Question 1

The criteria for asset recognition include(s):

Accepted Answer

A) the firm owns or controls the right to use the item. 
B) the right to use the item arises as a result of a past transaction or exchange. 
C) the future benefit has a relevant measurement attribute that can be quantified with sufficient reliability. 
D) Answers a, b and c are correct. 
E) None of these answer choices is correct. 
A) the firm owns or controls the right to use the item. 
B) the right to use the item arises as a result of a past transaction or exchange. 
C) the future benefit has a relevant measurement attribute that can be quantified with sufficient reliability. 
D) Answers a, b and c are correct. 
E) None of these answer choices is correct.

Question 2

A balance sheet prepared according to U.S.GAAP lists assets from most liquid to least liquid, where liquid refers to the ease of converting the asset into cash.

Accepted Answer

A) True 
 B)False

Question 3

The amounts that firms report as received from owners are equal to the amounts the firm received when it originally issued the shares of stock.

Accepted Answer

A) True 
 B)False

Question 4

The current replacement cost of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

Accepted Answer

A) True 
 B)False

Question 5

When a firm has accumulated losses, rather than profits, the Retained Earnings account is typically called:

Accepted Answer

A) Negative cash balance 
B) Ordinary Loss 
C) Accumulated Excess 
D) Accumulated Deficit 
E) Insolvency 
A) Negative cash balance 
B) Ordinary Loss 
C) Accumulated Excess 
D) Accumulated Deficit 
E) Insolvency

Question 6

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Accepted Answer

A) True 
 B)False

Question 7

Firms use long-term financing for

Accepted Answer

A) assets they expect to convert to cash in the short run. 
B) assets to be used over long periods. 
C) liabilities they expect to convert to cash in the short run. 
D) liabilities to be used over long periods. 
E) shareholders' equity they expect to convert to cash in the short run. 
A) assets they expect to convert to cash in the short run. 
B) assets to be used over long periods. 
C) liabilities they expect to convert to cash in the short run. 
D) liabilities to be used over long periods. 
E) shareholders' equity they expect to convert to cash in the short run.

Question 8

Accountants record assets at

Accepted Answer

A) acquisition cost 
B) the present value of the future net cash flows based on estimated receipts and operating expenses 
C) current economic value 
D) current replacement cost 
E) appraised value 
A) acquisition cost 
B) the present value of the future net cash flows based on estimated receipts and operating expenses 
C) current economic value 
D) current replacement cost 
E) appraised value

Question 9

Assets are classified as current for reporting purposes when

Accepted Answer

A) shares of common stock in a company's important supplier are acquired to ensure continued availability of raw materials. 
B) shares of common stock in another company are acquired to diversify operations. 
C) expenditures are made in developing new technologies or advertising products. 
D) they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating cycle of the business. 
E) None of these answer choices is correct. 
A) shares of common stock in a company's important supplier are acquired to ensure continued availability of raw materials. 
B) shares of common stock in another company are acquired to diversify operations. 
C) expenditures are made in developing new technologies or advertising products. 
D) they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating cycle of the business. 
E) None of these answer choices is correct.

Question 10

The _____ of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

Accepted Answer

A) Current Replacement Cost 
B) Net Realizable Value 
C) Fair Value 
D) Present Value of Future Net Cash Flows. 
E) Acquisition cost 
A) Current Replacement Cost 
B) Net Realizable Value 
C) Fair Value 
D) Present Value of Future Net Cash Flows. 
E) Acquisition cost

Question 11

Classifying financial statement accounts.The balance sheet or income statement classifies various items in one of the following ways:
CA-Current assets
NA-Noncurrent assets
CL-Current liabilities
NL-Noncurrent liabilities
CC-Contributed capital
RE-Retained earnings
NI-Income statement item (revenue or expense)
X-Item generally does not appear on a balance sheet or an income statement

Using the abbreviations in the previous list, indicate the classification of each of the following items under U.S.GAAP and IFRS.If the classifications differ between U.S.GAAP and IFRS, indicate what that difference would be.

a.Interest revenue.
b.Factory.
c.Treasury shares repurchased by a corporation.
d.Research and development expenditures.
e.Automobiles used by sales staff.
f.Cash on hand.
g.Promise to a vendor to buy inventory from it next period.
h.Commissions earned by sales staff.
i.Supplies inventory.
j.Note payable, due in six months.
k.Increase in fair value of land held.
l.Income taxes owed to state or city government.
m.Note payable, due in ten years.
n.The portion of the note payable in part n that is due next year.
o.Dividends declared.

Accepted Answer

(Classifying financial statement account

Question 12

The balance sheet does provides all the information an analyst wants or needs about a firm's resources and the claims on those resources.

Accepted Answer

A) True 
 B)False

Question 13

The shareholders' equity section of the balance sheet for a corporation generally does not include

Accepted Answer

A) dividends paid 
B) retained earnings 
C) par or stated value of common stock 
D) amounts contributed in excess of par or stated value 
E) None of these answer choices is correct. 
A) dividends paid 
B) retained earnings 
C) par or stated value of common stock 
D) amounts contributed in excess of par or stated value 
E) None of these answer choices is correct.

Question 14

Historically, _____ has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Accepted Answer

A) conservatism 
B) reliability 
C) realization 
D) recognition 
E) relevance 
A) conservatism 
B) reliability 
C) realization 
D) recognition 
E) relevance

Question 15

Which of the following is/are true regarding accounting liabilities?

Accepted Answer

A) All accounting liabilities are obligations. 
B) Not all obligations are accounting liabilities. 
C) An item must meet the definition of a liability. 
D) An item must recognition criteria. 
E) All of these answers are correct. 
A) All accounting liabilities are obligations. 
B) Not all obligations are accounting liabilities. 
C) An item must meet the definition of a liability. 
D) An item must recognition criteria. 
E) All of these answers are correct.

Question 16

Both U.S.GAAP and IFRS require reporting that results in the more conservative measurement of earnings.

Accepted Answer

A) True 
 B)False

Question 17

Shareholders' equity is a residual interest or claim-that is, the owners (shareholders) of a firm have a claim on assets not required to meet the claims of creditors.

Accepted Answer

A) True 
 B)False

Question 18

In assessing the financial condition of a firm, an astute analyst recognizes that historical costs are reflected on the balance sheet and adjusts the reported numbers.

Accepted Answer

A) True 
 B)False

Question 19

Assume that an investment group owns a high-rise, oceanfront condominium building that it rents unfurnished to tenants.The group purchased the building five years ago from a construction company.At that time, it expected the building to have a useful life of 40 years.Explain the procedures you might follow as the investor group's accountant to ascertain the measurement amount for this building under each of the following approaches:

a.Acquisition cost.
b.Adjusted acquisition cost (reduced for services already consumed).
c.Current replacement cost.
d.Net realizable value.
e.Fair value.

Accepted Answer

a.Acquisition Cost.The contract between

Question 20

A liability arises when a firm

Accepted Answer

A) signs a new labor union contract which includes a 6% pay raise for its union employees. 
B) issues a purchase order for 100,000 units of inventory from a supplier over the next two years. 
C) receives inventory previously ordered. 
D) Both answers b and c are correct. 
E) None of these answer choices is correct. 
A) signs a new labor union contract which includes a 6% pay raise for its union employees. 
B) issues a purchase order for 100,000 units of inventory from a supplier over the next two years. 
C) receives inventory previously ordered. 
D) Both answers b and c are correct. 
E) None of these answer choices is correct.

The criteria for asset recognition include(s):

A balance sheet prepared according to U.S.GAAP lists assets from most liquid to least liquid, where liquid refers to the ease of converting the asset into cash.

The amounts that firms report as received from owners are equal to the amounts the firm received when it originally issued the shares of stock.

The current replacement cost of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

When a firm has accumulated losses, rather than profits, the Retained Earnings account is typically called:

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Firms use long-term financing for

Accountants record assets at

Assets are classified as current for reporting purposes when

The _____ of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

The balance sheet does provides all the information an analyst wants or needs about a firm's resources and the claims on those resources.

The shareholders' equity section of the balance sheet for a corporation generally does not include

Historically, _____ has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Which of the following is/are true regarding accounting liabilities?

Both U.S.GAAP and IFRS require reporting that results in the more conservative measurement of earnings.

Shareholders' equity is a residual interest or claim-that is, the owners (shareholders) of a firm have a claim on assets not required to meet the claims of creditors.

In assessing the financial condition of a firm, an astute analyst recognizes that historical costs are reflected on the balance sheet and adjusts the reported numbers.

A liability arises when a firm

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Exam 4: Balance Sheet: Presenting and Analyzing Resources and Financing

The criteria for asset recognition include(s):

A balance sheet prepared according to U.S.GAAP lists assets from most liquid to least liquid, where liquid refers to the ease of converting the asset into cash.

The amounts that firms report as received from owners are equal to the amounts the firm received when it originally issued the shares of stock.

The current replacement cost of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

When a firm has accumulated losses, rather than profits, the Retained Earnings account is typically called:

Historically, recognition has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Firms use long-term financing for

Accountants record assets at

Assets are classified as current for reporting purposes when

The _____ of an asset is the amount a firm would have to pay to obtain another asset with identical service potential; it is an entry value that reflects economic conditions at the measurement date.

The balance sheet does provides all the information an analyst wants or needs about a firm's resources and the claims on those resources.

The shareholders' equity section of the balance sheet for a corporation generally does not include

Historically, _____ has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets."

Which of the following is/are true regarding accounting liabilities?

Both U.S.GAAP and IFRS require reporting that results in the more conservative measurement of earnings.

Shareholders' equity is a residual interest or claim-that is, the owners (shareholders) of a firm have a claim on assets not required to meet the claims of creditors.

In assessing the financial condition of a firm, an astute analyst recognizes that historical costs are reflected on the balance sheet and adjusts the reported numbers.

A liability arises when a firm

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters