1) Under IFRS, assets and liabilities appear in the statement of
financial position in order of decreasing closeness-to-cash.
Answer:
2) Applying asset and liability definitions and recognition criteria
under U.S. GAAP and IFRS results in the balance sheet including all
economic benefits (resources) and obligations.
Answer:
3) How do firms account for inventories?
Answer:
4) One year is the conventional cutoff for distinguishing a current
and a noncurrent asset or liability, because the operating cycle
for most firms is one year or less.
Answer:
5) The concept of a reporting entity pertains to a group of entities
pursuing a common business purpose under the control of one of the
entities in the group.
Answer:
6) U.S. GAAP and IFRS do not classify preferred stock subject to
redemption only at the option of the issuing firm as shareholders
equity.
Answer:
7) The following cash-basis income statement has been prepared for the
first year of business.
|
Kitchen Mart, Inc.Statement of Cash Receipts and ExpendituresFor the Year Ending December 31, Year 1 |
||||
| Cash Receipts from Sales of Merchandise | $26,000 | |||
| Less: | Cash Expenditures for Merchandise and Services | |||
| Merchandise | $12,000 | |||
| Salaries | 5,000 | |||
| Rent | 7,000 | |||
| Total Cash Expenditures | 22,000 | |||
| Excess of Cash Receipts over Cash Expenditures | $4,000 | |||
At year-end, the firm had inventory with a cost of $3,000
remaining. Also, customers owed $2,500 for goods that had already
been delivered. The utilities for December were $500 and were
billed to but not yet paid by the company. The rent of $3,500 for
January, Year 2, was paid in December, Year 1.
Required:
Prepare an accrual-basis income statement for the year.
Answer:
8) Historical market interest rate is the discount rate prevailing at
the date of the initial borrowing.
Answer:
9) Use the abbreviations below to classify the following income
statement items.
| R | Revenues |
| E | Expenses |
| X | Item generally not appearing on an income statement |
Income Statement ItemsExample Corporation, Inc.For
the year ended December 31, Year 1
a. __________ Accounts payable
b. __________ Sales
c. __________ Dividends paid
d. __________ Cost of goods sold
e. __________ Cash from operating activities
f. __________ Supplies inventory
g. __________ Commissions earned by sales staff
h. __________ Common stock
i. __________ Yearly depreciation on equipment
j. __________ Administrative office space rent on a month-to-month
lease
k. __________ Sales from services
l. __________ Sales from products
m. __________ Note payable, due in March, Year 1
n. __________ Note receivable, due June 1, Year 2
o. __________ Acquisition of common stock
p. __________ Retained earnings
q. __________ Officer salaries
Answer:
10) Discuss the definition, recognition, and measurement of assets.
Answer:
11) When accounting for a fair value hedge of a recognized asset or
liability, at the end of each period, the firm remeasures the
hedged asset or liability to fair value and includes the resulting
gain or loss in net income, and the derivative instrument (hedging
instrument) to fair value and includes the resulting loss or gain
in net income.
Answer:
12) Discuss the definition, recognition, and measurement of
shareholders equity for a corporation.
Answer:
13) 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.
Answer:
14) Many analysts use a common-size balance sheet, which expresses each
balance sheet item as a percentage of total assets.
Answer:
15) Assets are economic resources with the potential to provide future
economic benefits to
a firm.
Answer:
16) The balance sheet equation shows the equality of assets with
liabilities plus shareholders equity. This equation requires that
an entitys assets exactly balance, or offset, an equal amount of
financing provided by creditors and owners of the corporation.
Answer:
17) As a general principle, under the accrual basis of accounting, the
firm recognizes revenue when the transaction meets which of the
following conditions?
A.completion of the earnings process, only
B.receipt of assets from the customer, only
C.completion of the earnings process and receipt of assets from the
customer
D.expiration of the warranty period, only
E.receipt of the final payment, only
Answer:
18) U.S. GAAP and IFRS require firms to account for debt securities
held-to-maturity that are deemed to be impaired. The investor
recognizes (debits) _____ and reduces (credits) _____.
A.an impairment loss (included in other comprehensive income); the
balance sheet carrying value of the investment
B.the balance sheet carrying value of the investment; an impairment
loss (included in other comprehensive income)
C.the balance sheet carrying value of the investment; an impairment
loss (included in net income)
D.an impairment loss (included in net income); the balance sheet
carrying value of the investment
E.reserve for impairment loss (included in other comprehensive
income); the balance sheet reserve for net realizable value of
investments
Answer:
19) Firms typically borrow from banks, insurance companies, and other
financial institutions by signing a note, which specifies the terms
of the borrowing arrangement. The initial valuation of the loan
equals _____.
A.the future value of the present cash payments discounted at the
yield required by the borrower
B.the future value of the present cash payments discounted at the
yield required by the lender
C.the present value of the future cash payments discounted at the
yield required by the borrower
D.the present value of the future cash payments discounted at the
yield required by the lender
E.the future value of the present cash payments undiscounted
Answer:
20) U.S. GAAP and IFRS distinguish between revenues and expenses on the
one hand and gains and losses on the other. Which of the following
is/are true?
A.Revenues and expenses result from the recurring, primary
operating activities of a business
B.Income items include the ordinary, recurring operating activities
of the firm
C.Gains and losses result from either peripheral activities or
nonrecurring activities
D.The reporting of revenues and expenses are at gross amounts, and
firms report gains and losses at net amounts
E.all of the above
Answer:
21) For each of the following transactions, determine what adjustments
are necessary to prepare the statement of cash flows using the
indirect method.
a. Firm A sells equipment with a cost of $2,000 and accumulated
depreciation of $1,000 for $600 cash.
b. Firm A uses the equity method to record its investment in Firm
B. In the current year, A records $1,500 as equity in earnings of
affiliate. A also received $1,600 in dividends from B in the
current year.
c. Firm A converts $50,000 of debt to common stock. Firm A chooses
to report this transaction in the statement of cash flows.
Answer:
22) The term _____ implies active and frequent buying and selling with
the objective of generating profits from short-term changes in
market prices.
A.gambling
B.mad money
C.conjecture
D.trading
E.ka-ching
Answer:
23) The method of revenue recognition where the seller has substantial
uncertainty about the amount of cash it will collect and matches
the costs of generating revenues dollar for dollar with cash
receipts until the seller recovers all such costs is called the
A.cash basis method
B.percentage-of-payment method
C.installment method
D.cost-recovery-first method
E.cost-recovery-last method
Answer:
24) Regarding employee stock options, which of the following is/are
true?
A.Firms compute a fair-value-based measure of employee stock
options on the date of the grant using an option-pricing model that
incorporates information about the current market price, the
exercise price, the expected time between grant and exercise, the
expected volatility of the stock, the expected dividends, and the
risk-free interest rate
B.Total compensation cost is the number of options the firm expects
to vest times the value per option
C.Firms amortize total compensation cost over the requisite service
period, which is the expected period of benefit
D.The requisite service period is usually the period between the
grant date and the vesting date
E.Firms do not typically remeasure most types of stock options
after the initial grant date
Answer:
25) Under U.S. GAAP, sometimes a firm sells or otherwise disposes of a
major division or segment of its business during the year or
contemplates its sale or disposal within a foreseeable time after
the end of the accounting period. If so, it must disclose
separately any income, gains, and losses related to that division
or segment. The separate disclosure appears in the
A.income from continuing operations
B.income, gains, and losses from discontinued operations
C.extraordinary gains and losses
D.retained earnings
E.paid-in-capital
Answer:
26) A firm may postpone or omit
A.mortgage payments
B.preferred dividend payments
C.bond payments
D.loan payments
E.debenture payments
Answer:
27) (CMA adapted, Dec 86 #20) On January 1, Year 1, Nicole Company sold
its 5-year, $100,000 face value, 8% bonds at $108,530, to yield an
effective annual interest rate of 6%. The bonds are dated January
1, Year 1, and interest is payable annually on January 1. Using the
effective interest method of premium amortization, the amount of
interest expense (rounded to the nearest dollar) reported by Nicole
Company in Year 1 is
A.$1,488
B.$6,512
C.$8,000
D.$8,682
E.$9,681
Answer:
28) When a firm constructs its own buildings or equipment:
A. it recognizes the labor, material, and overhead costs incurred
as an asset
B.U.S. GAAP and IFRS require firms to include, or capitalize,
interest costs during construction in the cost of a
self-constructed asset
C. it recognizes the labor, material, and overhead costs incurred
as a period expense
D.U.S. GAAP and IFRS require firms to expense interest costs
incurred during construction of a self-constructed asset
E.both choices a and b are correct
Answer:
29) Pager Corporation acquires 30% of the outstanding voting common
shares of the Intercomm Corporation for $600,000. Pager Corporation
acquires the investment in Intercomm Corporation by buying
previously issued shares of Intercomm Corporation from other
investors.
Suppose that Intercomm Corporation reports earnings of $100,000 and
pays dividends of $40,000, during the next accounting period. As a
result, Pager Corporations entries are:
A.Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . .
. . . . . . . . . 30,000
Investment in Stock of Intercomm Corporation . . . . . . . . . . .
. . . . . . .30,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . ..
. . . . 12,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 12,000
B.Investment in Stock of Intercomm Corporation . . . . . . . . . .
. . . . . 30,000
Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 30,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . .
. . . . . . . . 12,000
C.Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . .
. . . . . . . . .100,000
Investment in Stock of Intercomm Corporation . . . . . . . . . . .
. . . . . . 100,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . .
. . . . . . . . 12,000
D.Investment in Stock of Intercomm Corporation . . . . . . . . . .
. . . . . 100,000
Equity in Earnings of Affiliate . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 100,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . .
. . . . . . . . 12,000
E.Investment in Stock of Intercomm Corporation . . . . . . . . . .
. . . . . 30,000
Investment Revenue. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 30,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 12,000
Investment in Stock of Intercomm Corporation. . . . . . . . . . . .
. . . . . . . . 12,000
Answer:
30) Analysts deciding between investments must consider the comparative
risks. Which of the following is/are not industry-wide factors that
affect the risk of business firms?
A.increased competition
B.increased government regulatory actions, such as anti-trust or
clean environment policies
C.changes in technology
D.lack of availability of raw materials
E.increased inflation
Answer:
31) The net income for a period and the financial position at the end
of the period are
A.interrelated
B.independent
C.relevant
D.irrelevant
E.autonomous
Answer:
32) Purchaser Corporation acquires 30% of the outstanding voting common
shares of the Investee Corporation for $600,000. Purchaser
Corporation acquires the investment in Investee Corporation by
buying previously issued shares of Investee Corporation from other
investors.
Investee Corporations other comprehensive income during the first
period is as follows:
Unrealized Holding Gains from Marketable Securities. . .$ 3,000
Unrealized Losses from Cash Flow Hedges . . . . . . . . . .
(2,000)
Other Comprehensive Income. . . . . . . . . . . . . . . . . . . . $
1,000
Purchaser Corporation would make the following entry to recognize
its share of the items of other comprehensive income of Investee
Corporation:
A.Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 300
Realized Holding Losses from Cash Flow Hedges
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
600
Realized Holding Gains from Marketable Securities
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
. . . .900
B.Investment in Stock of Investee Corporation . . . . . . . . . .
300
Realized Holding Losses from Cash Flow Hedges
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
600
Realized Holding Gains from Marketable Securities
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
. . . .900
C.Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 300
Unrealized Holding Losses from Cash Flow Hedges
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
600
Unrealized Holding Gains from Marketable Securities
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
. . . .900
D.Investment in Stock of Investee Corporation . . . . . . . . . .
300
Unrealized Holding Losses from Cash Flow Hedges
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
600
Unrealized Holding Gains from Marketable Securities
(Other Comprehensive Income) . . . . . . . . . . . . . . . . . . .
. . . .900
E.none of the above
Answer:
33) Revenue and expense accounts
A.are permanent accounts
B.are temporary accounts
C.reflect cumulative changes in each account since the organization
of the firm
D.record all cash receipts and cash disbursements
E.none of the above
Answer:
34) ValleyView Company
ValleyView Company acquires common stock of Kansas Enterprises for
$400,000 on November 1, 2013, and designates this investment as
available-for-sale. The fair value of these shares is $435,000 on
December 31, 2013 . ValleyView sells these shares on August 15,
2014, for $480,000.
(Refer to the ValleyView.) The journal entries to record the sale
of securities available-for-sale on August 15, 2013.
A.Cash……………………………………………..480,000
Unrealized Holding Gain on
Securities Available-for-Sale………. 35,000
Marketable Securities………………………………
435,000
Realized Gain on Sale of Securities
Available-for-Sale……………………………….. 80,000
B.Marketable Securities……………………..435,000
Realized Gain on Sale of Securities
available-for-sale………………………….. 80,000
Cash……………………………………………………
480,000
Unrealized Holding Gain on
Securities Available-for-Sale………………….. 35,000
C.Cash…………………………………………….
480,000
Realized Holding Gain on
Securities Available-for-Sale…………. 35,000
Marketable Securities………………………………
435,000
Unrealized Gain on Sale of Securities
available-for-sale……………………………………
80,000
D.Marketable Securities……………………. 435,000
Unrealized Gain on Sale of Securities
available-for-sale………………………….. 80,000
Cash…………………………………………………….
480,000
Realized Holding Gain on
Securities Available-for-Sale………………….. 35,000
Enone of the above
Answer:
35) Which of the following is an example of a contra account?
A.Merchandise Inventory
B.Accounts Payable
C.Cost of Goods Sold
D.Accumulated Depreciation
E.Deferred income taxes payable
Answer:
36) Devlin Company
|
Devlin Company Statement of Financial Positionas of May 31 (in thousands) |
||
| Assets | Year 7 | Year 6 |
| Current assets | ||
| Cash | $45 | $38 |
| Trading securities | 30 | 20 |
| Accounts receivable (net) | 68 | 48 |
| Inventories | 90 | 80 |
| Prepaid expenses | 22 | 30 |
| Total current assets | $255 | $216 |
| Investments, at equity | 38 | 30 |
| Property, plant, and equipment (net) | 375 | 400 |
| Intangible assets (net) | 80 | 45 |
| Total assets | $748 | $691 |
| Liabilities and shareholders’ equity | ||
| Current liabilities | ||
| Notes payable | $35 | $18 |
| Accounts payable | 70 | 42 |
| Accrued expenses | 5 | 4 |
| Income taxes payable | 15 | 16 |
| Total current liabilities | 125 | 80 |
| Long-term debt | 35 | 35 |
| Deferred taxes | 3 | 2 |
| Total liabilities | $163 | $117 |
| Shareholders’ equity | ||
| Preferred stock, 6%, $100 par value, cumulative | 150 | 150 |
| Common stock, $10 par value | 225 | 195 |
| Additional paid-in capital-common stock | 114 | 100 |
| Retained earnings | 96 | 129 |
| Total shareholders’ equity | $585 | $574 |
| Total liabilities and shareholders’ equity | $748 | $691 |
|
Devlin Company Income StatementFor the year ended May 31 (in thousands) |
||
| Year 7 | Year 6 | |
| Net sales | $480 | $460 |
| Costs and expenses | ||
| Cost of goods sold | 330 | 315 |
| Selling, general, and administrative | 52 | 51 |
| Interest expense | 8 | 9 |
| Income before taxes | $90 | $85 |
| Income taxes | 36 | 34 |
| Net income | $54 | $51 |
(CMA adapted, Jun 97 #18) Refer to the Devlin Company example.
Devlin Company’s times interest earned for the year ended May 31,
Year 7, was
A.6.75 times
B.11.25 times
C.12.25 times
D.18.75 times
E.20.75 times
Answer:
37) Which of the following is/are false regarding a merchandising
firm?
A.A merchandising firm purchases inventory for resale
B.A merchandising firm does not change the physical form of the
inventory
C.A merchandising firm performs no incremental work on the
inventory
D.A merchandising firm adds nothing to the acquisition cost of the
inventory after it is purchased
E.None of the above are false regarding a merchandising firm
Answer:
38) Firms do not recognize certain obligations that are uncertain as to
amount or timing or both as liabilities, unless those items meet a
probability threshold and have a reliable measurement attribute.
U.S. GAAP refers to these as _____, such as the possible obligation
under an unsettled lawsuit.
A.contingent liabilities
B.unrealized contingencies
C.realized contingencies
D.unrecognized contingencies
E.recognized contingencies
Answer:
39) The FASB and IASB are working jointly to develop a revised,
coordinated set of financial reporting objectives. They envision
that the
A.primary user groups are present and potential providers of
resources, including equity investors and creditors
B.users want information useful for making resource allocation
decisions
C.users want information useful for making decisions about
protecting and enhancing their investments
D.proposed reporting objectives would also specify that firms
should prepare financial reports from the perspective of the
reporting entity (entity perspective)
E.all of the above
Answer:
40) The FASBs conceptual framework defines a(n) _____ as a probable
future economic benefit obtained or controlled by a particular
entity as a result of a past transaction or event.
A.asset
B.liability
C.equity
D.revenue
E.expense
Answer:
41) Firms sometimes invest in the common stock of other entities in
order to exert significant influence or control over the other
entity. U.S. GAAP and IFRS assume that firms owning between _____
of the voting stock of another entity can exert significant
influence.
A.10% and 40%
B.15% and 45%
C.20% and 50%
D.25% and 55%
E.30% and 60%
Answer:
42) Which of the following is not true?
A.Firms report accounts receivable they expect to collect within
one year at the amount of cash the firms expect to receive
B.Both U.S. GAAP and IFRS require firms with significant
uncollectible accounts receivable to estimate the amount of
uncollectible accounts related to a particular periods sales and
recognize that amount as bad debt expense in the same period as the
related revenues
C.Firms typically use a contra account to accounts receivable, such
as Allowance for Uncollectibles, to reflect the amount of accounts
receivable they do not expect to collect
D.The entry to recognize estimated uncollectible amounts involves a
debit to Bad Debt Expense and a credit to Allowance for
Uncollectibles
E.The write-off of a particular customers account that becomes
uncollectible involves a debit to Accounts Receivable and a credit
to Allowance for Uncollectibles
Answer:
43) A common-size income statementpermits an analysis of changes or
differences in the relations between revenues, expenses, and net
income and identifies relations that the analyst should explore
further, such as
A.time series analysis
B.economic analysis
C.cross-section analysis
D.both choices a and c
E.both choices b and c
Answer:
44) The stock dividend relabels a portion of the retained earnings that
had been legally available for dividend declarations as a more
permanent form of shareholders equity, because
A.the firm has used some funds represented by past earnings to
expand plant facilities or to replace assets at increased prices or
to retire bonds
B.the firm does not have this cash available for cash dividends
C.the stock dividend does not affect the availability of cash on
hand or cash that the firm has already invested; rather, the stock
dividend signals to readers of the balance sheet, perhaps more
clearly than before, the commitment to investment
D.all of the above
E.none of the above
Answer:
45) Evers Companys balance sheet shows a trade name acquired as part of
a business combination with a carrying value of $60 million. The
trade name has an indefinite life and therefore Evers does not
amortize it. Negative publicity regarding the product carrying the
trade name has reduced its fair value to $48 million and its value
in use to $44 million. The entry is as follows:
A.Loss on Impairment . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 16,000,000
Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 16,000,000
B.Loss on Impairment . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . .. . . .12,000,000
Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 12,000,000
C.Loss on Impairment . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 8,000,000
Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . .. . . . . . . . . . . . . . 8,000,000
D.Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .. . . . . . . . 12,000,000
Loss on Impairment . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 12,000,000
E.Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .. . . . . . . . 16,000,000
Loss on Impairment . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .16,000,000
Answer:
46) Which of the following is not true?
A.Comprehensive income equals the net amount of revenues, expenses,
gains, and losses during an accounting period
B.Authoritative guidance classifies revenues and expenses arising
from a firms core business as components of net income
C.Net income includes gains and losses from sales or exchanges of
assets or settlements of liabilities related incidentally or
peripherally to the firms core business
D.Authoritative guidance classifies gains and losses from the
remeasurement of certain assets and liabilities as either net
income or other comprehensive income
E.The FASBs and IASBs conceptual framework contains a conceptual
model for classifying items in net income versus in other
comprehensive income
Answer:
47) The financial statements of the Poston Company appear below.
Calculate the following ratios:
a. Rate of return on assets
b. Rate of return on common shareholders’ equity
c. Earnings per share of common stock
d. Current ratio (both dates)
e. Cash flow from operations to current liabilities
f. Long-term debt ratio (both dates)
g. Cash flow from operations to total liabilities
h. Interest coverage
| January 1 | December 31 | |
| Current assets | $180,000 | $210,000 |
| Noncurrent assets | 255,000 | 275,000 |
| Current liabilities | 85,000 | 78,000 |
| Long-term liabilities | 30,000 | 75,000 |
| Common stock, 10,000 shares | 300,000 | 300,000 |
| Retained earnings | 20,000 | 32,000 |
Operations
| Net income | $84,000 | |
| Interest expense | 3,000 | |
| Income taxes (30 percent rate) | 36,000 | |
| Cash provided by operations | 30,970 | |
| Dividends declared | 72,000 | |
Answer:
48) The IASBs conceptual framework defines a(n) _____ as a resource
controlled by an entity as a result of past events and from which a
firm expects future economic benefits.
A.asset
B.liability
C.equity
D.revenue
E.expense
Answer:
49) _____ are the amounts at which items entered the firms balance
sheet and reflect economic conditions at the time the firm obtained
assets or obtained financing.
A.Past amounts
B.Present amounts
C.Valuation amounts
D.Historical amounts
E.Current amounts
Answer:
50) When the stated interest rate for a loan equals the yield required
by the lender, then the amount borrowed equals the
A.principal amount of the loan
B.principal amount of the loan plus a premium
C.principal amount of the loan less a discount
D.fair amount of the loan
E.fair amount of the loan less a discount
Answer:
51) Which of the following is/are not true regarding a manufacturing
firm?
A.A manufacturing firm incurs costs as it produces goods by
changing the physical form of raw materials
B.The product costs for a manufacturing firm are the costs incurred
in manufacturing goods for sale
C.The costs to produce finished goods inventory for a manufacturing
firm do not become expenses until the firm sells the product
D.Prior to sale, the production costs of a a manufacturing firm
represent the transformation of assets from one form into
another
E.Product costs for a manufacturing firm are treated as period
costs during the period that the inventory is finished and ready
for sale
Answer:
52) The number of days between when the employees and suppliers provide
goods and services and when the firm pays cash to those employees
and suppliers is called the _____ period.
A.financing
B.grace
C.float
D.funds flow
E.cash disbursement
Answer: