Exam 6: Accounting Quality

When evaluating the quality of accounting information the user should consider the _____________________________________________ of the measurements made.

The Orbus Company has a 30,000 unrealized gain and a 10,000 unrealized loss.Where would Orbus Company report these transactions?

The best measure of a firm's sustainable income is: 

____________________ represents the concept of being able to compare financial statement data across years for any particular firm.

All of the following are the general principles underlying the valuation of liabilities except:

On September 1,2012,Ramos Inc.approved a plan to dispose of a segment of its business.Ramos expected that the sale would occur on March 31,2013,at an estimated gain of $375,500.The segment had actual and estimated operating profits (losses as follows): Realized loss from 1/1/12 to 8/31/12 \ 200,000 Realized loss from 9/1/12 to 12/31/12 (135,000 Expected profit from 1/1/13 to 3/31/13 475,000 Assume a marginal tax rate of 35% Required: A)In its 2012 income statement,what should Ramos report as profit or loss from discontinued operations (net of tax effects)? B)Calculate the amount of income that should be shown on the 2013 income statement as a result of the operating profit and the gain on disposal (net of tax)

All of the following are true regarding a high quality balance sheet except:

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

Examples of poor earnings quality that hinder the forecasting of expected future earnings include all of the following except:

Firm's choices and estimates within U.S.GAAP should be determined by:

Which of the following items is consistent with earnings being informative about current performance and informing the analyst that level of current earnings are not sustainable?

Penny Corp.manufactures telecommunication equipment and has been profitable each year for the past ten years.During 2014 the company saw its core market decline sharply when a competitor introduced a significant new product technology.In response to the decline in business Penny Corp.announced a major restructuring of its operations.The restructuring plan which would be implemented in 2010 would involve the following changes (all of the charges are material): a. Severance payments to reduce work force \ 9 million b. Write-down of inventory \ 13 million c. Penalty payment for termination of lease on manufacturing facility \ 6 million d. Write-down of equipment associated with manufacturing facility Penny Corp.has never previously restructured its operations and believes that it can return to profitability within two years based on its current research and development activity. Required: 1.Discuss whether or not you would eliminate the restructuring charge from the 2010 income statement of Penny Corp.when using earnings to forecast future profitability. 2.Penny Corp.'s restructuring charges cover a wide range of different cost categories; identify those that entail a cash payment and those that do not require a cash payment.For those charges not requiring a cash payment how would they be treated in the Statement of Cash Flows?

One definition of earnings management is that it occurs when managers use:

Quality accounting information should be informative as to both the __________________________________________________ of the current period's earnings and the long-run sustainability of profits.

Accounting information should be a fair and complete representation of the firm's economic ____________________,____________________,and ____________________.