Question 1

The basic accounting equation may be expressed as:

Accepted Answer

A) assets = liabilities - owners' equity 
B) liabilities = assets + owners' equity 
C) owners' equity = assets - liabilities 
D) assets = owners' equity - liabilities 
A) assets = liabilities - owners' equity 
B) liabilities = assets + owners' equity 
C) owners' equity = assets - liabilities 
D) assets = owners' equity - liabilities

Question 2

For each transaction,the dollar total of the debits must equal the dollar total of the credits.

Accepted Answer

A) True 
 B)False

Question 3

Any increase in an asset may be offset by

Accepted Answer

A) a corresponding decrease in a liability. 
B) a decrease in some other asset account. 
C) a corresponding decrease in owner' equity. 
D) an increase in another asset account. 
A) a corresponding decrease in a liability. 
B) a decrease in some other asset account. 
C) a corresponding decrease in owner' equity. 
D) an increase in another asset account.

Question 4

While the earnings process is the result of many separate activities,it is generally acknowledged that there is usually one critical event or key stage considered to be absolutely essential to the ultimate increase in net asset value of the firm.

Accepted Answer

A) True 
 B)False

Question 5

When using the retrospective approach for a change in accounting principle,disclosure rules require that

Accepted Answer

A) prior years' income statements presented for comparative purposes be restated to reflect use of the new principle unless it is impractical to do so. 
B) all prior years' income statements be restated to reflect use of the new principle,and include a pro forma net income figure of the previously reported income. 
C) no prior years' income statements be restated,but a pro forma net income figure be provided to reflect use of the new principle for each year presented. 
D) no prior years' income statements be restated,and no pro forma net income figures be provideD. 
A) prior years' income statements presented for comparative purposes be restated to reflect use of the new principle unless it is impractical to do so. 
B) all prior years' income statements be restated to reflect use of the new principle,and include a pro forma net income figure of the previously reported income. 
C) no prior years' income statements be restated,but a pro forma net income figure be provided to reflect use of the new principle for each year presented. 
D) no prior years' income statements be restated,and no pro forma net income figures be provideD.

Question 6

GAAP requires that each set of EPS numbers includes separately reported numbers for all of the following except

Accepted Answer

A) special or unusual items. 
B) income from continuing operations. 
C) discontinued operations. 
D) extraordinary items. 
A) special or unusual items. 
B) income from continuing operations. 
C) discontinued operations. 
D) extraordinary items.

Question 7

The process of reporting transitory income items net of tax on the income statement is known as intraperiod income tax allocation.

Accepted Answer

A) True 
 B)False

Question 8

Reported accrual accounting net income for a period always provides an accurate picture of underlying economic performance.

Accepted Answer

A) True 
 B)False

Question 9

In order to recognize revenue,it must be possible to measure the amount of revenue that has been earned with a reasonable degree of assurance.

Accepted Answer

A) True 
 B)False

Question 10

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10.
-Under the accrual basis,how much revenue should Canon recognize in November?

Accepted Answer

A) $0 
B) $16,000 
C) $24,000 
D) $40,000 
A) $0 
B) $16,000 
C) $24,000 
D) $40,000

Question 11

Working capital accounts include

Accepted Answer

A) all assets. 
B) all assets and liabilities. 
C) current assets and all liabilities. 
D) current assets and current liabilities. 
A) all assets. 
B) all assets and liabilities. 
C) current assets and all liabilities. 
D) current assets and current liabilities.

Question 12

Which of the following is a true statement?

Accepted Answer

A) Revenue decreases owners' equity and increases liabilities. 
B) Expenses increase owners' equity and decrease liabilities. 
C) Revenue increases owners' equity and expenses decrease owners' equity. 
D) Revenue decreases owners' equity and expenses increase owners' equity. 
A) Revenue decreases owners' equity and increases liabilities. 
B) Expenses increase owners' equity and decrease liabilities. 
C) Revenue increases owners' equity and expenses decrease owners' equity. 
D) Revenue decreases owners' equity and expenses increase owners' equity.

Question 13

John Hamilton, D.D.S. keeps his accounting records on the cash basis. During 2014 Dr. Hamilton collected $220,000 in fees from his patients. At December 31, 2013 Dr. Hamilton had accounts receivable of $30,000. At December 31, 2014 Dr. Hamilton had accounts receivable of $35,000 and had collected unearned fees of $8,000.
Required:
On the accrual basis, what was Dr. Hamilton's patient service revenue for 2014?

Accepted Answer

@#IMG-DLM& Feedback:To change Dr.Hamilton's revenu

Question 14

Under the cash basis,expenses are recognized when the costs expire or assets are used.

Accepted Answer

A) True 
 B)False

Question 15

To get revenue and expense account balances to zero an adjusting entry is made.

Accepted Answer

A) True 
 B)False

Question 16

Basic earnings per share (EPS)is always computed by dividing net income by the weighted average number of common shares of stock outstanding.

Accepted Answer

A) True 
 B)False

Question 17

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10.
-Under the cash basis,how much revenue should Canon recognize in October?

Accepted Answer

A) $0 
B) $16,000 
C) $24,000 
D) $40,000 
A) $0 
B) $16,000 
C) $24,000 
D) $40,000

Question 18

A debit

Accepted Answer

A) increases Accounts Payable. 
B) increases Cost of Goods Sold. 
C) decreases Accounts Receivable. 
D) decreases Equipment. 
A) increases Accounts Payable. 
B) increases Cost of Goods Sold. 
C) decreases Accounts Receivable. 
D) decreases Equipment.

Question 19

A component of an entity may be a/an

Accepted Answer

A) reportable or operating segment. 
B) subsidiary. 
C) asset group. 
D) reportable or operating segment,subsidiary,or asset group. 
A) reportable or operating segment. 
B) subsidiary. 
C) asset group. 
D) reportable or operating segment,subsidiary,or asset group.

Question 20

On August 1,2014,Alpha Co.approved a plan to dispose of an unprofitable segment of its business.Alpha expected that the sale would occur on April 30,2015,at an estimated gain of $250,000.The segment had actual and estimated operating profits (losses)as follows:
$\begin{array}{lr}
\text { Realized loss from } 1 / 1 / 14 \text { to } 7 / 31 / 14 & (\$ 400,000) \
\text { Realized loss from } 8 / 1 / 14 \text { to } 12 / 31 / 14 & (250,000) \
\text { Expected loss from } 1 / 1 / 15 \text { to } 4 / 30 / 15 & (300,000)
\end{array}$ 
Assume Alpha's tax rate is 30%.
Required:
In its 2014 income statement,what should Alpha report as profit or loss from discontinued operations (net of tax effects)?

Accepted Answer

@#IMG-DLM& Feedback:Under GAAP,results of operatio

The basic accounting equation may be expressed as:

For each transaction,the dollar total of the debits must equal the dollar total of the credits.

Any increase in an asset may be offset by

While the earnings process is the result of many separate activities,it is generally acknowledged that there is usually one critical event or key stage considered to be absolutely essential to the ultimate increase in net asset value of the firm.

When using the retrospective approach for a change in accounting principle,disclosure rules require that

GAAP requires that each set of EPS numbers includes separately reported numbers for all of the following except

The process of reporting transitory income items net of tax on the income statement is known as intraperiod income tax allocation.

Reported accrual accounting net income for a period always provides an accurate picture of underlying economic performance.

In order to recognize revenue,it must be possible to measure the amount of revenue that has been earned with a reasonable degree of assurance.

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10. -Under the accrual basis,how much revenue should Canon recognize in November?

Working capital accounts include

Which of the following is a true statement?

Under the cash basis,expenses are recognized when the costs expire or assets are used.

To get revenue and expense account balances to zero an adjusting entry is made.

Basic earnings per share (EPS)is always computed by dividing net income by the weighted average number of common shares of stock outstanding.

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10. -Under the cash basis,how much revenue should Canon recognize in October?

A debit

A component of an entity may be a/an

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

The basic accounting equation may be expressed as:

For each transaction,the dollar total of the debits must equal the dollar total of the credits.

Any increase in an asset may be offset by

While the earnings process is the result of many separate activities,it is generally acknowledged that there is usually one critical event or key stage considered to be absolutely essential to the ultimate increase in net asset value of the firm.

When using the retrospective approach for a change in accounting principle,disclosure rules require that

GAAP requires that each set of EPS numbers includes separately reported numbers for all of the following except

The process of reporting transitory income items net of tax on the income statement is known as intraperiod income tax allocation.

Reported accrual accounting net income for a period always provides an accurate picture of underlying economic performance.

In order to recognize revenue,it must be possible to measure the amount of revenue that has been earned with a reasonable degree of assurance.

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10. -Under the accrual basis,how much revenue should Canon recognize in November?

Working capital accounts include

Which of the following is a true statement?

Under the cash basis,expenses are recognized when the costs expire or assets are used.

To get revenue and expense account balances to zero an adjusting entry is made.

Basic earnings per share (EPS)is always computed by dividing net income by the weighted average number of common shares of stock outstanding.

The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on October 20; Title pays $16,000, and agrees to pay the balance on November 10. -Under the cash basis,how much revenue should Canon recognize in October?

A debit

A component of an entity may be a/an

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