Question 1

Which of the following does NOT correctly describe a periodic inventory system?

Accepted Answer

A) Cost of goods sold is calculated every time a sale is made. 
B) Cost of goods sold is a residual amount. 
C) Assuming a FIFO cost flow, cost of goods sold would equal those that calculated by the
Perpetual system. 
D) Inventory and cost of goods sold must be updated at the end of the period.
Inventory 8 - 17 
A) Cost of goods sold is calculated every time a sale is made. 
B) Cost of goods sold is a residual amount. 
C) Assuming a FIFO cost flow, cost of goods sold would equal those that calculated by the
Perpetual system. 
D) Inventory and cost of goods sold must be updated at the end of the period.
Inventory 8 - 17

Question 2

When there is a continuous earnings process, but the progress towards completion is not measurable, ASPE requires the use of the

Accepted Answer

A) completed-contract method. 
B) percentage-of-completion method. 
C) zero-profit method. 
D) discrete earnings method. 
A) completed-contract method. 
B) percentage-of-completion method. 
C) zero-profit method. 
D) discrete earnings method.

Question 3

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Accepted Answer

A) selling price will be less than their replacement cost. 
B) replacement cost will be more than their net realizable value. 
C) future utility will be less than their cost. 
D) cost will be less than their replacement cost. 
A) selling price will be less than their replacement cost. 
B) replacement cost will be more than their net realizable value. 
C) future utility will be less than their cost. 
D) cost will be less than their replacement cost.

Question 4

Which of the following is(are)NOT recommended to be included in notes to the financial statements?

Accepted Answer

A) accounting policies 
B) information about the capital structure of the company 
C) individual salaries of top management 
D) sources of estimation uncertainty 
A) accounting policies 
B) information about the capital structure of the company 
C) individual salaries of top management 
D) sources of estimation uncertainty

Question 5

Contract-based approach In January 2014, McKay Construction Corp.contracted to construct a building for $6,000,000. Construction started in early 2014 and was completed in 2015.The following additional information is available:   McKay uses the percentage-of-completion method. Instructions Under the contract-based approach, 
a)How much revenue should McKay report for 2014 and 2015?
b)Prepare all journal entries for 2014 and 2015 for this contract.

Accepted Answer

a)
Revenue

Question 6

Accounts receivable assigned Prepare journal entries for Tanzania Inc for: Cash and Receivables 7 - 33
a)Accounts receivable of $700,000 that were originally recorded using the gross method were
assigned to Chad Finance Co.by Tanzania as security for a loan of $580,000.Chad charged
a 4% commission on the value of the accounts receivable; the interest rate on the note is
11%.
b)During the first month, Tanzania collected $300,000 on assigned accounts after deducting
$1,500 of sales discounts.As well, Tanzania wrote off a $1,100 assigned account as a bad
debt.
c)Tanzania paid Chad the amount collected plus one month's interest on the note.

Accepted Answer

The answer of Accounts receivable assigned Prepare journal entries for...

Question 7

Use the following information for questions. A product and service are bundled together and sold to customers for $350.The fair values of the product and service are $300 and $100 respectively.
-On January 1, 2014, Trumpet Ltd.sold land that cost $180,000 for $240,000, receiving a note bearing interest at 10 percent.The note will be paid in three annual instalments of $96,510 starting December 31, 2014.Assuming that collection of the note is very uncertain, how much revenue from this sale should Trumpet recognize in 2014?

Accepted Answer

A) $0 
B) $18,000 
C) $24,000 
D) $96,510 
A) $0 
B) $18,000 
C) $24,000 
D) $96,510

Question 8

Use the following information for questions. Piano Construction Corp.began operations in 2014.Construction activity for 2014 is shown below.Piano uses the completed-contract method.  
-Which of the following should be shown on the statement of financial position at December 31, 2014 related to Contract 3?

Accepted Answer

A) Unbilled contract costs, $140,000 
B) Unbilled contract costs, $60,000 
C) Accounts receivable, $760,000 
D) Construction in process, $480,000 
A) Unbilled contract costs, $140,000 
B) Unbilled contract costs, $60,000 
C) Accounts receivable, $760,000 
D) Construction in process, $480,000

Question 9

Gains are defined as

Accepted Answer

A) increases in economic resources resulting from an entity's ordinary activities. 
B) decreases in economic resources resulting from an entity's ordinary activities. 
C) the residual interest remaining after liabilities are deducted from assets. 
D) increases in equity resulting from an entity's peripheral or incidental transactions. 
A) increases in economic resources resulting from an entity's ordinary activities. 
B) decreases in economic resources resulting from an entity's ordinary activities. 
C) the residual interest remaining after liabilities are deducted from assets. 
D) increases in equity resulting from an entity's peripheral or incidental transactions.

Question 10

Use the following information for questions  
-Assuming that Lock uses the periodic inventory system, what should the inventory be at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

Accepted Answer

A) $10,237 
B) $10,260 
C) $10,360 
D) $10,505 
A) $10,237 
B) $10,260 
C) $10,360 
D) $10,505

Question 11

Use the following information for questions through. Giselle Ltd.is a calendar-year corporation.Its financial statements for the years 2015 and 2014 contained errors as follows:  
-Assume that no correcting entries were made at December 31, 2014, or December 31, 2015 and that no additional errors occurred in 2016.Ignoring income taxes, by how much will working capital, at December 31, 2016 be overstated or understated?

Accepted Answer

A) $0 
B) $4,000 overstated 
C) $4,000 understated 
D) $6,000 understated 
A) $0 
B) $4,000 overstated 
C) $4,000 understated 
D) $6,000 understated

Question 12

The IASB and FASB are currently working on a joint project to complete a common conceptual framework.According to the proposed (new)definition, which of the following would be considered assets?

Accepted Answer

A) accounts receivable, accounts payable, and patents 
B) insurance contracts and accounts receivable 
C) land, accounts receivable and unearned revenue 
D) property, plant and equipment and constructive obligations 
A) accounts receivable, accounts payable, and patents 
B) insurance contracts and accounts receivable 
C) land, accounts receivable and unearned revenue 
D) property, plant and equipment and constructive obligations

Question 13

The book of original entry where transactions and other selected events are first recorded is called the

Accepted Answer

A) ledger. 
B) journal. 
C) account. 
D) statement of financial position. 
A) ledger. 
B) journal. 
C) account. 
D) statement of financial position.

Question 14

Equitable obligations arise due to

Accepted Answer

A) statutory requirements. 
B) contractual obligations. 
C) moral or ethical considerations. 
D) union agreements. 
A) statutory requirements. 
B) contractual obligations. 
C) moral or ethical considerations. 
D) union agreements.

Question 15

Use the following information for questions The 2014 and 2015 financial statements of Banana Inc.contained the following errors:  
-Assuming that none of the errors were detected or corrected, by what amount will 2015 income before taxes be overstated or understated?

Accepted Answer

A) $28,600 understated 
B) $23,800 understated
Reporting Financial Performance 4 - 17 
C) $13,400 understated 
D) $13,400 overstated 
A) $28,600 understated 
B) $23,800 understated
Reporting Financial Performance 4 - 17 
C) $13,400 understated 
D) $13,400 overstated

Question 16

Gross profit method On January 1, Jasper Store had inventory valued at $124,000.January purchases were $78,000 and January sales were $220,000.On February 1, a fire destroyed most of the inventory.The rate of gross profit was 25% of cost.Merchandise with a selling price of $10,000 remained undamaged after the fire. Inventory 8 - 45 Instructions Calculate the amount of the fire loss.Show appropriate titles for all amounts in your presentation.

Accepted Answer

The answer of Gross profit method On January 1, Jasper...

Question 17

Twinkie Ltd.assigned $500,000 of Accounts Receivable to Friendly Finance as security for a loan of $420,000.Friendly charged a 2% commission on the amount of the loan; the interest rate on the note was 10%.During the first month, Twinkie collected $110,000 of the assigned accounts, after deducting $380 of discounts.As well, Twinkie accepted returns worth $1,350 and wrote off assigned accounts totalling $3,700.The amount of cash Twinkie received from Friendly at the time of the transfer was

Accepted Answer

A) $378,000. 
B) $410,000. 
C) $411,600. 
D) $420,000. 
A) $378,000. 
B) $410,000. 
C) $411,600. 
D) $420,000.

Question 18

A post-closing trial balance

Accepted Answer

A) includes temporary accounts only. 
B) includes permanent accounts only. 
C) includes both temporary and permanent accounts. 
D) may include expense accounts. 
A) includes temporary accounts only. 
B) includes permanent accounts only. 
C) includes both temporary and permanent accounts. 
D) may include expense accounts.

Question 19

Which of the following statements is true regarding accounting information systems?

Accepted Answer

A) Both large and small firms should use the same type of accounting system. 
B) All firms should have the same types of transactions. 
C) The volume of data to be handled should not vary between firms. 
D) The kind of information that management requires of an accounting system will vary,
Depending on the type of firm. 
A) Both large and small firms should use the same type of accounting system. 
B) All firms should have the same types of transactions. 
C) The volume of data to be handled should not vary between firms. 
D) The kind of information that management requires of an accounting system will vary,
Depending on the type of firm.

Question 20

Performing a service for a client on account will

Accepted Answer

A) increase one asset and decrease another asset. 
B) decrease an asset and decrease a liability. 
C) increase an asset and decrease equity. 
D) increase an asset and increase equity. 
A) increase one asset and decrease another asset. 
B) decrease an asset and decrease a liability. 
C) increase an asset and decrease equity. 
D) increase an asset and increase equity.

Which of the following does NOT correctly describe a periodic inventory system?

When there is a continuous earnings process, but the progress towards completion is not measurable, ASPE requires the use of the

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Which of the following is(are)NOT recommended to be included in notes to the financial statements?

Gains are defined as

Use the following information for questions -Assuming that Lock uses the periodic inventory system, what should the inventory be at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

The IASB and FASB are currently working on a joint project to complete a common conceptual framework.According to the proposed (new)definition, which of the following would be considered assets?

The book of original entry where transactions and other selected events are first recorded is called the

Equitable obligations arise due to

Use the following information for questions The 2014 and 2015 financial statements of Banana Inc.contained the following errors: -Assuming that none of the errors were detected or corrected, by what amount will 2015 income before taxes be overstated or understated?

A post-closing trial balance

Which of the following statements is true regarding accounting information systems?

Performing a service for a client on account will

Intermediate Accounting Volume 2

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Exam 1: Intermediate Accounting Volume 1

Which of the following does NOT correctly describe a periodic inventory system?

When there is a continuous earnings process, but the progress towards completion is not measurable, ASPE requires the use of the

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Which of the following is(are)NOT recommended to be included in notes to the financial statements?

Gains are defined as

Use the following information for questions -Assuming that Lock uses the periodic inventory system, what should the inventory be at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

The IASB and FASB are currently working on a joint project to complete a common conceptual framework.According to the proposed (new)definition, which of the following would be considered assets?

The book of original entry where transactions and other selected events are first recorded is called the

Equitable obligations arise due to

Use the following information for questions The 2014 and 2015 financial statements of Banana Inc.contained the following errors: -Assuming that none of the errors were detected or corrected, by what amount will 2015 income before taxes be overstated or understated?

A post-closing trial balance

Which of the following statements is true regarding accounting information systems?

Performing a service for a client on account will

Intermediate Accounting Volume 2

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