Exam 4: Statements of Financial Position and Changes in Equity; Disclosure Notes

Accumulated Other Comprehensive Income is essentially a deferred credit which appears under the Liabilities section of the Balance Sheet.

Which of the following is a limitation of the balance sheet?

Subsequent events are those which occur after the release of the financial statements.

A corporation paid a six-year insurance premium on January 1,year 1,for $12,000.It recorded the prepayment in two asset accounts--one with a $2,000 debit balance and one with a $10,000 debit balance.Under which of the following captions should the account be with the $10,000 balance be classified on a balance sheet dated January 1,year 1?

The declaration (but not payment) of common share dividends will have an adverse effect on ROA (Return on Assets).

Held-for-sale assets are carried at the lower of amortized cost or estimated net realizable value.

The Return on Assets (ROA) and Return on Equity (ROE) ratios measure a company's liquidity.

The current asset section of a balance sheet includes:

The December 31,the trial balance of ABC company before adjustments included the following accounts: The company estimates its bad debts based upon 2 percent of net credit sales.What amount should it record as bad debt expense,assuming all sales are credit sales?

Which of the following should be excluded from long-term liabilities?

Related party transactions,not in the normal course of business,must be recorded at:

The statement of significant accounting policies,which is included in the notes to the financial statements,must include reasons for the selection of one generally accepted accounting method over another generally accepted accounting method.

Current assets are cash and those items,which are reasonably expected to be realized in cash,or to be sold or consumed during the normal operating cycle or within one year from the balance sheet,date,whichever is shorter.

Define current assets without using the word "asset."

Reporting in the main body of the financial statements is required for:

A corporation operates a retail store and must determine the correct December 31,year 1,year-end accrual for the following expenses: 1.The store lease calls for fixed rent of $1,000 per month,payable at the beginning of the month,and additional rent equal to 6 percent of net sales over $200,000 per calendar year,payable on January 31 of the following year.Net sales for year 1 are $800,000. 2)The corporation has personal property subject to a city property tax.The city's fiscal year runs from July 1 to June 30 and the tax,assessed at 3 percent of personal property on hand at April 30,is payable on June 30.The corporation estimates that its personal property tax will amount to $6,000 for the city's fiscal year ending June 30,year 2. In its December 31,year 1,balance sheet,the corporation should report accrued expenses of:

Which of the following would be non-adjusting subsequent event(s)?

The entry to accrue a loss contingency would

A contingency is an event or transaction that will occur only if some other uncertain event happens.

On January 1^st,2010,ABC Inc.,a publicly traded company,had the following Shareholder Equity balances: During 2010,the following took place: ABC Inc earned net income of $120,000 and paid cash dividends in the amount of $20,000. In addition,the company declared a stock dividend in the amount of $50,000. Also during 2010,ABC experienced an unrealized foreign exchange gain of $50,000 upon translation of its foreign subsidiary's results. Required: Prepare a Statement of Changes in Equity for ABC Inc.for 2010.