cost 
B) Fair market value 
C) Going concern 
D) Revenue recognition 
A) Original cost 
B) Fair market value 
C) Going concern 
D) Revenue recognition

Question 19

Short-term investments have an original cost of $2,500 and a market price of $3,500 at December 31, 2018. At what amount would the investments be measured on the December 31, 2018 balance sheet?

Accepted Answer

The answer of Short-term investments have an original cost of...

Question 20

Equipment with an original cost of $23,000 has a fair market value of $19,000, current replacement cost of $26,000, and a book value of $21,000 on December 31, 2018. At what amount would net equipment be measured on the December 31, 2018 balance sheet?

Accepted Answer

The answer of Equipment with an original cost of $23,000...

Today's fair market value would be the same as:

During 2003, Jeter Company purchased property for its plant for $90,000. During December of 2018, a similar neighboring plot of land was sold for $120,000. At what amount would land be measured on Jeter Company's December 31, 2018 balance sheet?

The monetary unit that a company uses to measure economic transactions is primarily determined by the:

Which one of the following is violated when a company records cost of goods sold expense at the time when inventory is purchased?

The valuation basis used to measure accounts receivable is:

When in doubt, financial statements should:

On December 31, 2018, total assets and liabilities are measured at $24,000 and $16,000, respectively. The total market value of the company's common stock is $9,000. At what amount would shareholders' equity be measured on the December 31, 2018 balance sheet?

When preparing the financial statements, we assume that the life of the entity will continue beyond the current period. Which assumption are we most likely following?

Original cost may be defined as the:

Which one of the following statements best describes objectivity?

Which one of the following is violated when a sole proprietorship records its magazine stand at the present value of the cash flows expected to be earned from the sale of magazines over the expected life of the stand?

Short-term investments have an original cost of $2,500 and a market price of $3,500 at December 31, 2018. At what amount would the investments be measured on the December 31, 2018 balance sheet?

Equipment with an original cost of $23,000 has a fair market value of $19,000, current replacement cost of $26,000, and a book value of $21,000 on December 31, 2018. At what amount would net equipment be measured on the December 31, 2018 balance sheet?

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Introduction to Liabilities: Economic Consequences, Current Liabilities, and Contingencies

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

Filters

Exam 3: The Measurement Fundamentals of Financial Accounting

Today's fair market value would be the same as:

During 2003, Jeter Company purchased property for its plant for $90,000. During December of 2018, a similar neighboring plot of land was sold for $120,000. At what amount would land be measured on Jeter Company's December 31, 2018 balance sheet?

The monetary unit that a company uses to measure economic transactions is primarily determined by the:

Which one of the following is violated when a company records cost of goods sold expense at the time when inventory is purchased?

The valuation basis used to measure accounts receivable is:

When in doubt, financial statements should:

On December 31, 2018, total assets and liabilities are measured at $24,000 and $16,000, respectively. The total market value of the company's common stock is $9,000. At what amount would shareholders' equity be measured on the December 31, 2018 balance sheet?

When preparing the financial statements, we assume that the life of the entity will continue beyond the current period. Which assumption are we most likely following?

Original cost may be defined as the:

Which one of the following statements best describes objectivity?

Which one of the following is violated when a sole proprietorship records its magazine stand at the present value of the cash flows expected to be earned from the sale of magazines over the expected life of the stand?

Short-term investments have an original cost of $2,500 and a market price of $3,500 at December 31, 2018. At what amount would the investments be measured on the December 31, 2018 balance sheet?

Equipment with an original cost of $23,000 has a fair market value of $19,000, current replacement cost of $26,000, and a book value of $21,000 on December 31, 2018. At what amount would net equipment be measured on the December 31, 2018 balance sheet?

Financial Accounting and Its Economic Context

A Closer Look at the Financial Statements

The Mechanics of Financial Accounting

Using Financial Statement Information

The Current Asset Classification, Cash, and Accounts Receivable

Merchandise Inventory

Investments in Equity Securities

Long-Lived Assets

Introduction to Liabilities: Economic Consequences, Current Liabilities, and Contingencies

Long-Term Liabilities: Notes, Bonds, and Leases

Stockholders Equity

The Complete Income Statement

The Statement of Cash Flows

The Time Value of Money

Filters