Question 1

A company borrows $10,000 and signs a 90-day nontrade note payable.How would this event would be reflected in the statement of cash flows?

Accepted Answer

A) cash outflow from investing activities 
B) cash inflow from investing activities 
C) cash outflow from financing activities 
D) cash inflow from financing activities 
A) cash outflow from investing activities 
B) cash inflow from investing activities 
C) cash outflow from financing activities 
D) cash inflow from financing activities

Question 2

When making a voluntary accounting change,a firm must explain the justification for the change on the basis that it more accurately portrays its financial position and performance.

Accepted Answer

A) True 
 B)False

Question 3

When a lessor records a sales-type lease,the transaction is similar to ________.

Accepted Answer

A) selling a fixed asset 
B) exchanging assets 
C) purchasing merchandise on account 
D) selling merchandise on account 
A) selling a fixed asset 
B) exchanging assets 
C) purchasing merchandise on account 
D) selling merchandise on account

Question 4

Cash payments of the principal portion of promissory notes are classified as financing activities.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following is not a change in a reporting entity?

Accepted Answer

A) the purchase of a new subsidiary 
B) presenting consolidated statement for the first time 
C) changing the subsidiaries that make up the group of entities presented in the financial statements 
D) changing the entities in combined financial statements 
A) the purchase of a new subsidiary 
B) presenting consolidated statement for the first time 
C) changing the subsidiaries that make up the group of entities presented in the financial statements 
D) changing the entities in combined financial statements

Question 6

The indirect method of calculating cash flows from investing activities begins with net income.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not included in the operating activities section of the cash flow statement?
A)payments of income taxes
B)payments of dividends
C)payments of interest
D)payments of executive salaries

Accepted Answer

• Operating activities include cash flow

Question 8

A lease is classified as a capital lease if the lease term is at least 75% of the estimated life for the property.

Accepted Answer

A) True 
 B)False

Question 9

Self-correcting errors do not require any journal entries regardless of the length of time involved.

Accepted Answer

A) True 
 B)False

Question 10

Describe a change in reporting and discuss its accounting treatment and its required disclosures.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following questions would not be answered by the annual cash flow statement?
A)What was cash used for during the year?
B)What was the change in the cash balance during the year?
C)Where did cash come from during the year?
D)How did cash expenditures benefit the firm during the year?

Accepted Answer

A) True 
 B)False

Question 12

Jett Company purchased an umbrella liability policy in January,2015 and paid a five-year premium for $200,000.It was recorded as Insurance Expense.The error was discovered in early 2018 when the accountants were reconciling 2017 for adjusting entries.What is the proper entry to correct the error at December 31,2017? (Ignore income taxes.)

Accepted Answer

A) No entry required because it will self-correct in two more years. 
B)    Retained Earnings-Prior Period Adj. 120,000 
C)    Prepaid Insurance 160,000 
D)    Retained Earnings -Prior Period Adj. 160,000 
A) No entry required because it will self-correct in two more years. 
B)    Retained Earnings-Prior Period Adj. 120,000 
C)    Prepaid Insurance 160,000 
D)    Retained Earnings -Prior Period Adj. 160,000

Question 13

One purpose of the cash flow statement is to determine the firm's need for external financing.

Accepted Answer

A) True 
 B)False

Question 14

Refer to Crest Industries:
1.Prepare an amortization schedule for the first year of the lease.
2.Prepare the appropriate journal entries for Crest for the first two payments of the current year and depreciation expense for December 31 of the current year.
3.Show how the lease-related information will be presented on Crest's financial statements at December 31 of the current year.

Accepted Answer

A) True 
 B)False

Question 15

What is the difference between a sales-type lease and a direct-financing lease?

Accepted Answer

A) The lessor uses a longer amortization period on a sales-type lease. 
B) The lessor receives less interest on a sales-type lease. 
C) The lessor receives more interest on a sales-type lease. 
D) The lessor receives a manufacturer's or dealers profit. 
A) The lessor uses a longer amortization period on a sales-type lease. 
B) The lessor receives less interest on a sales-type lease. 
C) The lessor receives more interest on a sales-type lease. 
D) The lessor receives a manufacturer's or dealers profit.

Question 16

A firm may choose to apply indirect effects of an accounting principle change either prospectively or retrospectively.

Accepted Answer

A) True 
 B)False

Question 17

How are the direct method and the indirect method alike?

Accepted Answer

A) True 
 B)False

Question 18

In a sales-type capital lease,the lessor records a lease receivable and depreciates the leased asset.

Accepted Answer

A) True 
 B)False

Question 19

On the books of a lessor,a lease may be classified as either ________.

Accepted Answer

A) operating,capital,or direct financing 
B) direct financing or sales type 
C) operating,direct financing,or sales type 
D) operating,sales type or indirect financing 
A) operating,capital,or direct financing 
B) direct financing or sales type 
C) operating,direct financing,or sales type 
D) operating,sales type or indirect financing

Question 20

On March 1 of the current year,Stafford Corporation leased equipment under a six-year noncancellable lease.The estimated economic of the equipment is nine years.The fair value of the equipment is $750,000.The lease does not contain a bargain purchase option or a transfer of title.Stafford must classify this lease as a capital lease if the present value of the minimum lease payments is at least ________.
A)$500,000
B)$562,500
C)$675,000
D)$750,000

Accepted Answer

In order to be classified as a capital l

A company borrows $10,000 and signs a 90-day nontrade note payable.How would this event would be reflected in the statement of cash flows?

When making a voluntary accounting change,a firm must explain the justification for the change on the basis that it more accurately portrays its financial position and performance.

When a lessor records a sales-type lease,the transaction is similar to ________.

Cash payments of the principal portion of promissory notes are classified as financing activities.

Which one of the following is not a change in a reporting entity?

The indirect method of calculating cash flows from investing activities begins with net income.

Which of the following is not included in the operating activities section of the cash flow statement? A)payments of income taxes B)payments of dividends C)payments of interest D)payments of executive salaries

A lease is classified as a capital lease if the lease term is at least 75% of the estimated life for the property.

Self-correcting errors do not require any journal entries regardless of the length of time involved.

Describe a change in reporting and discuss its accounting treatment and its required disclosures.

Which of the following questions would not be answered by the annual cash flow statement? A)What was cash used for during the year? B)What was the change in the cash balance during the year? C)Where did cash come from during the year? D)How did cash expenditures benefit the firm during the year?

One purpose of the cash flow statement is to determine the firm's need for external financing.

What is the difference between a sales-type lease and a direct-financing lease?

A firm may choose to apply indirect effects of an accounting principle change either prospectively or retrospectively.

How are the direct method and the indirect method alike?

In a sales-type capital lease,the lessor records a lease receivable and depreciates the leased asset.

On the books of a lessor,a lease may be classified as either ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Filters

Exam 22: Accounting Corrections and Error Analysis

A company borrows $10,000 and signs a 90-day nontrade note payable.How would this event would be reflected in the statement of cash flows?

When making a voluntary accounting change,a firm must explain the justification for the change on the basis that it more accurately portrays its financial position and performance.

When a lessor records a sales-type lease,the transaction is similar to ________.

Cash payments of the principal portion of promissory notes are classified as financing activities.

Which one of the following is not a change in a reporting entity?

The indirect method of calculating cash flows from investing activities begins with net income.

Which of the following is not included in the operating activities section of the cash flow statement? A)payments of income taxes B)payments of dividends C)payments of interest D)payments of executive salaries

A lease is classified as a capital lease if the lease term is at least 75% of the estimated life for the property.

Self-correcting errors do not require any journal entries regardless of the length of time involved.

Describe a change in reporting and discuss its accounting treatment and its required disclosures.

Which of the following questions would not be answered by the annual cash flow statement? A)What was cash used for during the year? B)What was the change in the cash balance during the year? C)Where did cash come from during the year? D)How did cash expenditures benefit the firm during the year?

One purpose of the cash flow statement is to determine the firm's need for external financing.

What is the difference between a sales-type lease and a direct-financing lease?

A firm may choose to apply indirect effects of an accounting principle change either prospectively or retrospectively.

How are the direct method and the indirect method alike?

In a sales-type capital lease,the lessor records a lease receivable and depreciates the leased asset.

On the books of a lessor,a lease may be classified as either ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Filters