Question 1

General Limited's income statement reported the following for last year:
 
Which of the following statements is correct about the income statement?

Accepted Answer

A) Gross profit percentage is 34.96%. 
B) Mark-up on cost is $573,000. 
C) Net income percentage is 14.64%. 
D) Mark-up on the selling price is $308,000. 
A) Gross profit percentage is 34.96%. 
B) Mark-up on cost is $573,000. 
C) Net income percentage is 14.64%. 
D) Mark-up on the selling price is $308,000.

Question 2

For the following types of accounting changes,identify the relevant criteria for each accounting change by selecting "yes," "no," or "N/A" (not applicable).

Accepted Answer

The answer of For the following types of accounting changes,identify...

Question 3

Which statement is not correct about expenses in the income statement?

Accepted Answer

A) The function of expense format classifies expenses based on their use. 
B) Some function of expense categories are depreciation,employee costs,raw materials consumed. 
C) The nature of expense format classifies expenses based on their source. 
D) Some function of expense categories are cost of sales,administration or warehouse. 
A) The function of expense format classifies expenses based on their use. 
B) Some function of expense categories are depreciation,employee costs,raw materials consumed. 
C) The nature of expense format classifies expenses based on their source. 
D) Some function of expense categories are cost of sales,administration or warehouse.

Question 4

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 is the appropriate accounting?

Accepted Answer

A) Retrospective adjustment for fiscal 2019. 
B) Retrospective adjustment for fiscal 2017 and 2018. 
C) Prospective adjustment from fiscal 2018 going forward. 
D) Error correction for fiscal 2019. 
A) Retrospective adjustment for fiscal 2019. 
B) Retrospective adjustment for fiscal 2017 and 2018. 
C) Prospective adjustment from fiscal 2018 going forward. 
D) Error correction for fiscal 2019.

Question 5

The following entry was recorded by Hollow Inc.:
 
What is the effect on Hollow's financial statements?

Accepted Answer

A) A cash inflow from financing activities of $70,000. 
B) Net assets increased by $10,000. 
C) An increase of $10,000 in using the indirect method of determining cash flows from operating activities. 
D) Retained earnings decreased by $10,000. 
A) A cash inflow from financing activities of $70,000. 
B) Net assets increased by $10,000. 
C) An increase of $10,000 in using the indirect method of determining cash flows from operating activities. 
D) Retained earnings decreased by $10,000.

Question 6

Which statement is correct?

Accepted Answer

A) The amount and types of excessive accruals are directly related to earnings quality. 
B) Excessive accruals are transparent and improve the quality of financial reporting. 
C) Users can routinely determine the contractual incentives causing excessive accruals. 
D) Users like earnings that closely correspond to reported results without management bias. 
A) The amount and types of excessive accruals are directly related to earnings quality. 
B) Excessive accruals are transparent and improve the quality of financial reporting. 
C) Users can routinely determine the contractual incentives causing excessive accruals. 
D) Users like earnings that closely correspond to reported results without management bias.

Question 7

Which of the following is an example of an error that should be corrected?

Accepted Answer

A) Switching from straight-line to the declining balance method of depreciation. 
B) Changing from weighted average to the first-in,first out method of inventory valuation. 
C) Using 5% for bad debts provision,but 1% is required in the company's procedures manual. 
D) Starting to capitalize fixed assets under $1,000 which were previously considered immaterial. 
A) Switching from straight-line to the declining balance method of depreciation. 
B) Changing from weighted average to the first-in,first out method of inventory valuation. 
C) Using 5% for bad debts provision,but 1% is required in the company's procedures manual. 
D) Starting to capitalize fixed assets under $1,000 which were previously considered immaterial.

Question 8

Assume that a company has a fiscal year of July 1,2018-June 30,2019.August 15,2019,was the end of the period for gathering information pertaining to the financial statements.The financial statements were authorized for issue on August 24,2019.
What is the cut off point for the "measurement" of transactions and events in this reporting period?

Accepted Answer

A) July 1,2018. 
B) The end of the subsequent events period. 
C) August 24,2019. 
D) June 30,2019. 
A) July 1,2018. 
B) The end of the subsequent events period. 
C) August 24,2019. 
D) June 30,2019.

Question 9

Identify whether each of the following items of operating expense is described according to its function.

Accepted Answer

The answer of Identify whether each of the following items...

Question 10

Prepare a single-step income statement using the following data for Leila Inc.for the year ended December 31,2018.

Accepted Answer

Leila Inc.
Income St

Question 11

The following information was provided from the records of Konstruct Inc,which began operations in the current year:
 
What were the company's expenses for the year?

Accepted Answer

A) $192,000 
B) $207,000 
C) $222,000 
D) $237,000 
A) $192,000 
B) $207,000 
C) $222,000 
D) $237,000

Question 12

Dexter Corp.received cash for a service that is to be performed in the next accounting period.How should this transaction be accounted for?

Accepted Answer

A) As accrued revenue. 
B) As an expense. 
C) As a prepaid expense. 
D) As a liability. 
A) As accrued revenue. 
B) As an expense. 
C) As a prepaid expense. 
D) As a liability.

Question 13

Under the IFRS Conceptual Framework,what general information is useful for the decision making needs of lenders and investors?

Accepted Answer

A) Information prepared on the cash basis of accounting. 
B) Information and changes in information relating to the entity's resources and claims against those resources. 
C) Financial performance resulting from a company's operating activities. 
D) Information on the company's equity and share structure. 
A) Information prepared on the cash basis of accounting. 
B) Information and changes in information relating to the entity's resources and claims against those resources. 
C) Financial performance resulting from a company's operating activities. 
D) Information on the company's equity and share structure.

Question 14

IFRS requires certain line items to be presented in the statement of comprehensive income (rather than just disclosed in the notes).Identify whether the following items are required in the statement of comprehensive income.

Accepted Answer

The answer of IFRS requires certain line items to be...

Question 15

Explain why a change in accounting policy requires the adjustment of both prior and future periods,whereas a change in estimate requires only adjustment of current and future periods.

Accepted Answer

A change in accounting policy is a chang

Question 16

Which statement is correct about the statement of comprehensive income?

Accepted Answer

A) Entities using the nature format for expenses must provide additional disclosure. 
B) The single-step format provides more information than the multiple-step format. 
C) The multiple-step format must be used in financial reporting. 
D) Entities using the function format for expenses must provide additional disclosure. 
A) Entities using the nature format for expenses must provide additional disclosure. 
B) The single-step format provides more information than the multiple-step format. 
C) The multiple-step format must be used in financial reporting. 
D) Entities using the function format for expenses must provide additional disclosure.

Question 17

For each of the following scenarios,determine the effects (if any)of the accounting change (correction of error,change in accounting policy,or change in estimate)on the relevant asset or liability,equity,and comprehensive income in the year of change and the prior year.Use the following table for your response.
   
A.Company A increases the allowance for doubtful accounts (ADA).Using the old estimate,ADA would have been $71,000.The new estimate is $74,000.
B.Company B omitted to record an invoice for a $7,000 sale made on credit at the end of the previous year and incorrectly recorded the sale in the current year.The related inventory sold has been accounted for.
C.Company C changes its revenue recognition policy to a more conservative one.The result is a decrease in prior year revenue of $4,200 and a decrease in current-year revenue of $6,300 relative to the amounts under the old policy.

Accepted Answer

The answer of For each of the following scenarios,determine the...

Question 18

The following event occurred after the company's year-end but before the completion of the audit.For this subsequent event,determine whether the event:
• requires an adjustment to the year-end financial statements,
• requires note disclosure,or
• requires neither adjustment to recognized amounts nor disclosure.
A major client unexpectedly goes bankrupt and it is determined that you will get only 30% of the value of their account receivable as full and final settlement.(Justify your recommendation. )

Accepted Answer

For the bankruptcy of a client,recognize

Question 19

Which statement is correct?

Accepted Answer

A) Lower amounts of excessive accruals results in higher earnings quality. 
B) Excessive accruals are directly observable in financial reporting. 
C) It is easy to determine the contractual incentives causing excessive accruals. 
D) Excessive accruals improve the comparability of financial reporting. 
A) Lower amounts of excessive accruals results in higher earnings quality. 
B) Excessive accruals are directly observable in financial reporting. 
C) It is easy to determine the contractual incentives causing excessive accruals. 
D) Excessive accruals improve the comparability of financial reporting.

Question 20

Determine the missing amounts in the statement of financial position provided below:

Accepted Answer

The answer of Determine the missing amounts in the statement...

General Limited's income statement reported the following for last year: Which of the following statements is correct about the income statement?

For the following types of accounting changes,identify the relevant criteria for each accounting change by selecting "yes," "no," or "N/A" (not applicable).

Which statement is not correct about expenses in the income statement?

The following entry was recorded by Hollow Inc.: What is the effect on Hollow's financial statements?

Which statement is correct?

Which of the following is an example of an error that should be corrected?

Identify whether each of the following items of operating expense is described according to its function.

Prepare a single-step income statement using the following data for Leila Inc.for the year ended December 31,2018.

The following information was provided from the records of Konstruct Inc,which began operations in the current year: What were the company's expenses for the year?

Dexter Corp.received cash for a service that is to be performed in the next accounting period.How should this transaction be accounted for?

Under the IFRS Conceptual Framework,what general information is useful for the decision making needs of lenders and investors?

IFRS requires certain line items to be presented in the statement of comprehensive income (rather than just disclosed in the notes).Identify whether the following items are required in the statement of comprehensive income.

Explain why a change in accounting policy requires the adjustment of both prior and future periods,whereas a change in estimate requires only adjustment of current and future periods.

Which statement is correct about the statement of comprehensive income?

Which statement is correct?

Determine the missing amounts in the statement of financial position provided below:

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

General Limited's income statement reported the following for last year: Which of the following statements is correct about the income statement?

For the following types of accounting changes,identify the relevant criteria for each accounting change by selecting "yes," "no," or "N/A" (not applicable).

Which statement is not correct about expenses in the income statement?

The following entry was recorded by Hollow Inc.: What is the effect on Hollow's financial statements?

Which statement is correct?

Which of the following is an example of an error that should be corrected?

Identify whether each of the following items of operating expense is described according to its function.

Prepare a single-step income statement using the following data for Leila Inc.for the year ended December 31,2018.

The following information was provided from the records of Konstruct Inc,which began operations in the current year: What were the company's expenses for the year?

Dexter Corp.received cash for a service that is to be performed in the next accounting period.How should this transaction be accounted for?

Under the IFRS Conceptual Framework,what general information is useful for the decision making needs of lenders and investors?

IFRS requires certain line items to be presented in the statement of comprehensive income (rather than just disclosed in the notes).Identify whether the following items are required in the statement of comprehensive income.

Explain why a change in accounting policy requires the adjustment of both prior and future periods,whereas a change in estimate requires only adjustment of current and future periods.

Which statement is correct about the statement of comprehensive income?

Which statement is correct?

Determine the missing amounts in the statement of financial position provided below:

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