Question 1

GAAP allows companies to value certain types of highly standardized, fungible inventories, with ready market values, at net realizable value.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements about accounting for goodwill under GAAP is correct?

Accepted Answer

A)  Usually, goodwill is recognized each year by profitable companies, based on estimates of the value of their reputation and customer loyalty. 
B)  Goodwill is typically recorded based on an appraisal report on goodwill. 
C)  Goodwill is recorded when a company buys another, and the value of the goodwill equals the difference between the purchase price and the value of the identifiable assets and liabilities purchased. 
D)  Once recorded, goodwill is never checked for impairment. 
A)  Usually, goodwill is recognized each year by profitable companies, based on estimates of the value of their reputation and customer loyalty. 
B)  Goodwill is typically recorded based on an appraisal report on goodwill. 
C)  Goodwill is recorded when a company buys another, and the value of the goodwill equals the difference between the purchase price and the value of the identifiable assets and liabilities purchased. 
D)  Once recorded, goodwill is never checked for impairment.

Question 3

The Lang Company started the year with 300 units in inventory, which cost $2 each. During January, it bought 700 units, which cost $3 each. During January, it sold 800 units. The amount the Lang Company should show as the value of the 200 items left in its ending inventory, using the LIFO method, is

Accepted Answer

A)  400 
B)  500 
C)  540 
D)  600 
A)  400 
B)  500 
C)  540 
D)  600

Question 4

The real estate market is an example of a "perfect" market.

Accepted Answer

A) True 
 B)False

Question 5

Some companies have "managed earnings" by underestimating the value of asset acquired during acquisitions of other companies.

Accepted Answer

A) True 
 B)False

Question 6

The "net realizable value" of an asset is what it can be sold for, ignoring any transaction costs.

Accepted Answer

A) True 
 B)False

Question 7

Under IFRS, all assets are valued at fair value.

Accepted Answer

A) True 
 B)False

Question 8

Typically, when a company owns equity securities of another company, this asset is shown on the balance sheet at replacement cost.

Accepted Answer

A) True 
 B)False

Question 9

Under GAAP, an asset that would be recorded at fair value would be

Accepted Answer

A)  Goodwill 
B)  Buildings 
C)  Investments in marketable equity securities 
D)  Most inventories 
A)  Goodwill 
B)  Buildings 
C)  Investments in marketable equity securities 
D)  Most inventories

Question 10

Under GAAP, the rules for recording contingent gains and contingent losses say that, if they are probable and can be reasonably estimated:

Accepted Answer

A)  Both contingent gains and losses are recognized. 
B)  Contingent losses are recognized, but contingent gains are not. 
C)  Contingent gains are recognized, but contingent losses are not. 
D)  Neither contingent gains or losses may be recognized. 
A)  Both contingent gains and losses are recognized. 
B)  Contingent losses are recognized, but contingent gains are not. 
C)  Contingent gains are recognized, but contingent losses are not. 
D)  Neither contingent gains or losses may be recognized.

Question 11

The term "liquidation value" means:

Accepted Answer

A)  The price at which an asset can be sold in orderly markets 
B)  The amount the company would receive by selling the asset in orderly markets, less transaction costs 
C)  The sales value assuming the company must sell immediately 
D)  The price at which someone can buy the asset now. 
A)  The price at which an asset can be sold in orderly markets 
B)  The amount the company would receive by selling the asset in orderly markets, less transaction costs 
C)  The sales value assuming the company must sell immediately 
D)  The price at which someone can buy the asset now.

Question 12

When companies use direct costing, all the fixed overhead charges for the year are expensed, regardless of production levels.

Accepted Answer

A) True 
 B)False

GAAP allows companies to value certain types of highly standardized, fungible inventories, with ready market values, at net realizable value.

Which of the following statements about accounting for goodwill under GAAP is correct?

The Lang Company started the year with 300 units in inventory, which cost $2 each. During January, it bought 700 units, which cost $3 each. During January, it sold 800 units. The amount the Lang Company should show as the value of the 200 items left in its ending inventory, using the LIFO method, is

The real estate market is an example of a "perfect" market.

Some companies have "managed earnings" by underestimating the value of asset acquired during acquisitions of other companies.

The "net realizable value" of an asset is what it can be sold for, ignoring any transaction costs.

Under IFRS, all assets are valued at fair value.

Typically, when a company owns equity securities of another company, this asset is shown on the balance sheet at replacement cost.

Under GAAP, an asset that would be recorded at fair value would be

Under GAAP, the rules for recording contingent gains and contingent losses say that, if they are probable and can be reasonably estimated:

The term "liquidation value" means:

When companies use direct costing, all the fixed overhead charges for the year are expensed, regardless of production levels.

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters

Exam 7: Tackling the General Ledger

GAAP allows companies to value certain types of highly standardized, fungible inventories, with ready market values, at net realizable value.

Which of the following statements about accounting for goodwill under GAAP is correct?

The real estate market is an example of a "perfect" market.

Some companies have "managed earnings" by underestimating the value of asset acquired during acquisitions of other companies.

The "net realizable value" of an asset is what it can be sold for, ignoring any transaction costs.

Under IFRS, all assets are valued at fair value.

Typically, when a company owns equity securities of another company, this asset is shown on the balance sheet at replacement cost.

Under GAAP, an asset that would be recorded at fair value would be

Under GAAP, the rules for recording contingent gains and contingent losses say that, if they are probable and can be reasonably estimated:

The term "liquidation value" means:

When companies use direct costing, all the fixed overhead charges for the year are expensed, regardless of production levels.

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Payroll Taxes

Appendix

Filters