Exam 3: The Measurement Fundamentals of Financial Accounting

Why are market values not used for property, plant, and equipment on the balance sheet?

Karr Construction built a levee for the state of Mississippi over a three-year period. The contracted price for the levee was $1,200,000. The costs incurred by Karr and the payments from the state over the three year period are as follows: If revenue is recognized in proportion to the costs incurred by Karr, how much net income is reported in 2010? a. $100,000 b. $200,000 c. $300,000 d. $400,000

Which of the following represents two of the four criteria that must be met before revenue can be included in the income statement?

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

Information is considered material if:

Karr Construction built a levee for the state of Mississippi over a three-year period. The contracted price for the levee was $1,200,000. The costs incurred by Karr and the payments from the state over the three year period are as follows: If revenue is recognized when payments are received, which of the following present the net income amounts reported in 2009, 2010, and 2011, respectively?

Match the descriptions listed in letters a through e below with the proper valuation numbered from 1 through 4. ____ 1. Present value ____ 2. Fair market value ____ 3. Replacement cost ____ 4. Residual interest

Why must measures of performance and financial position be available on a timely basis?

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

Jeter Company ordered 400 toy wagons from Lamar, Inc. on May 1, 2010. Jeter Company paid for them on May 20 at a cost of $2 each. Jeter sold 50 of them on June 2, 2010, for $4 each to Gilloz Company. Gilloz Company paid Jeter on June 10. How much revenue should Jeter Company recognize at the preferred point of revenue recognition?

Why would a company recognize the cost of an asset on its balance sheet rather than treat it as an expense on the date it is acquired?

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?

As fiscal periods become shorter, the application of certain accounting methods become:

Which one of the following is violated when a firm measures accounts receivable at its face amount even though knowing some customers may not pay the amounts due?

Why is inflation ignored in accounting?

Match the descriptions listed in letters a through e below with the proper assumption numbered from 1 through 4 below. ____ 1. Economic entity assumption ____ 2. Stable dollar assumption ____ 3. Going concern assumption ____ 4. Fiscal period assumption

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

The fiscal period assumption states that the operating life of an economic entity:

Compared to U.S. GAAP, IFRS tends to:

Original cost may be defined as the: