Question 1

The inventory turnover ratio is calculated as

Accepted Answer

A) cost of goods sold divided by average inventory. 
B) average inventory divided by cost of goods sold. 
C) cost of goods sold times average inventory. 
D) average assets divided by cost of goods sold. 
A) cost of goods sold divided by average inventory. 
B) average inventory divided by cost of goods sold. 
C) cost of goods sold times average inventory. 
D) average assets divided by cost of goods sold.

Question 2

Under the earnings approach, if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction should be recognized at the time of sale if

Accepted Answer

A) the market for returnable goods is untested. 
B) there is a transfer of the risks and rewards of ownership. 
C) the amount of future returns can be reasonably estimated. 
D) the amount of goods returned is likely to be high. 
A) the market for returnable goods is untested. 
B) there is a transfer of the risks and rewards of ownership. 
C) the amount of future returns can be reasonably estimated. 
D) the amount of goods returned is likely to be high.

Question 3

Comprehensive income includes all changes in equity during a period EXCEPT

Accepted Answer

A) gains and losses from discontinued operations. 
B) unrealized gains and losses on available for sale securities. 
C) those resulting from investments by owners and distributions to owners. 
D) gains and losses from irregular items. 
A) gains and losses from discontinued operations. 
B) unrealized gains and losses on available for sale securities. 
C) those resulting from investments by owners and distributions to owners. 
D) gains and losses from irregular items.

Question 4

The debit and credit analysis of a transaction normally takes place

Accepted Answer

A) before an entry is recorded in a journal. 
B) when the entry is posted to the ledger. 
C) when the trial balance is prepared. 
D) when the financial statements are prepared. 
A) before an entry is recorded in a journal. 
B) when the entry is posted to the ledger. 
C) when the trial balance is prepared. 
D) when the financial statements are prepared.

Question 5

The general accounting standards for recognition and measurement of accounts receivable include

Accepted Answer

A) measuring the receivable initially at amortized cost. 
B) measuring the receivable initially at fair value. 
C) after initial recognition, measuring the receivable at fair value. 
D) not recognizing the receivable until it is paid. 
A) measuring the receivable initially at amortized cost. 
B) measuring the receivable initially at fair value. 
C) after initial recognition, measuring the receivable at fair value. 
D) not recognizing the receivable until it is paid.

Question 6

A company that follows IFRS

Accepted Answer

A) may disclose cash flow per share if it makes a special election to do so. 
B) must not disclose cash flow per share. 
C) is generally allowed to disclose cash flow per share. 
D) only discloses cash flow per share if there are more than two shareholders. 
A) may disclose cash flow per share if it makes a special election to do so. 
B) must not disclose cash flow per share. 
C) is generally allowed to disclose cash flow per share. 
D) only discloses cash flow per share if there are more than two shareholders.

Question 7

The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming

Accepted Answer

A) the contract is entered into at the same time as when control over the goods is passed to
The customer. 
B) the underlying goods or services are valued under the residual value method. 
C) the completed contract method is used. 
D) the percentage-of-completion method is used. 
A) the contract is entered into at the same time as when control over the goods is passed to
The customer. 
B) the underlying goods or services are valued under the residual value method. 
C) the completed contract method is used. 
D) the percentage-of-completion method is used.

Question 8

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Accepted Answer

A) retained earnings statement. 
B) income statement. 
C) statement of cash flows. 
D) statement of financial position. 
A) retained earnings statement. 
B) income statement. 
C) statement of cash flows. 
D) statement of financial position.

Question 9

"Allowance for Doubtful Accounts" is a(n)

Accepted Answer

A) expense account. 
B) contra account. 
C) liability account. 
D) current asset. 
A) expense account. 
B) contra account. 
C) liability account. 
D) current asset.

Question 10

Which of the following criteria does NOT have to be met in order to be able to value inventory ABOVE cost?

Accepted Answer

A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product. 
D) The sale must already have occurred. 
A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product. 
D) The sale must already have occurred.

Question 11

Capitalization of borrowing costs During 2014, Tibet Building Company constructed various assets at a total cost of $4.2 million. The weighted-average accumulated expenditures on assets qualifying for capitalization of interest during 2014 were $2.8 million.The company had the following debts outstanding at December 31, 2014:   Instructions Calculate the amounts of the following for 2014 (show calculations): 
a)avoidable interest,
b)total interest to be capitalized.

Accepted Answer

Property, Plant, and Equipment: Accounti

Question 12

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards and guide management?

Accepted Answer

A) Report an inventory cost on the statement of financial position that is representative of the
Inventory's recent cost. 
B) Choose an approach that corresponds as closely as possible to the physical flow of
Goods. 
C) Use the same method for all inventory assets that have similar economic characteristics. 
D) It is permissible under ASPE to use any inventory method, including LIFO. 
A) Report an inventory cost on the statement of financial position that is representative of the
Inventory's recent cost. 
B) Choose an approach that corresponds as closely as possible to the physical flow of
Goods. 
C) Use the same method for all inventory assets that have similar economic characteristics. 
D) It is permissible under ASPE to use any inventory method, including LIFO.

Question 13

Revenue recognition In October 2014, Blackbird Inc.signed a contract for $30,000 with the BH Law office to provide legal services for Blackbird Inc.for the remainder of 2014 and all of 2015.Assume that BH can reliably estimate future direct costs associated with the contract.The following services were performed based on the estimate by BH:   Instructions Under the earnings approach, 
a)When should BH recognize revenue in this situation? Explain.
b)Prepare journal entries to recognize revenues related to this contract on BH's books.

Accepted Answer

a)BH could use a method of proportional

Question 14

Dividends and interest receivable would be classified as

Accepted Answer

A) loans receivable. 
B) trade receivables. 
C) notes receivable. 
D) nontrade receivables. 
A) loans receivable. 
B) trade receivables. 
C) notes receivable. 
D) nontrade receivables.

Question 15

Which of the following is NOT one of the five steps under the proposed new revenue recognition standard currently being studied by the IASB and FASB?

Accepted Answer

A) Identify the contract(s)with the customer. 
B) Determine the transaction price. 
C) Determine the collectability of the contract. 
D) Recognize revenue when a performance obligation is satisfied. 
A) Identify the contract(s)with the customer. 
B) Determine the transaction price. 
C) Determine the collectability of the contract. 
D) Recognize revenue when a performance obligation is satisfied.

Question 16

The single-step income statement emphasizes

Accepted Answer

A) the gross profit figure. 
B) total revenues and total expenses. 
C) discontinued operations and accounting changes. 
D) the various components of income from continuing operations. 
A) the gross profit figure. 
B) total revenues and total expenses. 
C) discontinued operations and accounting changes. 
D) the various components of income from continuing operations.

Question 17

Which of the following statements regarding borrowing costs is correct?

Accepted Answer

A) Neither ASPE nor IFRS usually require disclosure of these items. 
B) They are usually amortized until the majority of the underlying products have been sold. 
C) They are usually treated as period costs if they are incurred to bring inventories to a
Condition ready for sale. 
D) If interest is capitalized, ASPE requires this policy and the amount capitalized to be
Disclosed. 
A) Neither ASPE nor IFRS usually require disclosure of these items. 
B) They are usually amortized until the majority of the underlying products have been sold. 
C) They are usually treated as period costs if they are incurred to bring inventories to a
Condition ready for sale. 
D) If interest is capitalized, ASPE requires this policy and the amount capitalized to be
Disclosed.

Question 18

Percentage-of-completion method Finch Construction Corp.contracted to build a bridge for $5,000,000.Construction began in 2014 and was completed in 2015.Data relating to the construction are:   Revenue Recognition 6 - 31   Instructions Using the percentage-of-completion method and the cost-to-cost basis, 
a)How much revenue should be reported for 2014? Show your calculation.
b)Prepare the journal entry to record progress billings of $1,700,000 during 2014.
c)Prepare the journal entry to record the revenue and gross profit for 2014.
d)How much gross profit should be reported for 2015? Show your calculation.

Accepted Answer

The answer of Percentage-of-completion method Finch Construction Corp.contracted to build...

Question 19

Goods in transit which are shipped f.o.b.shipping point should be included

Accepted Answer

A) in the inventory of the buyer. 
B) in the inventory of the seller. 
C) in the inventory of the shipping company. 
D) in no one's inventory until they arrive at their destination. 
A) in the inventory of the buyer. 
B) in the inventory of the seller. 
C) in the inventory of the shipping company. 
D) in no one's inventory until they arrive at their destination.

Question 20

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Accepted Answer

A) full disclosure principle. 
B) periodicity assumption. 
C) going concern assumption. 
D) economic entity assumption.
Conceptual Framework Underlying Financial Reporting 2 - 11 
A) full disclosure principle. 
B) periodicity assumption. 
C) going concern assumption. 
D) economic entity assumption.
Conceptual Framework Underlying Financial Reporting 2 - 11

The inventory turnover ratio is calculated as

Under the earnings approach, if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction should be recognized at the time of sale if

Comprehensive income includes all changes in equity during a period EXCEPT

The debit and credit analysis of a transaction normally takes place

The general accounting standards for recognition and measurement of accounts receivable include

A company that follows IFRS

The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

"Allowance for Doubtful Accounts" is a(n)

Which of the following criteria does NOT have to be met in order to be able to value inventory ABOVE cost?

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards and guide management?

Dividends and interest receivable would be classified as

Which of the following is NOT one of the five steps under the proposed new revenue recognition standard currently being studied by the IASB and FASB?

The single-step income statement emphasizes

Which of the following statements regarding borrowing costs is correct?

Goods in transit which are shipped f.o.b.shipping point should be included

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Intermediate Accounting Volume 2

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Exam 1: Intermediate Accounting Volume 1

The inventory turnover ratio is calculated as

Under the earnings approach, if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction should be recognized at the time of sale if

Comprehensive income includes all changes in equity during a period EXCEPT

The debit and credit analysis of a transaction normally takes place

The general accounting standards for recognition and measurement of accounts receivable include

A company that follows IFRS

The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

"Allowance for Doubtful Accounts" is a(n)

Which of the following criteria does NOT have to be met in order to be able to value inventory ABOVE cost?

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards and guide management?

Dividends and interest receivable would be classified as

Which of the following is NOT one of the five steps under the proposed new revenue recognition standard currently being studied by the IASB and FASB?

The single-step income statement emphasizes

Which of the following statements regarding borrowing costs is correct?

Goods in transit which are shipped f.o.b.shipping point should be included

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Intermediate Accounting Volume 2

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