1) under ifrs, companies are not required to prepare a statement of cash flows if the
transactions are reported elsewhere in the financial statements.
2) users of financial reports provided by a company use that information to make their
capital allocation decisions.
3) the percentage-of-sales method results in a more accurate valuation of receivables on
the balance sheet.
4) when land with an old building is purchased as a future building site, the cost of
removing the old building is part of the cost of the new building.
5) under ifrs, a company may classify expenses by function, but must also disclose the
classification of expenses by nature.
6) one purpose of a trial balance is to prove that debits and credits of an equal amount
are in the general ledger.
7) the debt to total assets ratio will go up if an equal amount of assets and liabilities are
added to the balance sheet.
8) lucy and fred want to begin saving for their baby’s college education. they estimate
that they will need $200,000 in eighteen years. if they are able to earn 6% per annum,
how much must be deposited at the beginning of each of the next eighteen years to fund
the education?
a.$6,471
b.$6,105
c.$11,111
d.$5,924
9) fleming company provided the following information on selected transactions during
2013:
the net cash provided (used) by investing activities during 2013 is
a.$(600,000)
b.$(250,000)
c.$100,000
d.$450,000
10) lower-of-cost-or-market
a.is most conservative if applied to the total inventory
b.is most conservative if applied to major categories of inventory
c.is most conservative if applied to individual items of inventory
d.must be applied to major categories for taxes
11) an available-for-sale debt security is purchased at a discount. the entry to record the
amortization of the discount includes a
a.debit to available-for-sale securities
b.debit to the discount account
c.debit to interest revenue
d.none of these
12) for mortenson company, the following information is available:
in mortensons single-step income statement, gross profit
a.should not be reported
b.should be reported at $27,000
c.should be reported at $80,000
d.should be reported at $85,000
13) in 2012, orear manufacturing signed a contract with a supplier to purchase raw
materials in 2013 for $700,000. before the december 31, 2012 balance sheet date, the
market price for these materials dropped to $510,000. the journal entry to record this
situation at december 31, 2012 will result in a credit that should be reported
a.as a valuation account to inventory on the balance sheet
b.as a current liability
c.as an appropriation of retained earnings
d.on the income statement
14) matching concept.
a concept is a group of related ideas. matching could be considered a concept because it
includes ideas related to both revenue recognition and expense recognition. briefly
explain the ideas in (a) revenue recognition and (b) expense recognition.
15) treasury stock should be reported as a(n)
a.current asset
b.investment
c.other asset
d.reduction of stockholders’ equity
16) the issues which the fasb and iasb must address in developing a common conceptual
framework include all of the following except:
a.should the common framework lead to standards that are principles-based or
rules-based?
b.should the role of financial reporting focus on stewardship as well as providing
information to assist users in decision making?
c.should the characteristic of reliability be traded-off in favor of information that is
verifiable?
d.should a single measurement method such as historical cost be used?
17) deferred taxes should be presented on the balance sheet
a.as one net debit or credit amount
b.in two amounts: one for the net current amount and one for the net noncurrent amount
c.in two amounts: one for the net debit amount and one for the net credit amount
d.as reductions of the related asset or liability accounts
18) how should an unusual event not meeting the criteria for an extraordinary item be
disclosed in the financial statements?
a.shown as a separate item in operating revenues or expenses if material and
supple-mented by a footnote if deemed appropriate
b.shown in operating revenues or expenses if material but not shown as a separate item
c.shown net of income tax after ordinary net earnings but before extraordinary items
d.shown net of income tax after extraordinary items but before net earnings
19) on june 1, 2012, yang corp. loaned gant $400,000 on a 12% note, payable in five
annual installments of $80,000 beginning january 2, 2013. in connection with this loan,
gant was required to deposit $4,000 in a zero-interest-bearing escrow account. the
amount held in escrow is to be returned to gant after all principal and interest payments
have been made. interest on the note is payable on the first day of each month
beginning july 1, 2012. gant made timely payments through november 1, 2012. on
january 2, 2013, yang received payment of the first principal installment plus all interest
due. at
december 31, 2012, yang’s interest receivable on the loan to gant should be
a.$0
b.$4,000
c.$8,000
d.$12,000
20) which of the following statements is associated with the accrual basis of
accounting?
a.the timing of cash receipts and disbursements is emphasized
b.a minimum amount of record keeping is required
c.this method is used less frequently by businesses than the cash method of accounting
d.revenues are recognized in the period they are earned, regardless of the time period
the cash is received
21) what is a discount as it relates to zero-interest-bearing notes payable?
a.the discount represents the lender’s costs to underwrite the note
b.the discount represents the credit quality of the borrower
c.the discount represents the cost of borrowing
d.the discount represents the allowance for uncollectible amounts
22) compute estimated goodwill if it is found by discounting excess earnings at 12%
compounded quarterly. excess annual earnings of $16,000 are expected for 8 years.
23) the records of heese stores provided the following data for the year:
other data are: freight-in, $14,000; net markups, $8,000; net markdowns, $6,000; and
the price index for the year is 110.
instructions
determine the approximate valuation of the final inventory by the dollar-value,
lifo-retail method. label all figures.
costretailratio
24) briefly describe some of the similarities and differences between u.s. gaap and ifrs
with respect to the accounting for intangible assets.
25) murphy company sublet a portion of its warehouse for five years at an annual rental
of $30,000, beginning on may 1, 2012. the tenant, sheri charter, paid one year’s rent in
advance, which murphy recorded as a credit to unearned rent revenue. murphy reports
on a calendar-year basis. the adjustment on december 31, 2012 for murphy should be
26)
27) assume in each case that the selling expenses are $10 per unit and that the normal
profit is $5 per unit. calculate the limits for each case. then enter the amount that should
be used for lower of cost or market.
28) which intangible assets are amortized?
29) according to the fasb’s conceptual framework, which of the following relates to both
relevance and faithful representation?