Question 1

The statement of cash flows allows the accountant to agree the net cash provided to the _________________________ general ledger

Accepted Answer

The answer of The statement of cash flows allows the...

Question 2

A minimum liability for pension expense is reported when:

Accepted Answer

A)  the projected benefit obligation exceeds the fair value of pension plan assets. 
B)  the pension expense reported for the period is greater than the funding amount for the same period. 
C)  the accumulated benefit obligation exceeds the fair value of pension plan assets. 
D)  vested benefits exceed the fair value of pension plan assets. 
A)  the projected benefit obligation exceeds the fair value of pension plan assets. 
B)  the pension expense reported for the period is greater than the funding amount for the same period. 
C)  the accumulated benefit obligation exceeds the fair value of pension plan assets. 
D)  vested benefits exceed the fair value of pension plan assets.

Question 3

Under the accrual method of accounting,when a firm has substantially completed its value-adding activities it should recognize ____________________.

Accepted Answer

The answer of Under the accrual method of accounting,when a...

Question 4

The following information is available from Sheldon Corp.:
 
$\begin{array}{l}
\begin{array}{lll}
\text { Information iram the Balance Shet: }\
\
\text { Depreciable Assets}\
\text {  Accumulated Depreciation }\
\text { Depreciable Assets (Net)}\
\end{array}
\begin{array}{lll}
\ 
\mathbf{2 0 1 2} & \mathbf{2 0 1 1} \
\$ 2,458,600 & \$ 1,985,400 \
(1,350,700)& (1,046,000)\
\$ 1,107,900&\$ 939,400
\end{array}
\end{array}$ 
 Fram the Incame Statement    $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $2012
Depreciation Esguense   $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$384,500 
Use the information above to calculate the following:
a.Average age of the depreciable assets
b.Average remaining useful life of the depreciable assets

Accepted Answer

a.$1,350,00 / $384,5

Question 5

Under the completed contract method:

Accepted Answer

A)  revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed. 
B)  revenue, cost, and gross profit are recognized during the production cycle. 
C)  revenue, cost, and gross profit are recognized at the time the contract is completed. 
D)  None of these are correct. 
A)  revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed. 
B)  revenue, cost, and gross profit are recognized during the production cycle. 
C)  revenue, cost, and gross profit are recognized at the time the contract is completed. 
D)  None of these are correct.

Question 6

To calculate a company's average tax rate an analyst would:

Accepted Answer

A)  Divide income tax payable by income before taxes 
B)  Divide income tax expense by income before taxes 
C)  Multiply the statutory income tax rate by income before tax 
D)  Average a firm's Federal, State, Local and Foreign tax rates. 
A)  Divide income tax payable by income before taxes 
B)  Divide income tax expense by income before taxes 
C)  Multiply the statutory income tax rate by income before tax 
D)  Average a firm's Federal, State, Local and Foreign tax rates.

Question 7

The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms:

Accepted Answer

A)  do not need to report an excess of the accumulated benefits obligations over assets in a postretirement benefits fund as a liability on the balance sheet. 
B)  do not need to disclose any estimates used in calculating projected benefits. 
C)  postretirement benefits are normally not material for most companies and do not need to be disclosed. 
D)  do not need to set aside funds for future postretirement benefits as they do for pension benefits. 
A)  do not need to report an excess of the accumulated benefits obligations over assets in a postretirement benefits fund as a liability on the balance sheet. 
B)  do not need to disclose any estimates used in calculating projected benefits. 
C)  postretirement benefits are normally not material for most companies and do not need to be disclosed. 
D)  do not need to set aside funds for future postretirement benefits as they do for pension benefits.

Question 8

All of the following conditions signal that revenue recognition may have been recorded too early except:

Accepted Answer

A)  large and volatile amounts of uncollectible accounts receivable. 
B)  a decrease in the number of days accounts receivable are outstanding. 
C)  unusually large amounts of returned goods. 
D)  excessive warranty expenditures. 
A)  large and volatile amounts of uncollectible accounts receivable. 
B)  a decrease in the number of days accounts receivable are outstanding. 
C)  unusually large amounts of returned goods. 
D)  excessive warranty expenditures.

Question 9

Falcon Networks
Falcon Networks is a leading semiconductor company with operations in 17 different countries.Information about the company's taxes appears below:
 \(\begin{array}{l}
\begin{array}{lll}
  \text { Falcon Networks}\
  \text { Components of Income Tax Expense}\
  \text { (in millions)}\
\
  \text { Current - Federal}\
  \text { - Foreign}\
  \text { - State and Local}\
  \text { Total Current}\
  \text { Deferred - Federal}\
  \text { - Foreign}\
  \text { Total Deferred}\
  \text { Total Income Tax Expense}\
  \text { Note: Falcon Networks has no current liability at year-end with }\
  \text { respect to total current taxes.}\
  \text { Components of Income before Taxes}\
  \text { United States}\
  \text { Foreign}\
  \text { Total}\
\end{array}
\begin{array}{lll}
\
\
\
\mathbf{2 0 1 2} & \mathbf{2 0 11} \
\$ 55.65 & \$ 47.52 \
83.85 & 78.95 \
\underline{14.69} & \underline{12.5} \
\$ 154.19 & \$ 138.97 \
\$ 30.28 & \$ 42.90 \
\underline{23.89} &\underline{14.58}\
\$ 54.17& \$ 57.48 \
\underline{\$ 208.36}& \underline{\$ 196.45} \
\
\
\mathbf{2 0 1 2} & \mathbf{2 0 1 1} \
\$ 256.35 & \$ 253.68 \
\underline{236.85} & \underline{198.85}\
\underline{\$ 493.20}&\underline{\$ 452.53}
\end{array}
\end{array}\)
-Using the information provided by Falcon Networks,determine the federal effective tax rate for 2012.

Accepted Answer

A)  33.52% 
B)  35.00% 
C)  42.25% 
D)  45.49% 
A)  33.52% 
B)  35.00% 
C)  42.25% 
D)  45.49%

Question 10

All of the following are true regarding accrual accounting except:

Accepted Answer

A)  Accrual basis measures operating success by the extent to which accomplishments exceed efforts. 
B)  Accrual basis measures operating success by the extent to which revenues exceed expenses. 
C)  Accrual basis reports operating activities in terms of their success in generating value. 
D)  Accrual basis for the recognition of expenses is not required under IFRS. 
A)  Accrual basis measures operating success by the extent to which accomplishments exceed efforts. 
B)  Accrual basis measures operating success by the extent to which revenues exceed expenses. 
C)  Accrual basis reports operating activities in terms of their success in generating value. 
D)  Accrual basis for the recognition of expenses is not required under IFRS.

Question 11

____________________ differences result from including revenues and expenses in income before taxes in a different period than those items affect taxable income.

Accepted Answer

The answer of ____________________ differences result from including revenues and...

Question 12

Deferred tax liabilities result in future tax ____________________ when temporary differences reverse.

Accepted Answer

The answer of Deferred tax liabilities result in future tax...

Question 13

U.S.GAAP requires firms to report the assets and liabilities of defined benefit plans _______________________________________________________.

Accepted Answer

in the not

Question 14

Which of the following is not part of the balance sheet approach when computing income tax expense?

Accepted Answer

A)  Identifying at each balance sheet date all differences between the book basis of assets, liabilities, and tax loss carryforwards 
B)  Eliminating permanent differences between book and tax basis. 
C)  Eliminating deferred tax assets. 
D)  Assessing the likelihood that the firm will realize the benefits of deferred tax assets in
The future. 
A)  Identifying at each balance sheet date all differences between the book basis of assets, liabilities, and tax loss carryforwards 
B)  Eliminating permanent differences between book and tax basis. 
C)  Eliminating deferred tax assets. 
D)  Assessing the likelihood that the firm will realize the benefits of deferred tax assets in
The future.

Question 15

Playtime Corporation
Assume that Playtime Corp.has agreed to construct a new playground for Surrey County for $2,450,000.Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013.At the signing of the contract Playtime Corp.estimates that it will cost $1,750,000 to build the playground.
-At the end of 2012 Playtime provided the following information about the project:
$\begin{array}{lll}
 & \text { Costsincurred } & \text { Estimated costs } \
\text { Year }&\text { to date } & \text { remaining }\
2012&\$ 1,200.000 & \$ 600.000 \
\end{array}$
What percentage is the playground complete?

Accepted Answer

A)  62.5% 
B)  66.7% 
C)  55.6% 
D)  50.0% 
A)  62.5% 
B)  66.7% 
C)  55.6% 
D)  50.0%

Question 16

Pronto,Inc.is a major producer of printing equipment.Pronto uses a LIFO cost-flow assumption for inventories.The company's tax rate is 35%.Below is selected financial data for the company.
 $\begin{array}{l}
\begin{array}{lll}
\text { Pronto, Inc.}\
\text { Selected Financial Data}\
\text { December 31,}\
\text { (amounts in thousands)}\
\text { Inventories (LIFO)}\
\text { Total Assets}\
\text { Common Shareholders' Equity}\
\
\text { Sales}\
\text { Cost of Goods Sold}\
\text { Interest Expense}\
\text { Net Income}\
\end{array}
\begin{array}{lll}
\
\
2013 & 2012&2011 \
\
\$ 48,454 & \$ 42,369 &\$ 45,388 \
395,685 & 384,545&378,122 \
102,754 & 98,564&89,455 \
\
\$ 546,258 & \$ 488,965 \
393,857 & 348,920 \
14,253 & 15,689 \
24,581 & 21.025
\end{array}
\end{array}$ 
Required:
a.The excess of FIFO over LIFO inventories was $25 million on December 31,2013,$28.5 million on December 31,2012 and $22 million on December 31,2011.Compute the cost of goods sold for Pronto,Inc.for years 2013 and 2012 assuming that it had used a FIFO assumption.
b.Compute the inventory turnover ratio for Pronto,Inc.for years 2013 and 2012 using a LIFO cost-flow assumption.
c.Compute the inventory turnover ratio for Pronto,Inc.for years 2013 and 2012 using a FIFO cost-flow assumption.
d.Compute the rate of return on assets for years 2013 and 2012 based on the reported amounts.Disaggregate ROA into profit margin and asset turnover components.
e.Compute the rate of return on assets for years 2013 and 2012 assuming that Pronto,Inc.had used the FIFO method of accounting for inventories.Disaggregate ROA into profit margin and asset turnover components.

Accepted Answer

Required:
a.The excess of FIFO over LIFO

Question 17

The accumulated benefit obligation measures:

Accepted Answer

A)  the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels. 
B)  an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement. 
C)  the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels. 
D)  the shortest possible period for funding to maximize the tax deduction. 
A)  the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels. 
B)  an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement. 
C)  the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels. 
D)  the shortest possible period for funding to maximize the tax deduction.

Question 18

All of the following are events that can change the projected benefit obligation (PBO)during a period except:

Accepted Answer

A)  The payment of retirement benefits. 
B)  Amendments to the pension plan agreement 
C)  The interest accumulated on the liability. 
D)  All of these can change the PBO. 
A)  The payment of retirement benefits. 
B)  Amendments to the pension plan agreement 
C)  The interest accumulated on the liability. 
D)  All of these can change the PBO.

The statement of cash flows allows the accountant to agree the net cash provided to the _________________________ general ledger

A minimum liability for pension expense is reported when:

Under the accrual method of accounting,when a firm has substantially completed its value-adding activities it should recognize ____________________.

Under the completed contract method:

To calculate a company's average tax rate an analyst would:

The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms:

All of the following conditions signal that revenue recognition may have been recorded too early except:

All of the following are true regarding accrual accounting except:

____________________ differences result from including revenues and expenses in income before taxes in a different period than those items affect taxable income.

Deferred tax liabilities result in future tax ____________________ when temporary differences reverse.

U.S.GAAP requires firms to report the assets and liabilities of defined benefit plans _______________________________________________________.

Which of the following is not part of the balance sheet approach when computing income tax expense?

The accumulated benefit obligation measures:

All of the following are events that can change the projected benefit obligation (PBO)during a period except:

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

Financing Activities

Investing 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

Exam 9: Operating Activities

The statement of cash flows allows the accountant to agree the net cash provided to the _________________________ general ledger

A minimum liability for pension expense is reported when:

Under the accrual method of accounting,when a firm has substantially completed its value-adding activities it should recognize ____________________.

Under the completed contract method:

To calculate a company's average tax rate an analyst would:

The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms:

All of the following conditions signal that revenue recognition may have been recorded too early except:

All of the following are true regarding accrual accounting except:

____________________ differences result from including revenues and expenses in income before taxes in a different period than those items affect taxable income.

Deferred tax liabilities result in future tax ____________________ when temporary differences reverse.

U.S.GAAP requires firms to report the assets and liabilities of defined benefit plans _______________________________________________________.

Which of the following is not part of the balance sheet approach when computing income tax expense?

The accumulated benefit obligation measures:

All of the following are events that can change the projected benefit obligation (PBO)during a period except:

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

Financing Activities

Investing 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