Exam 1: Intermediate Accounting Volume 1

In 2014, Banjo Construction Corp.began work on a contract for $3,700,000.Other details follow: Banjo uses the percentage-of-completion method.For calendar 2014, Banjo should report gross profit of

Accounting information is considered to be relevant when it

Assuming that the ideal measure of short-term receivables in the statement of financial position is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the financial statements misleading because

Which of the following approaches to determine bad debts expense best achieves the matching concept?

Where information asymmetry exists, the capital market may attract the wrong kind of company.This is known as

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. -Under the relative fair value method, how much would be allocated to the product?

Not using the net method because of difficulties that may arise is a good example of applying

The straight-line method of amortization of discounts and premiums for long term notes

Under IFRS, "other comprehensive income" does NOT include

A credit that is realized through an entity's ordinary activities would be treated as

Which of the following does NOT describe a cause of management bias?

Use the following information for questions Sesame Corp.'s adjusted trial balance at December 31, 2014 included the following: Sesame uses the perpetual system, and their income tax rate is 30%.On Sesame's multiple- step income statement for 2014: -Income statement - limitations Briefly discuss the limitations of the income statement.

When a contract becomes unprofitable to an entity, this is called a(n)

In preparing its bank reconciliation at April 30, 2013, Ritz Inc.has the following information available: The correct balance of cash at April 30, 2013 is

Management Discussion and Analysis (MD&A)does NOT include

As of 2011, the responsibilities of the Accounting Standards Board (AcSB)in Canada relate to setting standards for

The direct write off method of accounting for the impairment of receivables

When assessing earnings quality, financial analysts are concerned that management may attempt to manipulate information to make earnings appear better or worse than they really are. Which of the following would NOT suggest poor earnings quality?

SOX and standard setting After several highly-publicized accounting scandals in the U.S.such as Enron, Sunbeam and WorldCom, all of whom, coincidentally, were clients of the now basically defunct public accounting firm of Arthur Andersen, the U.S.regulators enacted the Sarbanes-Oxley Act (SOX). Pressure was put on Canada to follow a similar course.Explain what Canada has done to make public companies more accountable.

Limitations of the income statement include all of the following EXCEPT