Question 1

Which of the following is the date on which the dividend distribution occurs?

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 2

Under IFRS,cash payments for purchase of treasury stock:

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 3

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.
 $$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Item } & \begin{array} { c } 
\text { Common } \
\text { Stock }
\end{array} & \begin{array} { c } 
\text { Additional } \
\text { Paid-In } \
\text { Capital }
\end{array} & \begin{array} { c } 
\text { Deferred } \
\text { Compensation }
\end{array} & \begin{array} { c } 
\text { Retained } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { Treasury } \
\text { Stock at } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Total Common } \
\text { Shareholders' } \
\text { Equity }
\end{array} \
\hline \text { a. } & & & & & & \
\hline \text { b. } & & & & & & \
\hline \text { c. } & & & & & & \
\hline \text { d. } & & & & & & \
\hline \text { e. } & & & & & & \
\hline \text { f. } & & & & & & \
\hline
\end{array}$$

Accepted Answer

None

Question 4

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

Accepted Answer

A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a) an agreement that both entitles and obligates it to repurchase the assets or (b) the
Ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy. 
A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a) an agreement that both entitles and obligates it to repurchase the assets or (b) the
Ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy.

Question 5

Which of the following is not true concerning the recognition of unrealized gains and losses on foreign currency translation during the consolidation process?

Accepted Answer

A)  Firms do not recognize these gains/losses in current income. 
B)  Firms recognize these gain/losses in the statement of other comprehensive income 
C)  Firms increase/reduce their investment accounts by the translation gains/losses 
D)  Unrealized gains and losses increase/decrease other accumulated comprehensive income in shareholders' equity. 
A)  Firms do not recognize these gains/losses in current income. 
B)  Firms recognize these gain/losses in the statement of other comprehensive income 
C)  Firms increase/reduce their investment accounts by the translation gains/losses 
D)  Unrealized gains and losses increase/decrease other accumulated comprehensive income in shareholders' equity.

Question 6

NOTE: The following problem requires present value information.
On January 1,2012,Porter Corporation signed a five-year non-cancelable lease for certain machinery.The terms of the lease called for:
A)Porter to make annual payments of $60,000 at the end of each year (starting on Dec.31,2012)for five years.Porter must return the equipment to the lessor end of this period.
B)The machinery has an estimated useful life of 6 years and no expected salvage value.
C)Porter uses the straight-line method of depreciation for all of its fixed assets.
D)Porter's incremental borrowing rate is 8%.
E)The fair value of the asset at January 1,2012 is $275,000.
Required:
1.Discuss whether Porter should account for the lease as an operating or capital lease and why.
2.Using the above information determine how the lease would affect Porter's financial statements in 2013.Use the balance sheet equation below to show the effects.
 $\mathrm{C}+\mathrm{N} \$ \mathrm{~A}=\mathrm{L}+\mathrm{CC}+\mathrm{AOCI}+\mathrm{RE}$

Accepted Answer

1.The lease should be accounted for as a

Question 7

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 8

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

Accepted Answer

The answer of A(n)____________________ lease arrangement is one in which...

Question 9

Under current U.S.GAAP,unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss.Which of the following is not one of the balance sheet items?

Accepted Answer

A)  Derivatives held as cash flow hedges 
B)  Deferred tax assets related to net operating loss carryforwards 
C)  Minimum pension obligations 
D)  Investment securities classified as available for sale 
A)  Derivatives held as cash flow hedges 
B)  Deferred tax assets related to net operating loss carryforwards 
C)  Minimum pension obligations 
D)  Investment securities classified as available for sale

Question 10

When firms use derivatives effectively to manage risks,the net gain or loss each period should be relatively ____________________.

Accepted Answer

The answer of When firms use derivatives effectively to manage...

Question 11

Which kind of dividend is a return of the original investment by shareholders?

Accepted Answer

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

Question 12

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

Accepted Answer

The answer of Gains and losses on cash flow hedges...

Question 13

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 14

The acceptable method of accounting for stock options is the _________________________ method.

Accepted Answer

The answer of The acceptable method of accounting for stock...

Question 15

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.

Question 16

The _________________________ is the date a firm gives a stock option to employees.

Accepted Answer

The answer of The _________________________ is the date a firm...

Question 17

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

Accepted Answer

The answer of __________ means that a company will buy...

Question 18

Derivative instruments acquired to hedge exposure to changes in the fair value of an asset or liability are ______________________________ hedges.

Accepted Answer

The answer of Derivative instruments acquired to hedge exposure to...

Question 19

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 20

Which of the following is not a distinguishing characteristic of a derivative instrument?

Accepted Answer

A)  Derivative instruments have terms that require or permit net settlement. 
B)  Derivative instruments have a low initial net investment. 
C)  Derivative instruments are highly effective throughout their term. 
D)  Derivative instruments have one or more underlyings and notional amounts. 
A)  Derivative instruments have terms that require or permit net settlement. 
B)  Derivative instruments have a low initial net investment. 
C)  Derivative instruments are highly effective throughout their term. 
D)  Derivative instruments have one or more underlyings and notional amounts.

Which of the following is the date on which the dividend distribution occurs?

Under IFRS,cash payments for purchase of treasury stock:

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

Which of the following is not true concerning the recognition of unrealized gains and losses on foreign currency translation during the consolidation process?

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

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

Under current U.S.GAAP,unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss.Which of the following is not one of the balance sheet items?

When firms use derivatives effectively to manage risks,the net gain or loss each period should be relatively ____________________.

Which kind of dividend is a return of the original investment by shareholders?

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

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

The acceptable method of accounting for stock options is the _________________________ method.

All of the following are benefits of leasing except:

The _________________________ is the date a firm gives a stock option to employees.

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

Derivative instruments acquired to hedge exposure to changes in the fair value of an asset or liability are ______________________________ hedges.

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 of the following is not a distinguishing characteristic of a derivative instrument?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

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

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

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

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Exam 7: Financing Activities

Which of the following is the date on which the dividend distribution occurs?

Under IFRS,cash payments for purchase of treasury stock:

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

Which of the following is not true concerning the recognition of unrealized gains and losses on foreign currency translation during the consolidation process?

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

A(n)____________________ lease arrangement is one in which the lessee enjoys the use of the property for a set period of time.

Under current U.S.GAAP,unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss.Which of the following is not one of the balance sheet items?

When firms use derivatives effectively to manage risks,the net gain or loss each period should be relatively ____________________.

Which kind of dividend is a return of the original investment by shareholders?

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

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

The acceptable method of accounting for stock options is the _________________________ method.

All of the following are benefits of leasing except:

The _________________________ is the date a firm gives a stock option to employees.

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

Derivative instruments acquired to hedge exposure to changes in the fair value of an asset or liability are ______________________________ hedges.

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 of the following is not a distinguishing characteristic of a derivative instrument?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

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

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

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