Question 1

Which of the following statements is correct regarding revenue and expense accounts?

Accepted Answer

A) These are really owners' equity accounts. 
B) These are really contributed capital accounts. 
C) They have no impact on the balance sheet. 
D) These are balance sheet accounts. 
A) These are really owners' equity accounts. 
B) These are really contributed capital accounts. 
C) They have no impact on the balance sheet. 
D) These are balance sheet accounts. A

Question 2

Recent changes in _______ accounting standards require companies to group items within OCI based on __________

Accepted Answer

A) U.S.GAAP;whether they will be reclassified subsequently into net income or whether they will be subsequently reclassified into income when specific conditions are met. 
B) IFRS;whether they will be reclassified subsequently into net income or whether they will be subsequently reclassified into income when specific conditions are met. 
C) U.S.GAAP;their expected future categorization on the income statement into income from continuing operations,discontinued operations,extraordinary items. 
D) IFRS;their expected future categorization on the income statement into income from continuing operations,discontinued operations,extraordinary items. 
A) U.S.GAAP;whether they will be reclassified subsequently into net income or whether they will be subsequently reclassified into income when specific conditions are met. 
B) IFRS;whether they will be reclassified subsequently into net income or whether they will be subsequently reclassified into income when specific conditions are met. 
C) U.S.GAAP;their expected future categorization on the income statement into income from continuing operations,discontinued operations,extraordinary items. 
D) IFRS;their expected future categorization on the income statement into income from continuing operations,discontinued operations,extraordinary items. B

Question 3

Revenue is earned when the seller substantially completes performance required by an agreement.

Accepted Answer

A) True 
 B)False  True

Question 4

Revenue increases owners' equity and expenses decrease owners' equity.

Accepted Answer

A) True 
 B)False

Question 5

The statement,"linkage between these costs and individual sales is difficult to establish," refers to

Accepted Answer

A) period costs. 
B) expired costs. 
C) product costs. 
D) traceable costs. 
A) period costs. 
B) expired costs. 
C) product costs. 
D) traceable costs.

Question 6

Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.

Accepted Answer

A) True 
 B)False

Question 7

Under IFRS if a company opts to present separately a net income statement and a statement of comprehensive income,the net income statement must immediately follow the statement of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 8

Changes in accounting principle and changes in accounting estimate are reported under the prospective approach.

Accepted Answer

A) True 
 B)False

Question 9

The best measure of a firm's sustainable income is

Accepted Answer

A) income from continuing operations. 
B) income before extraordinary items. 
C) income before extraordinary item and change in accounting principle. 
D) net income. 
A) income from continuing operations. 
B) income before extraordinary items. 
C) income before extraordinary item and change in accounting principle. 
D) net income.

Question 10

To get revenue and expense account balances to zero requires a/an

Accepted Answer

A) adjusting entry. 
B) closing entry. 
C) operating entry. 
D) reversing entry. 
A) adjusting entry. 
B) closing entry. 
C) operating entry. 
D) reversing entry.

Question 11

Firms that use early debt retirement on a recurring basis as part of their ongoing risk management practices will report the associated gains and losses as part of income from continuing operations with separate line-item disclosure.

Accepted Answer

A) True 
 B)False

Question 12

In its accrual-basis income statement for the year ended December 31,2014,Ralph Company reported revenue of $2,565,000.Additional information was as follows:
$\begin{array}{lr}
\text { Accounts receivable 12/31/13 } & \$ 418,500 \
\text { Uncollectible accounts written off during 2014 } & 17,200 \
\text { Accounts receivable 12/31/14 } & 391,700
\end{array}$ 
Required:
Under the cash basis of net income determination,how much should Ralph report as revenue for 2014?

Accepted Answer

@#IMG-DLM& Feedback:Under the cash basis of net in

Question 13

Costs expensed with the passage of time are called period costs.

Accepted Answer

A) True 
 B)False

Question 14

Entering the DR or CR amount in the appropriate left or right side of the affected T-account is called

Accepted Answer

A) posting. 
B) cross-referencing. 
C) journalizing. 
D) recording. 
A) posting. 
B) cross-referencing. 
C) journalizing. 
D) recording.

Question 15

If a material event is either unusual in nature or an infrequent occurrence it is classified on the income statement as a special or unusual item in continuing operations.

Accepted Answer

A) True 
 B)False

Question 16

As a general rule,IFRS allows more opportunities for managers to change balance sheet valuations of certain assets even when management has no intention to sell these assets.

Accepted Answer

A) True 
 B)False

Question 17

The change in equity of an entity during a period from transactions and other events from non-owner sources is known as

Accepted Answer

A) net income. 
B) net operating income. 
C) comprehensive income. 
D) net change in assets. 
A) net income. 
B) net operating income. 
C) comprehensive income. 
D) net change in assets.

Question 18

On November 15,2014,Jones Co.sold a segment of its business for $2,750,000.The net book value of the segment at the time of its disposal was $2,900,000.Jones had pretax operating income of $1,750,000 for 2014 which included $360,000 earned by the discontinued segment prior to its disposal.Assume Jones' tax rate is 30%.
Required:
Prepare a partial income statement for Jones Co.for 2014,beginning with pretax income from continuing operations.

Accepted Answer

@#IMG-DLM& Feedback:Sale price of segmen

Question 19

Diluted earnings per share reflects the EPS that would result if all potentially dilutive securities were converted into shares of common stock.

Accepted Answer

A) True 
 B)False

Question 20

Selected unrealized gains (or losses)sometimes bypass the income statement and are reported as direct adjustments to a stockholders' equity account.

Accepted Answer

A) True 
 B)False

Which of the following statements is correct regarding revenue and expense accounts?

Recent changes in _ accounting standards require companies to group items within OCI based on ____

Revenue is earned when the seller substantially completes performance required by an agreement.

Revenue increases owners' equity and expenses decrease owners' equity.

The statement,"linkage between these costs and individual sales is difficult to establish," refers to

Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.

Under IFRS if a company opts to present separately a net income statement and a statement of comprehensive income,the net income statement must immediately follow the statement of comprehensive income.

Changes in accounting principle and changes in accounting estimate are reported under the prospective approach.

The best measure of a firm's sustainable income is

To get revenue and expense account balances to zero requires a/an

Firms that use early debt retirement on a recurring basis as part of their ongoing risk management practices will report the associated gains and losses as part of income from continuing operations with separate line-item disclosure.

Costs expensed with the passage of time are called period costs.

Entering the DR or CR amount in the appropriate left or right side of the affected T-account is called

If a material event is either unusual in nature or an infrequent occurrence it is classified on the income statement as a special or unusual item in continuing operations.

As a general rule,IFRS allows more opportunities for managers to change balance sheet valuations of certain assets even when management has no intention to sell these assets.

The change in equity of an entity during a period from transactions and other events from non-owner sources is known as

Diluted earnings per share reflects the EPS that would result if all potentially dilutive securities were converted into shares of common stock.

Selected unrealized gains (or losses)sometimes bypass the income statement and are reported as direct adjustments to a stockholders' equity account.

The Economic and Institutional Setting for Financial Reporting

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters

Exam 2: Accrual Accounting and Income Determination

Which of the following statements is correct regarding revenue and expense accounts?

Recent changes in _______ accounting standards require companies to group items within OCI based on __________

Revenue is earned when the seller substantially completes performance required by an agreement.

Revenue increases owners' equity and expenses decrease owners' equity.

The statement,"linkage between these costs and individual sales is difficult to establish," refers to

Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income.

Under IFRS if a company opts to present separately a net income statement and a statement of comprehensive income,the net income statement must immediately follow the statement of comprehensive income.

Changes in accounting principle and changes in accounting estimate are reported under the prospective approach.

The best measure of a firm's sustainable income is

To get revenue and expense account balances to zero requires a/an

Firms that use early debt retirement on a recurring basis as part of their ongoing risk management practices will report the associated gains and losses as part of income from continuing operations with separate line-item disclosure.

Costs expensed with the passage of time are called period costs.

Entering the DR or CR amount in the appropriate left or right side of the affected T-account is called

If a material event is either unusual in nature or an infrequent occurrence it is classified on the income statement as a special or unusual item in continuing operations.

As a general rule,IFRS allows more opportunities for managers to change balance sheet valuations of certain assets even when management has no intention to sell these assets.

The change in equity of an entity during a period from transactions and other events from non-owner sources is known as

Diluted earnings per share reflects the EPS that would result if all potentially dilutive securities were converted into shares of common stock.

Selected unrealized gains (or losses)sometimes bypass the income statement and are reported as direct adjustments to a stockholders' equity account.

The Economic and Institutional Setting for Financial Reporting

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters

Recent changes in _ accounting standards require companies to group items within OCI based on ____