Question 1

All of the following are typically recognized as accounting liabilities except:

Accepted Answer

A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable 
A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable

Question 2

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following six transactions on the components of the book value of common shareholders' equity.
a.Small stock dividend declared and issued.
b.2-for-1 stock split announced and issued.
c.Stock options granted.
d.Recognition of compensation expense on stock options.
e.Stock options exercised.
f.Stock options expired.

Accepted Answer

@#IMG-DLM& *Indicate

Question 3

Which kind of dividends typically pay dividends with investments in other corporations' stock?

Accepted Answer

A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend 
A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend

Question 4

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following six transactions on the components of the book value of common shareholders' equity.
a.Issuance of $1 par value common stock at an amount greater than par value.
b.Donation by a governmental unit to a corporation.
c.Cash dividend declared.
d.Previously declared cash dividend paid.
e.Property dividend declared and paid.
f.Large stock dividend declared and issued.

Accepted Answer

@#IMG-DLM& * The direct effect of the property div

Question 5

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Accepted Answer

A)  date of record 
B)  measurement date 
C)  date of declaration 
D)  date of payment 
A)  date of record 
B)  measurement date 
C)  date of declaration 
D)  date of payment

Question 6

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

Accepted Answer

The answer of Under an operating lease agreement the lessee...

Question 7

Regarding accounting for troubled debt,which of the following statements is true?

Accepted Answer

A)  The treatment for troubled debt is the same under both U.S. GAAP and IFRS. 
B)  The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt. 
C)  U.S. GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation. 
D)  Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS. 
A)  The treatment for troubled debt is the same under both U.S. GAAP and IFRS. 
B)  The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt. 
C)  U.S. GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation. 
D)  Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.

Question 8

The lessor in a capital lease recognizes both a(n)____________________ and ____________________ equal to the present value of all future cash flows.

Accepted Answer

asset,reve

Question 9

Graham Corporation accounts for its investment in the common stock of Luke Company under the equity method.Graham Corporation should ordinarily record a cash dividend received from Luke as

Accepted Answer

A)  a reduction of the carrying value of the investment. 
B)  additional paid-in capital. 
C)  an addition to the carrying value of the investment. 
D)  dividend income. 
A)  a reduction of the carrying value of the investment. 
B)  additional paid-in capital. 
C)  an addition to the carrying value of the investment. 
D)  dividend income.

Question 10

Which of the following is the date on which a company incurs a legal liability to distribute the dividend to owners of the stock?

Accepted Answer

A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment 
A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment

Question 11

Which is the date when employees elect to exchange the option and cash for shares of common stock?

Accepted Answer

A)  vesting date 
B)  grant date 
C)  exercise date 
D)  market date 
A)  vesting date 
B)  grant date 
C)  exercise date 
D)  market date

Question 12

All of the following are primary events that typically lead to changes in book value of shareholders' equity except:

Accepted Answer

A)  Investments by shareholders, usually net cash received by the company at equity issue date. 
B)  Profitable operating and investing activities, with net income being a large component of this increase. 
C)  Debtholders requiring firms to enter into debt covenants. 
D)  Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases. 
A)  Investments by shareholders, usually net cash received by the company at equity issue date. 
B)  Profitable operating and investing activities, with net income being a large component of this increase. 
C)  Debtholders requiring firms to enter into debt covenants. 
D)  Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases.

Question 13

Which of the following is not one of the three criteria for recognition of a liability?

Accepted Answer

A)  The obligation involves a probable future sacrifice of resources at a specified or determinable date. 
B)  The firm is required to make a cash payment for the goods or services. 
C)  The firm has little or no discretion to avoid the transfer. 
D)  The transaction or event giving rise to the liability has already occurred. 
A)  The obligation involves a probable future sacrifice of resources at a specified or determinable date. 
B)  The firm is required to make a cash payment for the goods or services. 
C)  The firm has little or no discretion to avoid the transfer. 
D)  The transaction or event giving rise to the liability has already occurred.

Question 14

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

Accepted Answer

Normally most managers would probably wa

Question 15

Under IFRS,cash payments for interest can be reported as an

Accepted Answer

A)  operating cash outflow 
B)  investing cash outflow 
C)  financing cash outflow 
D)  Both A and C are correct. 
A)  operating cash outflow 
B)  investing cash outflow 
C)  financing cash outflow 
D)  Both A and C are correct.

Question 16

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Accepted Answer

A)  The arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices. 
B)  The selling or sponsoring firm physically controls the inventory. 
C)  The payments made to the other entity cover all acquisition, holding, and financing costs. 
D)  Both A and C are correct. 
A)  The arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices. 
B)  The selling or sponsoring firm physically controls the inventory. 
C)  The payments made to the other entity cover all acquisition, holding, and financing costs. 
D)  Both A and C are correct.

Question 17

NOTE: This problem requires present value information.
Charter Corp.manufactures office equipment and supplies throughout the U.S.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.The company's tax rate is 35%.Listed below is selected financial data for Charter and the company's operating lease disclosure.
     As an analyst you wish to restate Charter's operating leases into capital leases.
Required:

Accepted Answer

The answer of NOTE: This problem requires present value information.
Charter...

Question 18

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

Accepted Answer

The answer of Under the fair value method of accounting...

Question 19

Santa Corporation NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.
    Assuming that Santa Corporation was required to capitalize its operating lease how would the company's fixed asset ratio change under this assumption.

Accepted Answer

A)  increase 
B)  decrease 
C)  no effect 
D)  unable to determine 
A)  increase 
B)  decrease 
C)  no effect 
D)  unable to determine

Question 20

All of the following are benefits of leasing except:

Accepted Answer

A)  They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income. 
B)  They provide flexibility to change capacity as needed without having to purchase or sell assets. 
C)  They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets. 
D)  In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments. 
A)  They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income. 
B)  They provide flexibility to change capacity as needed without having to purchase or sell assets. 
C)  They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets. 
D)  In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.

All of the following are typically recognized as accounting liabilities except:

Which kind of dividends typically pay dividends with investments in other corporations' stock?

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

Regarding accounting for troubled debt,which of the following statements is true?

The lessor in a capital lease recognizes both a(n) and equal to the present value of all future cash flows.

Graham Corporation accounts for its investment in the common stock of Luke Company under the equity method.Graham Corporation should ordinarily record a cash dividend received from Luke as

Which of the following is the date on which a company incurs a legal liability to distribute the dividend to owners of the stock?

Which is the date when employees elect to exchange the option and cash for shares of common stock?

All of the following are primary events that typically lead to changes in book value of shareholders' equity except:

Which of the following is not one of the three criteria for recognition of a liability?

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

Under IFRS,cash payments for interest can be reported as an

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

All of the following are benefits of leasing except:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 6: Financing Activities

All of the following are typically recognized as accounting liabilities except:

Which kind of dividends typically pay dividends with investments in other corporations' stock?

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

Regarding accounting for troubled debt,which of the following statements is true?

The lessor in a capital lease recognizes both a(n)____________________ and ____________________ equal to the present value of all future cash flows.

Graham Corporation accounts for its investment in the common stock of Luke Company under the equity method.Graham Corporation should ordinarily record a cash dividend received from Luke as

Which of the following is the date on which a company incurs a legal liability to distribute the dividend to owners of the stock?

Which is the date when employees elect to exchange the option and cash for shares of common stock?

All of the following are primary events that typically lead to changes in book value of shareholders' equity except:

Which of the following is not one of the three criteria for recognition of a liability?

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

Under IFRS,cash payments for interest can be reported as an

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

All of the following are benefits of leasing except:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

The lessor in a capital lease recognizes both a(n) and equal to the present value of all future cash flows.