Exam 24: Full Disclosure in Financial Reporting

Which of the following is true regarding IFRS and GAAP?

If the loss on an account receivable results from a customer's bankruptcy after the balance sheet date, the company only discloses this information in the notes to the financial statements.

Interim reports.A few years ago, a publishing company in the fourth quarter had a net profit figure that exceeded sales for that quarter. Such a situation as this suggests that some difficult accounting issues are involved in interim reporting. Instructions (a) What are the major accounting related to interim reports? (b) What problem exists with income taxes in interim reports and how does GAAP recommend that taxes be reported? What does GAAP require? (c) Many academicians have attempted to predict the year's net income after the first quarter's income is reported. These attempts are generally unsuccessful, no matter how sophisticated the prediction model. What might be the reason for this inability to predict?

IFRS requires companies to prepare interim reports on a quarterly basis.

Use the following information for questions 60 through 63. Information for Ramirez Corp. is given below: Additional information: There are no preferred dividends in arrears, the balances in the Accounts Receivable and Inventory accounts are unchanged from January 1, 2015, and there were no changes in the Bonds Payable, Preferred Stock, or Common Stock accounts during 2015. Assume that preferred dividends for the current year have not been declared. -The rate of return for 2015 based on the year-end common stockholders' equity was

Companies should disclose all of the following in interim reports except

In considering interim financial reporting, how does the profession conclude that such reporting should be viewed?

The payout ratio is calculated by dividing

Accounting policies are the specific accounting principles and methods a company uses and considers most appropriate to present fairly its financial statements.

Which of the following should be disclosed in a Summary of Significant Accounting Policies?

Use the following information for questions 60 through 63. Information for Ramirez Corp. is given below: Additional information: There are no preferred dividends in arrears, the balances in the Accounts Receivable and Inventory accounts are unchanged from January 1, 2015, and there were no changes in the Bonds Payable, Preferred Stock, or Common Stock accounts during 2015. Assume that preferred dividends for the current year have not been declared. -The number of times interest was earned during 2015 was

Companies report extraordinary items in interim reports by prorating them over the four quarters.

Which of the following ratios should be used in evaluating the effectiveness with which the company uses its assets?

A qualified opinion is issued when the exception to the standard opinion is not of sufficient magnitude to invalidate the statements as a whole.

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

Which of the following facts concerning plant assets should be included in the summary of significant accounting policies?

Revenue of a segment includes

The basic limitations associated with ratio analysis include

During 2015, Quirk, Incorporated purchased $3,500,000 of inventory. The cost of goods sold for 2015 was $3,600,000 and the ending inventory at December 31, 2015, was $400,000. What was the inventory turnover for 2015?

Errors and irregularities are defined as intentional distortions of facts. Errors Irregularities A) Yes Yes B) Yes No C) No Yes D) No No