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1) Which of the following typically involves the use of non-GAAP accounting? a. Strategic matching b. A change in accounting estimate that is fully disclosed c. Proforma earnings d. A change in accounting principle that is fully disclosed 2) Allure […]

1) The calculation of a reportable segments operating income or loss excludes which of the following? a. Corporate costs allocated to the segment on a reasonable basis b. Segment sales c. Segment wage expense d. Segment income tax expense 2) […]

1) On January 1, 2014, Emont Enterprises purchased 35 percent of the outstanding shares of stock of Leshner Corp.for $175,000 cash. The investment will be accounted for by the equity method. On that date, Leshner’s net assets (book and fair […]

1) The following information relates to the Tykex Company for 2014: What is diluted earnings per share? a. $1.00 b. $0.89 c. $0.81 d. $0.76 2) A company made the following cash expenditures on a self-constructed building begun January 1 […]

1) Garden Company had pretax accounting income of $24,000 during 2014. Garden’s only temporary difference for 2011 relates to a sale made in 2012 and recognized for accounting purposes at that time. However, Garden uses the installment sales method of […]

1) When a contractor determines that a contract will result in an overall loss, when should that loss be recognized within the completed-contract and percentage-of-completion methods? Completed-Contract Percentage-of-Completion a. Immediately Over the remainder of the contract b. At the completion […]

1) Which of the following is correct regarding the effect that dilutive convertible bonds have on the earnings per share computation? a. The number of shares the bonds would convert to is added to the denominator; interest, net of tax, […]

1) Which of the following is NOT correct regarding the rate of return on assets? a. The rate of return on assets measures managements ability to productively employ all its resources b. The rate of return on assets measures the […]

1) On January 17, 2014, an explosion occurred at an Boondocks Fireworks plant causing extensive property damage to area buildings. Although no claims had yet been asserted against Boondocks by March 10, 2014, Boondocks’ management and counsel concluded that it […]

1) Merchandise shipped FOB shipping point on the last day of the year should ordinarily be included in a. the buyer’s inventory balance b. the seller’s inventory balance c. neither the buyer’s nor seller’s inventory balance d. both the buyer’s […]

1) When the interest payment dates of a bond are May 1 and November 1, and the bond is issued on June 1, the amount of interest expense at December 31 of the year of issuance would be for a. […]

1) Under international accounting standards, cash received from interest (associated with interest revenue) can be shown on the statement of cash flows as an a. operating activity only b. operating or financing activity c. operating or investing activity d. investing […]

1) Robinson Company reported a net loss of $23,000 during the year. Comparing beginning and ending balances, you determine the following: (1) accounts receivable increased by $8,000; and (2) accrued expenses payable increased by $5,000. What was the amount of […]

1) Which of the following features of preferred stock would most likely be opposed by common shareholders? a. Par or stated value b. Participating c. Redeemable d. Callable 2) Stock warrants outstanding should be classified as a. liabilities b. reductions […]

1) The data shown below represent the complete taxable income history for Confederacy Corporation. The tax rate was 35% throughout the entire period 2008 through 2015: If the company always chooses the carryback, carryforward option, what is the tax liability […]

1) Which of the following would be subtracted from net income when using the indirect method to derive net cash flows from operating activities? a. Decrease in net accounts receivable b. Loss on sale of investments c. Decrease in salaries […]

1) Jacquin Corporation reports its income from investments under the equity method and recognized income of $15,000 from its investment in Trapper Company during the current year. Trapper declared no dividends during the current year. On Jacquins statement of cash […]

1) Which of the following items is reported only in current and future periods? a. Prior period adjustment b. Change in accounting principle c. Change in estimate d. Effects of changing prices 2) Which of the following should NOT be […]

1) Broham Manufacturing Company purchased a machine on January 2, 2014. The invoice price of the machine was $40,000, and the vendor offered a 2 percent discount for payment within ten days. The following additional costs were incurred in connection […]

1) Starship Corporation incurred the following losses during 2014: Ignoring income taxes, what amount of loss should Starship report as extraordinary on its annual income statement? a. $100,000 b. $520,000 c. $270,000 d. $150,000 2) Citrus Inc. declared and paid […]

1) Which of the following statements concerning guaranteed residual values is appropriate for the lessee? a. The asset and related liability should be increased by the amount of the residual value b. The asset and related liability should be decreased […]

1) A debit balance in the account Market Adjustment–Available-for-Sale Securities at the end of a year should be interpreted as the net a. unrealized holding gain for that year b. realized holding gain for that year c. unrealized holding gain […]

1) When gains or losses on derivatives designated as fair value hedges exceed the gains or losses on the item being hedged, the excess a. affects reported net income b. is recognized as an equity adjustment c. is recognized as […]

1) At December 31, 2013, DeSoto Company had 500,000 shares of common stock outstanding. DeSoto sold 50,000 shares on October 1, 2014. Net income for 2014 was $2,417,875; the income tax rate was 30%. In addition, DeSoto had the following […]

1) An earthquake destroyed the home office building of a company located in an inland city. This should be reported as a(n) a. extraordinary loss b. prior period adjustment c. loss from continuing operations d. loss from discontinued operations 2) […]

1) A depreciable asset has an estimated 15 percent salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods? Productive- Sum-of-the- Double- […]

1) On January 1, 2014, Amber Inc. purchased 30 percent of the outstanding common stock of Collar Corporation for $516,000 cash. Amber is accounting for this investment using the equity method. On the date of acquisition, the fair value of […]

1) The staff interpretations statements issued by the SEC are called: a. Staff Accounting Research Bulletins b. Statements on Accounting Principles c. Financial Accounting Standards d. Staff Accounting Bulletins 2) In a business combination, goodwill is defined as the excess […]

1) The primary purpose of the Securities and Exchange Commission is to a. regulate the issuance and trading of securities b. issue accounting and auditing regulations for publicly held companies c. prevent the trading of speculative securities d. enforce generally […]

1) In a lease that is recorded as an operating lease by the lessee, the equal monthly rental payments should be a. allocated between interest expense and depreciation expense b. allocated between a reduction of the liability for leased assets […]

1) The United States Securities and Exchange Commission a. has recognized IASB standards as an acceptable alternative to U.S. GAAP b. requires foreign companies listing their shares on U.S. stock exchanges to restate their financial statements to U.S. GAAP c. […]

1) Cash inflows from investing result from a. decreases in liabilities b. increases in liabilities c. decreases in noncash assets d. increases in noncash assets 2) Which of the following is not a component of the DuPont Framework? a. Return […]

1) The following independent events occurred after the balance sheet date of December 31, 2014, but before the issuance of the balance sheet on March 1, 2015, of Polo Grounds Company: a. A loss on an account receivable was recorded […]

1) Which of the following is not classified as a cash outflow from operating activities? a. Cash payments to creditors for interest b. Cash payments to stockholders for dividends c. Cash payments to employees for services rendered d. Cash payments […]

1) Daniels Company entered into a direct-financing lease with Old 7 Corporation, which called for seven annual rentals of $3,500 at an interest rate of 12 percent. The payments are to be paid at the end of each year. The […]

1) Excluding some revenues, expenses, gains, losses from the earnings figure calculated using generally accepted accounting principles is an example of a. income smoothing b. “big bath” accounting c. a “cookie jar” reserve d. proforma earnings 2) On September 1, […]

1) Aronson, Inc. began business on January 1, 2014, and at December 31, 2014, Aronson had the following investment portfolios of equity securities: None of the declines is judged to be other than temporary. Unrealized losses at December 31, 2014, […]

1) A firm purchased $35,000 worth of investments classified as securities available for sale. At the end of the year, the investments were worth $23,000. What is the correct presentation of these events in the statement of cash flows prepared […]

1) If the cash balance shown in a company’s accounting records is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be a. outstanding checks b. deposits in transit c. […]

1) On January 2, 2009, Portier Enterprises issued $2,400,000 of 8 percent, 15-year semiannual coupon bonds to yield 7.5 percent. Each bond is convertible into 40 shares of $15 par common stock, which was trading at $20 per share on […]

1) In 2011, Huxley Corp. began construction work under a three-year contract. The contract price is $800,000. Huxley used the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs […]

1) Which of the following statements regarding assets is NOT true? a. An asset represents a probable future economic benefit b. Assets are obtained or controlled as a result of past or probable future transactions or events c. Assets reported […]

1) “Purchased in-process research and development” is typically associated with a. creative acquisition accounting b. cookie jar reserves c. proforma earnings amounts d. big bath accounting 2) Callable bonds a. can be redeemed by the issuer at some time at […]

1) The issuance price of a bond does not depend on the a. face value of the bond b. riskiness of the bond c. method used to amortize the bond discount or premium d. effective interest rate 2) Underwood Company […]

1) For companies with a complex capital structure, a convertible security is potentially dilutive if its incremental EPS is a. greater than basic EPS after considering any stock options, rights, and warrants b. less than basic EPS after considering any […]

1) The following information appears in Molsone Company’s records for the year ended December 31: On December 31, a physical inventory revealed that the ending inventory was only $210,000. Molsones gross profit on net sales has remained constant at 30 […]

1) During 2014, Robby, Inc. incurred the following costs: In its income statement for the year ended December 31, 2014, Robby should report research and development expense of a. $462,500 b. $312,500 c. $150,000 d. $125,000 2) Hosgood Distributing Inc. […]

1) An example of direct matching of an expense with revenues would be a. depreciation expense b. office salaries expense c. direct labor costs incurred to produce inventory sold during a period d. advertising expense 2) Astor Construction Company uses […]

1) Waller Corporation had the following account balances for 2014: Wallers 2014 net income is $450,000. What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows? a. $436,200 b. $445,200 c. […]

1) Lawson Corporation’s checkbook balance on December 31, 2014, was $8,000. In addition, Lawson held the following items in its safe on December 31: The proper amount to be shown as cash on Lawsons balance sheet at December 31, 2014, […]

1) A routine collection on a customer’s account was recorded and posted as a debit to Cash and a credit to Sales Revenue. The journal entry to correct this error would be a. a debit to Sales Revenue and a […]

1) The effective interest rate on bonds is lower than the stated rate when bonds sell a. above face value b. at maturity value c. below face value d. at face value 2) Sailor Construction Company has consistently used the […]