Question 1

Which of the following is not true?

Accepted Answer

A) Accrual accounting measures the effects of transactions and events in the periods when they occur. 
B) Cash-basis accounting recognizes only cash receipts and disbursements. 
C) Under accrual accounting, firms recognize revenues when an arrangement satisfies the revenue recognition criteria, increasing net assets but not necessarily cash at the time of revenue recognition. 
D) Under accrual accounting, firms recognize expenses when an arrangement satisfies the expense recognition criteria, decreasing net assets but not necessarily cash at the time of expense recognition. 
E) Accrual accounting often uses the amount of cash received or paid in some period to measure the amount of revenues and expenses recognized during the current period, and the timing of revenue and expense recognition coincides with the timing of cash receipts and disbursements. 
A) Accrual accounting measures the effects of transactions and events in the periods when they occur. 
B) Cash-basis accounting recognizes only cash receipts and disbursements. 
C) Under accrual accounting, firms recognize revenues when an arrangement satisfies the revenue recognition criteria, increasing net assets but not necessarily cash at the time of revenue recognition. 
D) Under accrual accounting, firms recognize expenses when an arrangement satisfies the expense recognition criteria, decreasing net assets but not necessarily cash at the time of expense recognition. 
E) Accrual accounting often uses the amount of cash received or paid in some period to measure the amount of revenues and expenses recognized during the current period, and the timing of revenue and expense recognition coincides with the timing of cash receipts and disbursements.

Question 2

The write-off of a particular customer's account that becomes uncollectible involves a debit to Allowance for Uncollectibles and a credit to Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 3

U.S.GAAP and IFRS provide criteria for distinguishing operating leases from capital leases.Which of the following is not true?

Accepted Answer

A) Under the capital, or finance, lease method, the lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable. 
B) Under the capital, or finance, lease method, the lessor recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds. 
C) Under the capital, or finance, lease method, the lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment. 
D) Under method, the lessee records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease. 
E) The capital, or finance, lease method, treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale. 
A) Under the capital, or finance, lease method, the lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable. 
B) Under the capital, or finance, lease method, the lessor recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds. 
C) Under the capital, or finance, lease method, the lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment. 
D) Under method, the lessee records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease. 
E) The capital, or finance, lease method, treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale.

Question 4

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

Accepted Answer

A) The capital, or finance, lease method treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale. 
B) The lessor records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease. 
C) The lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment. 
D) The lessee recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds. 
E) The lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable. 
A) The capital, or finance, lease method treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale. 
B) The lessor records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease. 
C) The lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment. 
D) The lessee recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds. 
E) The lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable.

Question 5

How do firms account for intangibles other than goodwill?

Accepted Answer

INTANGIBLES OTHER THAN GOODWILL
U.S.GAAP

Question 6

As part of their normal course of business, companies sometimes sell off entire divisions or segments.The accounting treatment for such sales is composed of two components and a reporting format.
Required:
a. Describe the accounting treatment and reporting format used for such sales.
b. Discuss why such sales are separated from other parts of the income statement.

Accepted Answer

The answer of As part of their normal course of...

Which of the following is not true?

The write-off of a particular customer's account that becomes uncollectible involves a debit to Allowance for Uncollectibles and a credit to Accounts Receivable.

U.S.GAAP and IFRS provide criteria for distinguishing operating leases from capital leases.Which of the following is not true?

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

How do firms account for intangibles other than goodwill?

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

Balance Sheet: Presenting and Analyzing Resources and Financing

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

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Exam 17: Synthesis and Extensions

Which of the following is not true?

The write-off of a particular customer's account that becomes uncollectible involves a debit to Allowance for Uncollectibles and a credit to Accounts Receivable.

U.S.GAAP and IFRS provide criteria for distinguishing operating leases from capital leases.Which of the following is not true?

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

How do firms account for intangibles other than goodwill?

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

Balance Sheet: Presenting and Analyzing Resources and Financing

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

Filters