Question 1

What is a "current asset"?

Accepted Answer

A) An asset expected to be consumed in the ordinary operating cycle of the business. 
B) An asset not expected to be consumed in the ordinary operating cycle of the business. 
C) An asset expected to be used for investment purposes. 
D) An asset,such as cash,that is restricted from being used for at least 12 months. 
A) An asset expected to be consumed in the ordinary operating cycle of the business. 
B) An asset not expected to be consumed in the ordinary operating cycle of the business. 
C) An asset expected to be used for investment purposes. 
D) An asset,such as cash,that is restricted from being used for at least 12 months.

Question 2

JP Corporation had net income of $1,000,000 for 2017.After issuing its financial statements,it realized that it had failed to include inventory from one of its small warehouses for several years.Specifically,it forgot to include $20,000 on December 31,2016,and $30,000 on December 31,2017.Which of the following is TRUE regarding JPs 2017 net income?

Accepted Answer

A) Net income was understated by $10,000. 
B) Net income was overstated by $10,000. 
C) Net income was understated by $30,000. 
D) Net income was overstated by $30,000. 
A) Net income was understated by $10,000. 
B) Net income was overstated by $10,000. 
C) Net income was understated by $30,000. 
D) Net income was overstated by $30,000.

Question 3

Explain the meaning of the cash basis of accounting and the accrual basis of accounting.When is the cash basis appropriate? Why is the accrual basis used in financial reporting?

Accepted Answer

•Cash basis of accounting: Record transa

Question 4

Identify at least one estimate that would be required in measuring the following financial statement items.

Accepted Answer

The answer of Identify at least one estimate that would...

Question 5

IFRS identifies a number of criteria to determine whether a liability should be classified as current.A liability that satisfies any one of these criteria must be classified as current.For the following list of criteria,identify whether each one is relevant for the classification of a liability as current instead of non-current.

Accepted Answer

The answer of IFRS identifies a number of criteria to...

Question 6

Why is it important to properly define the reporting period when using the accrual basis of accounting?

Accepted Answer

The cut-off date is the end of the perio

Question 7

A correction of an accounting error does not involve

Accepted Answer

A) note disclosure. 
B) retrospective adjustment. 
C) retrospective restatement. 
D) management bias. 
A) note disclosure. 
B) retrospective adjustment. 
C) retrospective restatement. 
D) management bias.

Question 8

Which of the following would be accounted for on a prospective basis? (More than one answer may be correct. )

Accepted Answer

A) A furniture maker decreases bad debts expense from 3% to 2% of credit sales. 
B) A manufacturer determines that credit losses are becoming material due to deteriorating economic conditions.As a result,it decides to set up an allowance for doubtful accounts at 5% of amounts over 90 days. 
C) A parking service estimates bad debts to be 10% of the value of parking violations issued.In the current year,it changes to estimating the allowance for bad debts to be equal to 20% of accounts 30 to 90 days and 50% of accounts over 90 days. 
D) A shipbuilder changes its revenue recognition policy from the point of receipt by the customer to when the ship leaves the factory shipyard.This change results from a change in shipping policy from f.o.b.destination to f.o.b.shipping point.(Recall from introductory accounting that f.o.b.means "free on board," and it refers to the point at which ownership transfers from seller to buyer. ) 
E) An electronics retailer has never accrued for warranties or product guarantees.A new consumer protection law comes into effect,giving buyers of electronic products a guarantee against defects for 180 days after purchase and the ability to return defective products to the retailer. 
A) A furniture maker decreases bad debts expense from 3% to 2% of credit sales. 
B) A manufacturer determines that credit losses are becoming material due to deteriorating economic conditions.As a result,it decides to set up an allowance for doubtful accounts at 5% of amounts over 90 days. 
C) A parking service estimates bad debts to be 10% of the value of parking violations issued.In the current year,it changes to estimating the allowance for bad debts to be equal to 20% of accounts 30 to 90 days and 50% of accounts over 90 days. 
D) A shipbuilder changes its revenue recognition policy from the point of receipt by the customer to when the ship leaves the factory shipyard.This change results from a change in shipping policy from f.o.b.destination to f.o.b.shipping point.(Recall from introductory accounting that f.o.b.means "free on board," and it refers to the point at which ownership transfers from seller to buyer. ) 
E) An electronics retailer has never accrued for warranties or product guarantees.A new consumer protection law comes into effect,giving buyers of electronic products a guarantee against defects for 180 days after purchase and the ability to return defective products to the retailer.

Question 9

Which statement is not correct?

Accepted Answer

A) Cash accounting is straightforward. 
B) Cash accounting requires the same financial statements as accrual accounting. 
C) The cash flow statement reports performance under cash accounting. 
D) The income statement is the same as the cash flow statement under cash accounting. 
A) Cash accounting is straightforward. 
B) Cash accounting requires the same financial statements as accrual accounting. 
C) The cash flow statement reports performance under cash accounting. 
D) The income statement is the same as the cash flow statement under cash accounting.

Question 10

Assume that a company has a calendar year of January 1,2018-December 31,2018.March 15,2019 was the end of the period for gathering information pertaining to the financial statements.The financial statements were authorized for issue on March 24,2019.
What is the cut off point for the "recognition" of transactions and events in a reporting period?

Accepted Answer

A) January 1,2018. 
B) March 15,2019. 
C) March 24,2019. 
D) December 31,2018. 
A) January 1,2018. 
B) March 15,2019. 
C) March 24,2019. 
D) December 31,2018.

Question 11

IFRS identifies a number of criteria to determine whether a liability should be classified as current.A liability that satisfies any one of these criteria must be classified as current.For the following list of criteria,identify whether each one is relevant for the classification of a liability as current instead of non-current.

Accepted Answer

The answer of IFRS identifies a number of criteria to...

Question 12

A company's reported earnings are $2,000 and cash flows are $1,600.Based on economic conditions during the year,the company booked allowances of $150.As a result of contractual incentives,the company booked a further $250 in accruals.What is the amount of unbiased earnings?

Accepted Answer

A) $150 
B) $400 
C) $1,750 
D) $2,000 
A) $150 
B) $400 
C) $1,750 
D) $2,000

Question 13

Which of the following is an example of the "financing" cash cycle?

Accepted Answer

A) Receipt of funding from investors that is used to generate returns from investments and operations,and then returned to investors. 
B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of. 
C) Planning for product growth which results in investment opportunities that will create returns for investors. 
D) Purchase of inventory,conversion into products that are delivered to customers,and receipts from customers. 
A) Receipt of funding from investors that is used to generate returns from investments and operations,and then returned to investors. 
B) Purchase of property with long-term future benefits which results in cash inflows and then the property is disposed of. 
C) Planning for product growth which results in investment opportunities that will create returns for investors. 
D) Purchase of inventory,conversion into products that are delivered to customers,and receipts from customers.

Question 14

Here are selected balances for BeaverCreek Inc for December 31,2018:
   
Required:
A.Prepare the balance sheet for BeaverCreek Inc.with items classified as current and non-current.
B.Prepare the statement of comprehensive income.
C.Determine the missing amounts:

Accepted Answer

@#IMG-DLM& 
A.Balance Sheet
BeaverCreek Inc.
Balan

Question 15

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2019.A machine was purchased on January 1,2017,at a cost of $150,000.The machine has an estimated useful life of 10 years and a residual value of $9,000.What was booked as depreciation expense in fiscal 2017?

Accepted Answer

A) $14,100 
B) $15,900 
C) $24,000 
D) $30,000 
A) $14,100 
B) $15,900 
C) $24,000 
D) $30,000

Question 16

What is meant by "quality of earnings"? Discuss if earnings quality should be assessed by comparing earnings to cash flows.

Accepted Answer

Quality of earnings refers to how closel

Question 17

What is an "operating" cycle?

Accepted Answer

A) A cycle of transactions that converts cash inflows to cash outflows,or vice versa. 
B) A cycle where there is receipt of funding from investors,those funds are used to generate returns from investments and operations,and then the funds are returned to investors. 
C) A cycle where a property is purchased that has long-term future benefits for the enterprise,which ultimately results in cash inflows,and then the property is disposed of. 
D) A cycle that involves the purchase of items such as inventory;production,sales,delivery of goods or provision of services;and receipts from customers. 
A) A cycle of transactions that converts cash inflows to cash outflows,or vice versa. 
B) A cycle where there is receipt of funding from investors,those funds are used to generate returns from investments and operations,and then the funds are returned to investors. 
C) A cycle where a property is purchased that has long-term future benefits for the enterprise,which ultimately results in cash inflows,and then the property is disposed of. 
D) A cycle that involves the purchase of items such as inventory;production,sales,delivery of goods or provision of services;and receipts from customers.

Question 18

Which statement is correct?

Accepted Answer

A) The income statement tracks the flow in assets and liabilities on the balance sheet. 
B) The balance sheet reports the economic performance of the company. 
C) The income statement reports performance of the company. 
D) The cash flow statement tracks the flow of revenues and expenses in the income statement. 
A) The income statement tracks the flow in assets and liabilities on the balance sheet. 
B) The balance sheet reports the economic performance of the company. 
C) The income statement reports performance of the company. 
D) The cash flow statement tracks the flow of revenues and expenses in the income statement.

Question 19

Mandel Corp.retired bonds payable with a carrying value of $980,000.What effect does this transaction have on these accounts?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

What information does a cash flow statement provide?

Accepted Answer

A) Resources that the company owns. 
B) Performance of the company on an accrual basis. 
C) Performance of the company on a cash basis. 
D) Changes not due to performance of the company. 
A) Resources that the company owns. 
B) Performance of the company on an accrual basis. 
C) Performance of the company on a cash basis. 
D) Changes not due to performance of the company.

What is a "current asset"?

Explain the meaning of the cash basis of accounting and the accrual basis of accounting.When is the cash basis appropriate? Why is the accrual basis used in financial reporting?

Identify at least one estimate that would be required in measuring the following financial statement items.

Why is it important to properly define the reporting period when using the accrual basis of accounting?

A correction of an accounting error does not involve

Which of the following would be accounted for on a prospective basis? (More than one answer may be correct. )

Which statement is not correct?

A company's reported earnings are $2,000 and cash flows are $1,600.Based on economic conditions during the year,the company booked allowances of $150.As a result of contractual incentives,the company booked a further $250 in accruals.What is the amount of unbiased earnings?

Which of the following is an example of the "financing" cash cycle?

Here are selected balances for BeaverCreek Inc for December 31,2018: Required: A.Prepare the balance sheet for BeaverCreek Inc.with items classified as current and non-current. B.Prepare the statement of comprehensive income. C.Determine the missing amounts:

What is meant by "quality of earnings"? Discuss if earnings quality should be assessed by comparing earnings to cash flows.

What is an "operating" cycle?

Which statement is correct?

Mandel Corp.retired bonds payable with a carrying value of $980,000.What effect does this transaction have on these accounts?

What information does a cash flow statement provide?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Revenue and Recognition

Cash and Receivables

Inventories

Financial Assets

Property, plant and Equipment

Intangible Assets, goodwill, mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters

Exam 3: Accrual Accounting

What is a "current asset"?

Explain the meaning of the cash basis of accounting and the accrual basis of accounting.When is the cash basis appropriate? Why is the accrual basis used in financial reporting?

Identify at least one estimate that would be required in measuring the following financial statement items.

Why is it important to properly define the reporting period when using the accrual basis of accounting?

A correction of an accounting error does not involve

Which of the following would be accounted for on a prospective basis? (More than one answer may be correct. )

Which statement is not correct?

A company's reported earnings are $2,000 and cash flows are $1,600.Based on economic conditions during the year,the company booked allowances of $150.As a result of contractual incentives,the company booked a further $250 in accruals.What is the amount of unbiased earnings?

Which of the following is an example of the "financing" cash cycle?

Here are selected balances for BeaverCreek Inc for December 31,2018: Required: A.Prepare the balance sheet for BeaverCreek Inc.with items classified as current and non-current. B.Prepare the statement of comprehensive income. C.Determine the missing amounts:

What is meant by "quality of earnings"? Discuss if earnings quality should be assessed by comparing earnings to cash flows.

What is an "operating" cycle?

Which statement is correct?

Mandel Corp.retired bonds payable with a carrying value of $980,000.What effect does this transaction have on these accounts?

What information does a cash flow statement provide?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Revenue and Recognition

Cash and Receivables

Inventories

Financial Assets

Property, plant and Equipment

Intangible Assets, goodwill, mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters