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Discount-Mart issued ten thousand $1,000 bonds on January 1, 2013. The bonds have a 10-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds. What is the effective annual rate of interest on the […]

The PBO is increased by: A. An increase in the average life expectancy of employees. B. Amortization of prior service cost. C. An increase in the actuary’s assumed discount rate. D. A return on plan assets that is lower than […]

Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer’s balance sheet? A. Only the plan assets are separately reported. B. Only the PBO is separately reported. C. Both […]

Dyckman Dealers has an investment in Thomas Corporation that Dyckman accounts for as a trading security. Thomas Corporation shares are publicly traded on the New York Stock Exchange, and the prevailing price on that exchange indicates that Dyckman’s investment is […]

Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2011, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage […]

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. 1)Donated assets 2)Software development costs 3)Restoration costs 4)Lump-sum purchase 5)Copyright A. Capitalized between points […]

Using the gross method, purchase discounts lost are: A. Included in purchases. B. Added to accounts payable. C. Included in interest expense. D. Deducted from discount income. Answer: The par value of common stock represents: A. The arbitrary dollar amount […]

In its 2013 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2013. In its reconciliation schedule, WME should: A. Show a $14,000 negative adjustment to net income […]

Sanjeev enters into a contract offering uncertain consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract […]

A statement of comprehensive income does not include: A. Net income. B. Losses resulting from the return on pension assets exceeding expectations. C. Losses from changes in estimates regarding the PBO. D. Prior service cost. Answer: Amortization of capitalized computer […]

The quick ratio is: A. The liquidity ratio divided by the equity ratio. B. Current assets minus inventory divided by current liabilities minus accounts payable. C. Current assets minus inventory and prepaid items divided by current liabilities. D. Cash divided […]

Under IFRS, the role of the conceptual framework: A.Primarily involves guiding standard setters to make sure that standards are consistent with each other. B.Includes serving as a guide for practitioners when a specific standard does not apply. C.Is less important […]

A guaranteed residual value at the inception of a capital lease should be: A. Excluded from minimum lease payments. B. Included as part of minimum lease payments at present value. C. Included as part of minimum lease payments at future […]

Warranty expense is recorded along with the related liability in the reporting period in which the product under warranty is sold. When accounting for a capital lease, the lessee records the leased asset at the present value of the minimum […]

When we take into account the dilutive effect of stock options, rights, and warrants in the calculation of EPS, the method used is called the:A. Optional method. B. If converted method. C. Dilution method. D. Treasury stock method. Answer: As […]

The average days inventory for ATC (rounded) for 2013 is: A. Less than 100 days. B. 114 days C. 132 days. D. 151 days. Answer: Listed below are five terms followed by a list of phrases that describe or characterize […]

In its 2013 income statement, WME reported $440,000 for the cost of goods sold. WME paid inventory suppliers $380,000 in 2013, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, WME should: A. Show a […]

If a pension plan is underfunded, the company has a net loss-OCI. In a bank reconciliation, adjustments to the bank balance could include adding deposits in transit and deducting bank service charges. Answer: FALSE In accounting for operating leases, the […]

The interest rate that is printed on the bond certificate is not referred to as the: A. Stated rate. B. Contract rate. C. Nominal rate. D. Effective rate. Answer: Listed below are five terms followed by a list of phrases […]

Which of the following changes should be accounted for using the retrospective approach?A. A change in the estimated useful life of a depreciable asset. B. A change from straight-line to double-declining-balance depreciation. C. A change from percentage-of-completion to the completed […]

Hogan Company had the following account balances for 2013: Hogan reported net income of $300,000 for 2013. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2013 reported in […]

The net pension liability (PBO minus plan assets) is decreased by:A. Service cost. B. Expected return on plan assets. C. Amortization of net gain-AOCI. D. Prior service cost. Answer: In a postretirement health care plan, prior service cost is attributed […]

Under GAAP, with respect to multiple-element arrangements, if the revenue for a particular part of a multiple-part arrangement does not qualify for separate recognition, it is: A. Never recognized. B. Recognized when the contract is signed or persuasive evidence of […]

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): The applicable tax rate is 40%. There are no other temporary or permanent differences. Franklin’s taxable income ($ in millions) is: A. […]

Defined contribution pension plans that link the amount of contributions to company performance are often called: A. Incentive savings plans. B. Thrift plans. C. Savings plans. D. None of the above is correct. Answer: Canliss Mining uses the retirement method […]

Conceptually, the service method provides a better matching of costs and benefits in amortizing prior service cost than does the straight-line method. Under IFRS, if it is probable that a contingent liability will result in a future payment but there […]

Since the lease payments under a lease agreement are normally paid at the beginning of each period, the appropriate compound interest table to be used to determine the amount at which the leased asset should be recorded is the: A. […]

If an available-for-sale investment is sold for which there are unrealized gains in accumulated other comprehensive income (AOCI), a reclassification adjustment affects other comprehensive income (OCI) in the period of sale by: A. Reducing OCI for the amount of unrealized […]

Return on shareholders’ equity is increased if a firm can maintain its return on assets but increase its leverage. Material restructuring costs are reported as an element of income from continuing operations. Answer: TRUE A disclosure note is required for […]

Nichols Corporation purchased $100,000 of Holly Inc. 6% bonds at par with the intent and ability to hold the bonds until they matured in 2017, so Nichols classifies its investment as held to maturity. Unfortunately, a combination of problems at […]

A small stock dividend is defined as one that is: A. Less than or equal to 40%. B. Less than 40%. C. Less than or equal to 10%. D. Less than 25%. Answer: The following information relates to Franklin Freightways […]

Harvey’s Junk Jewelry started business January 1, 2013, and uses the LIFO retail method to estimate ending inventory. Listed below is data accumulated for the year ended December 31, 2013: The numerator for the current period’s cost-to-retail percentage is: A. […]

Which of the following is reported as a financing activity in the statement of cash flows? A. The amortization of a patent. B. The exchange of common stock for a building. C. The acquisition of long-term investments. D. The repayment […]

Which of the following would not be accounted for using the prospective approach? A. A change to LIFO from FIFO for inventory costing. B. A change in price indexes used under the LIFO method of inventory costing. C. A change […]

Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2013, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. […]

Inventory records for Herb’s Chemicals revealed the following: March 1, 2013, inventory: 1,000 gallons @ $7.20 = $7,200 The ending inventory assuming FIFO is: A. $5,140. B. $5,080. C. $5,060. D. $5,050. Answer: Short Corporation purchased Hathaway, Inc., for $52,000,000. […]

Which of the following creates a deferred tax liability? A. An unrealized loss from recording inventory at lower of cost or market. B. Accelerated depreciation in the tax return. C. Estimated warranty expense. D. Subscriptions collected in advance. Answer: M […]

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. 1) 1.Prior period adjustment 2) 2.Depreciation 3) 3.Accelerated methods 4) 4.Change in useful life […]

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the inception of the lease. Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value. The asset […]

Under the conventional retail method, which of the following are not included in the denominator of the current period cost-to-retail conversion percentage? A. Purchase returns. B. Net markups. C. Purchases. D. Net markdowns. Answer: An exclusive 20-year right to manufacture […]

The adjusted trial balance contains only permanent accounts. The tax benefit of a net operating loss carried back two years represents a current receivable for income tax to be refunded. Answer: TRUE According to International Financial Reporting Standards, the costs […]

General Product Inc. shipped 100 million coupons in products it sold in 2013. The coupons are redeemable for 30 cents each. General anticipates that 70% of the coupons will be redeemed. The coupons expire on December 31, 2014. There were […]

Examples of internal transactions include all of the following except: A. Writing off an uncollectible account. B. Recording the expiration of prepaid insurance. C. Recording unpaid wages. D. Paying wages to company employees. Answer: Listed below are five terms followed […]

If a stock dividend were distributed, when calculating the current year’s EPS, the shares distributed are treated as having been issued: A. At the end of the year. B. At the beginning of the year. C. On the declaration date. […]