Question 1

Which of the following best describes the concept of product costs?

Accepted Answer

A) They are costs that are "attached" to inventory. 
B) They are costs that are usually expenses. 
C) They usually don't include freight charges. 
D) They usually don't include conversion costs. 
A) They are costs that are "attached" to inventory. 
B) They are costs that are usually expenses. 
C) They usually don't include freight charges. 
D) They usually don't include conversion costs.

Question 2

Year-end entries to update inventory accounts Omaha Corporation uses FIFO and a periodic inventory system.You have been provided with the following information relating to the company's inventory for the year ended December 2014:   Instructions Record the journal entry (entries)that are required to bring Omaha's inventory accounts and cost of goods sold up to date for 2014.

Accepted Answer

Note 1: To record ending inven

Question 3

For the year ended December 31, 2013, Tunisia Corp.estimated its allowance for doubtful accounts using the year-end aging of accounts receivable.Additional information for calendar 2013 follows:   For the year ended December 31, 2013, Tunisia's bad debt expense should be

Accepted Answer

A) $37,000. 
B) $52,000. 
C) $89,000. 
D) $126,000. 
A) $37,000. 
B) $52,000. 
C) $89,000. 
D) $126,000.

Question 4

Gross profit method Kiowa Ltd.prepares monthly financial statements.Inventory is counted only at year end; thus, month-end inventories must be estimated.All sales are made on account.The rate of mark-up on cost is 25%.The following information relates to the month of May:   Instructions Calculate the estimated cost of the inventory on May 31.

Accepted Answer

The answer of Gross profit method Kiowa Ltd.prepares monthly financial...

Question 5

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.  
-A project was correctly accounted for under the percentage-of-completion method.At the end of the project, the Construction-in-Process account includes total debits and credits of $3,500,000.Assuming that total gross profit of $1,200,000 was recognized throughout the contract, total construction costs were

Accepted Answer

A) $4,600,000. 
B) $3,500,000. 
C) $2,300,000. 
D) $2,100,000. 
A) $4,600,000. 
B) $3,500,000. 
C) $2,300,000. 
D) $2,100,000.

Question 6

In preparing its August 31 bank reconciliation, Ghana Corp.has the following information available:   Ghana's correct cash balance at August 31 is

Accepted Answer

A) $31,440. 
B) $32,090 
C) $32,140. 
D) $32,190. 
A) $31,440. 
B) $32,090 
C) $32,140. 
D) $32,190.

Question 7

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Accepted Answer

A) include mark-ups but not markdowns. 
B) include mark-ups and markdowns. 
C) ignore both mark-ups and markdowns. 
D) include markdowns but not mark-ups. 
A) include mark-ups but not markdowns. 
B) include mark-ups and markdowns. 
C) ignore both mark-ups and markdowns. 
D) include markdowns but not mark-ups.

Question 8

Asset exchange - no commercial substance Syria Corp.exchanged Building 24, which has an appraised value of $1,700,000, a cost of $2,800,000 and accumulated depreciation of $1,300,000, for Building M which belongs to Russia Ltd.Building M has an appraised value of $1,620,000, a cost of $3,100,000, and accumulated Depreciation of $1,750,000.Russia paid Syria the difference between the appraised values of the two buildings.Assume depreciation has been updated to the date of exchange. Instructions Prepare the entries on both companies' books, assuming the buildings are similar assets.

Accepted Answer

Property, Plant, and Equipment: Accounti

Question 9

Fudge Ltd.receives a four-year, $100,000 zero-interest bearing note.The present value of this note is $65,873.10.Interest income to be recognized for calendar 2014 will be

Accepted Answer

A) $11,797.06. 
B) $ 8,712.62. 
C) $ 8,043.11. 
D) $ 7,246.04. 
A) $11,797.06. 
B) $ 8,712.62. 
C) $ 8,043.11. 
D) $ 7,246.04.

Question 10

Impairment Assume the same information as in above, except for the following:   Instructions 
a)Calculate the recoverable amount.
b)Calculate the impairment loss.

Accepted Answer

a)Recoverable amount: $73,000, the highe

Question 11

Asset exchange Arabia Inc.traded its fleet of rental cars for a new fleet.Two thirds of the old fleet's original cost of $375,000 had been depreciated.The new fleet is valued at $500,000 and Arabia was required to make a cash payment of $400,000. Instructions Prepare the required entr(ies)to record the exchange.

Accepted Answer

The answer of Asset exchange Arabia Inc.traded its fleet of...

Question 12

In the closing process, all the revenue and expense accounts are transferred to a clearing or suspense account called

Accepted Answer

A) Other Comprehensive Income. 
B) Common Shares. 
C) Retained Earnings. 
D) Income Summary. 
A) Other Comprehensive Income. 
B) Common Shares. 
C) Retained Earnings. 
D) Income Summary.

Question 13

Which of the following equations is correct?

Accepted Answer

A) Assets plus Liabilities = Equity. 
B) Assets = Liabilities minus Equity. 
C) Liabilities = Assets plus Equity.
The Accounting Information System 3 - 9 
D) Equity = Assets minus Liabilities. 
A) Assets plus Liabilities = Equity. 
B) Assets = Liabilities minus Equity. 
C) Liabilities = Assets plus Equity.
The Accounting Information System 3 - 9 
D) Equity = Assets minus Liabilities.

Question 14

The assumption that a business enterprise will NOT be sold or liquidated in the near future is known as the

Accepted Answer

A) economic entity assumption. 
B) monetary unit assumption. 
C) fair value principle. 
D) going concern assumption. 
A) economic entity assumption. 
B) monetary unit assumption. 
C) fair value principle. 
D) going concern assumption.

Question 15

The common characteristic of both assets and liabilities is that they BOTH

Accepted Answer

A) provide an economic benefit. 
B) result from a past transaction or event. 
C) represent a present responsibility. 
D) represent contractual or other rights. 
A) provide an economic benefit. 
B) result from a past transaction or event. 
C) represent a present responsibility. 
D) represent contractual or other rights.

Question 16

Generally, revenue from sales should be recognized at a point when

Accepted Answer

A) management decides it is appropriate to do so. 
B) the product is available for sale. 
C) an exchange has taken place and the earnings process is substantially complete. 
D) the entire amount receivable has been collected from the customer and there remains
No further warranty liability. 
A) management decides it is appropriate to do so. 
B) the product is available for sale. 
C) an exchange has taken place and the earnings process is substantially complete. 
D) the entire amount receivable has been collected from the customer and there remains
No further warranty liability.

Question 17

An unearned revenue can best be described as an amount

Accepted Answer

A) collected and currently matched with expenses. 
B) collected and not currently matched with expenses. 
C) not collected and currently matched with expenses. 
D) not collected and not currently matched with expenses. 
A) collected and currently matched with expenses. 
B) collected and not currently matched with expenses. 
C) not collected and currently matched with expenses. 
D) not collected and not currently matched with expenses.

Question 18

On June 25, Bold Corp.accepted delivery of merchandise which it purchased on account.As of June 30, Bold had not recorded the transaction nor included the merchandise in its inventory. The effect of this on Bold's June 30 balance sheet would be

Accepted Answer

A) assets and shareholders' equity were overstated but liabilities were not affected. 
B) shareholders' equity was the only item affected by the omission. 
C) assets, liabilities, and shareholders' equity were understated. 
D) assets and liabilities were understated but shareholders' equity was not affected. 
A) assets and shareholders' equity were overstated but liabilities were not affected. 
B) shareholders' equity was the only item affected by the omission. 
C) assets, liabilities, and shareholders' equity were understated. 
D) assets and liabilities were understated but shareholders' equity was not affected.

Question 19

Which of the following is a required disclosure in the income statement when reporting the disposal of a segment of the business?

Accepted Answer

A) The gain or loss on disposal should be reported as an unusual item. 
B) Results of operations of a discontinued segment should be disclosed immediately below
Other irregular items. 
C) Earnings per share from both continuing operations and net income should be disclosed
On the face of the statement or in the notes. 
D) The gain or loss on disposal should not be segregated, but should be reported together
With the results of continuing operations.
Reporting Financial Performance 4 - 11 
A) The gain or loss on disposal should be reported as an unusual item. 
B) Results of operations of a discontinued segment should be disclosed immediately below
Other irregular items. 
C) Earnings per share from both continuing operations and net income should be disclosed
On the face of the statement or in the notes. 
D) The gain or loss on disposal should not be segregated, but should be reported together
With the results of continuing operations.
Reporting Financial Performance 4 - 11

Question 20

Application of the full disclosure principle

Accepted Answer

A) is theoretically desirable but not practical because the costs of complete disclosure
Exceed the benefits. 
B) is violated when important financial information is buried in the notes to the financial
Statements. 
C) is demonstrated by the inclusion of information such as information about contingencies. 
D) requires that the financial statements be consistent and comparable. 
A) is theoretically desirable but not practical because the costs of complete disclosure
Exceed the benefits. 
B) is violated when important financial information is buried in the notes to the financial
Statements. 
C) is demonstrated by the inclusion of information such as information about contingencies. 
D) requires that the financial statements be consistent and comparable.

Which of the following best describes the concept of product costs?

For the year ended December 31, 2013, Tunisia Corp.estimated its allowance for doubtful accounts using the year-end aging of accounts receivable.Additional information for calendar 2013 follows: For the year ended December 31, 2013, Tunisia's bad debt expense should be

In preparing its August 31 bank reconciliation, Ghana Corp.has the following information available: Ghana's correct cash balance at August 31 is

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Fudge Ltd.receives a four-year, $100,000 zero-interest bearing note.The present value of this note is $65,873.10.Interest income to be recognized for calendar 2014 will be

Impairment Assume the same information as in above, except for the following: Instructions a)Calculate the recoverable amount. b)Calculate the impairment loss.

In the closing process, all the revenue and expense accounts are transferred to a clearing or suspense account called

Which of the following equations is correct?

The assumption that a business enterprise will NOT be sold or liquidated in the near future is known as the

The common characteristic of both assets and liabilities is that they BOTH

Generally, revenue from sales should be recognized at a point when

An unearned revenue can best be described as an amount

On June 25, Bold Corp.accepted delivery of merchandise which it purchased on account.As of June 30, Bold had not recorded the transaction nor included the merchandise in its inventory. The effect of this on Bold's June 30 balance sheet would be

Which of the following is a required disclosure in the income statement when reporting the disposal of a segment of the business?

Application of the full disclosure principle

Intermediate Accounting Volume 2

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Exam 1: Intermediate Accounting Volume 1

Which of the following best describes the concept of product costs?

For the year ended December 31, 2013, Tunisia Corp.estimated its allowance for doubtful accounts using the year-end aging of accounts receivable.Additional information for calendar 2013 follows: For the year ended December 31, 2013, Tunisia's bad debt expense should be

In preparing its August 31 bank reconciliation, Ghana Corp.has the following information available: Ghana's correct cash balance at August 31 is

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Fudge Ltd.receives a four-year, $100,000 zero-interest bearing note.The present value of this note is $65,873.10.Interest income to be recognized for calendar 2014 will be

Impairment Assume the same information as in above, except for the following: Instructions a)Calculate the recoverable amount. b)Calculate the impairment loss.

In the closing process, all the revenue and expense accounts are transferred to a clearing or suspense account called

Which of the following equations is correct?

The assumption that a business enterprise will NOT be sold or liquidated in the near future is known as the

The common characteristic of both assets and liabilities is that they BOTH

Generally, revenue from sales should be recognized at a point when

An unearned revenue can best be described as an amount

On June 25, Bold Corp.accepted delivery of merchandise which it purchased on account.As of June 30, Bold had not recorded the transaction nor included the merchandise in its inventory. The effect of this on Bold's June 30 balance sheet would be

Which of the following is a required disclosure in the income statement when reporting the disposal of a segment of the business?

Application of the full disclosure principle

Intermediate Accounting Volume 2

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