ACC 253 FINAL EXAM 26 QUESTIONS ANSWERED
ACC 253 FINAL EXAM 26 QUESTIONS ANSWERED fin571
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Date Created: 11/11/15
ACC 253 FINAL EXAM26 QUESTIONS ANSWERED 10 Limitations of the income statement include all of the following except items that cannot be measured reliably are not reported only actual amounts are reported in determining net income income measurement involves judgment income numbers are affected by the accounting methods employed 11 Which of the following would represent the least likely use of an income statement prepared for a business enterprise AF Use by customers to determine a company39s ability to provide needed goods and services Use by labor unions to examine earnings closely as a basis for salary discussions Use by government agencies to formulate tax and economic policy Use bv investors interested in the financial position of the entity 12 Which of the following is not a generally practiced method of presenting the income statement AF Including prior period adiustments in determining net income The singlestep income statement The consolidated statement of income Including gains and losses from discontinued operations of a component of a business in determining net income 13 Which of the following is not a reason why revenue is recognized at time of sale Title legally passes from seller to buyer Realization has occurred All of these are reasons to rec02nize revenue at time of sale The sale is the critical event 14 In selecting an accounting method for a newly contracted longterm construction project the principal factor to be considered should be Ar B Cr Die the method commonly used by the contractor to account for other longterm construction contracts the terms of payment in the contract the inherent nature of the contractor39s technical facilities used in construction the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable 15 Which of the following is not an accurate representation concerning revenue recognition Ar Br Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used Revenue from selling products is recognized at the date of sale usually interpreted to mean the date of delivery to customers Revenue from disposing of assets other than products is recognized at the date of sale Revenue from services rendered is recognized when cash is received or when services have been performed 16 The balance sheet contributes to financial reporting by providing a basis for all of the following except if if or determining the increase in cash due to Operations computing rates of return assessing the liquidity and financial exibility of the enterprise P evaluating the capital structure of the enterprise 17 The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as A f liguidity P solvency f exchangeability P financial exibility 18 One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is f an extensive use of estimates f failure to re ect current value information f failure to include items of financial value that cannot be recorded objectively f the extensive use of separate classi cations 19 Which of the following should be disclosed in a Summary of Significant Accounting Policies f Claims of equity holders f Types of executory contracts f Depreciation method followed f Amount for cumulative effect of change in accounting principle 20 The focus of APB Opinion No 22 is on the disclosure of accounting policies This information is important to financial statement readers in determining P the value of obsolete items included in ending inventory f net income for the year f whether the working capital position is adequate for future operations f whether accountjng policies are c0nsistently applied from vegr to vear 21 Events that occur after the December 31 2008 balance sheet date but before the balance sheet is issued and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be A P used to record an adiustment to Bad Debt Expense for the year ending December 31 2008 B P discussed only in the MDampA Management39s Discussion and Analysis section of the annual report P used to record an adjustment directly to the Retained Earnings account P disclosed only in the Notes to the Financial Statements 22 If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole the opinion is said to be P adverse 5 unqualified f exceptional D f Quali ed 23 The MDampA section of an enterprise39s annual report is to cover the following three items f liquidity capital resources and results of Operations B f 1ncome statement balance sheet and statement of owners equ1ty f changes in the stock price mergers and acquisitions D P 1ncome statement balance sheet and statement of cash ows 24 The required approach for handling extraordinary items in interim reports is to f wrge or credit the loss or gain in the quarter that it occurs 5 prorate them over all four quarters f disclose them only in the notes f prorate them over the current and remaining quarters 25 The payout ratio is calculated by diViding f cash dividends by market price per share P dividends per share by earnings per share f cash dividends bv net income less preferred dividends f cash dividends by net income plus preferred dividends 26 Which of the following ratios measures longterm solvency f Debt to total assets f Acidtest ratio P Current ratio f Receivables turnover 27 The calculation of the number of times interest is earned involves dividing f net income plus income taxes and interest expense by annual interest expense f net income by annual interest expense f none of these f net income plus income taxes by annual interest expense 28 An increase in inventory balance would be reported in a statement of cash ows using the indirect method reconciliation method as an P cash out ow from investing activities P addition to net income in arriving at net cash ow from operating activities f cash out ow from financing activities D deduction from net income in arriving at net cash flow from operating activities 29 Of the following questions which one would not be answered by the statement of cash ows P Where did the cash come from during the period P What was the change in the cash balance during the period P What was the cash used for during the period P Were all the cash expenditures of benefit to the companv during the period 30 To arrive at net cash provided by operating activities it is necessary to report revenues and expenses on a cash basis This is done by A rerecording all income statement transactions that directly affect cash in a separate cash ow journal B eliminating all transactions that have no current or future effect on cash such as depreciation from the net income computation C estimating the percentage of income statement transactions that were originally reported f on a cash basis and projecting this amount to the entire array of income statement transactions D eliminating the effects of income statement transactions Mt did not result in a corresponding increase or decrease in cash 31 In determining net cash ow from operating activities a decrease in accounts payable during a period P means that income on an accrual basis is less than income on a cash basis B f requ1res a decrease adjustment to cost of goods sold under the d1rect method f requires an addition adjustment to net income under the indirect method D requires an increase adiustment to cost of goods sold under the direct method 32 In a statement of cash ows the cash ows from investing activities section should report f the issuance of common stock in exchange for a factory building B P the ass1gnment of accounts rece1vable P stock dividends received D a maior repair to mgchinerv chgrged to accumulated depreciation 33 Riley Company reports its income from investments under the equity method and recognized income of 25000 from its investment in Wood Co during the current year even though no dividends were declared or paid by Wood during the year On Riley39s statement of cash ows indirect method the 25000 should A f not be shown B P be shown as a deduction from net income in the cash ows from operating activities section C P be shown as cash in ow from investing activities P be shown as cash out ow from financing activities 34 Which of the following tables would Show the smallest factor for an interest rate of 10 for six periods f Future value of an ordinary annuity of 1 F Present value of an annuity due of 1 Present value of an ordinarv annuitv of 1 F Future value of an annuity due of 1 35 Which table has a factor of 100000 for 1 period at every interest rate F Future value of 1 F Present value of an ordinary annuity of 1 F Present value of 1 Future value of an ordin wuitm 36 Which of the following tables would show the smallest value for an interest rate of 5 for six periods F Future value of 1 F Present value of an ordinary annuity of 1 Present value of 1 F Future value of an ordinary annuity of 1
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