Question 1

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Accepted Answer

A) long-term investments. 
B) cash. 
C) marketable securities. 
D) intangibles. 
E) inventory of near-cash items. 
A) long-term investments. 
B) cash. 
C) marketable securities. 
D) intangibles. 
E) inventory of near-cash items.

Question 2

An item of equipment acquired on January 1,at a cost of $100,000,has an estimated use of 50,000 hours.During the first three years,the equipment was used 11,000,8,000,and 7,000 hours,respectively.The equipment has an estimated life of five years and an estimated salvage of $10,000.Required:
Determine the depreciation for each of the three years,using the straight-line method,the double declining-balance method,the sum-of-the-years'-digits method,and the units-of-production method.

Accepted Answer

Straight-Line: @#IMG-DLM&_TB2094_00 
Eac

Question 3

Subsequent events are those that occur after the balance sheet date,but before the statements are issued.

Accepted Answer

A) True 
 B)False

Question 4

Warranty obligations are estimated in order to recognize the obligation at the balance sheet date and to charge the expense to the period of the sale.

Accepted Answer

A) True 
 B)False

Question 5

Match each account to the proper account description;not all letters will be used.
-Common Stock

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 6

Which of the following is not a proper use of notes?

Accepted Answer

A) To describe the nature and effect of a change in accounting principle,such as from FIFO to LIFO. 
B) To indicate the basis for asset valuation. 
C) To indicate the method of depreciation. 
D) To correct an improper financial statement presentation. 
E) To describe a firm's debt. 
A) To describe the nature and effect of a change in accounting principle,such as from FIFO to LIFO. 
B) To indicate the basis for asset valuation. 
C) To indicate the method of depreciation. 
D) To correct an improper financial statement presentation. 
E) To describe a firm's debt.

Question 7

When the bond market interest rate is 6% and the bond contractual interest rate is 8%,the bond will sell at a premium.

Accepted Answer

A) True 
 B)False

Question 8

Match each account to the proper account description;not all letters will be used.
-Noncontrolling Interest

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 9

A quasi-reorganization is an accounting procedure equivalent to an accounting fresh start.

Accepted Answer

A) True 
 B)False

Question 10

Match each account to the proper account description;not all letters will be used.
-Accounts Receivable

Accepted Answer

A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price. 
A) Stocks and bonds of other companies held for the purpose of exercising control. 
B) An accumulation of the sum of the expense since the beginning of the benefit period. 
C) Outside ownership in the equity of consolidated subsidiaries. 
D) Machinery and tools,valued at historical cost. 
E) Monies due because expenses,such as salaries,are incurred in a different period than when the cash outlay occurs.
F)The most liquid of assets,it may also include savings accounts.
G)Goods on hand.
H)A potential liability created by differing tax and reporting methods.
I)Ownership and debt instruments readily converted to cash.
J)An expenditure made in advance of the use of the service or good.
K)Monies due from customers arising from sale or service rendered.
L)The capital stock of residual owners.
M)Bonds that can be exchanged for stock at the option of the holder.
N)Undistributed earnings of the corporation.
O)Shares of the firm's own stock that have been repurchased.
P)Monies due for goods bought for use or resale.
Q)Excess over legal par paid at time of sale.
R)Nondepreciable real estate.
S)Collections in advance of service.
T)Securities that give the holder the right to buy additional shares of common stock at a fixed price.

Question 11

The most popular depreciation method for financial reporting is the following:

Accepted Answer

A) units-of-production. 
B) sum-of-the-years'-digits. 
C) declining-balance. 
D) straight-line. 
E) other. 
A) units-of-production. 
B) sum-of-the-years'-digits. 
C) declining-balance. 
D) straight-line. 
E) other.

Question 12

Tangible assets on the balance sheet should include:

Accepted Answer

A) equipment. 
B) inventory. 
C) trademarks. 
D) investments. 
E) accrued insurance. 
A) equipment. 
B) inventory. 
C) trademarks. 
D) investments. 
E) accrued insurance.

Question 13

The financial statements of legally separate entities may be issued to show the financial position and income as they would appear if the companies were one legal entity.Such statements reflect a legal,rather than an economic,concept of the entity.

Accepted Answer

A) True 
 B)False

Question 14

Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

Accepted Answer

A) True 
 B)False

Question 15

Current assets are listed on the balance sheet in order of liquidity.

Accepted Answer

A) True 
 B)False

Question 16

The Internal Revenue Code penalizes borrowing for an ESOP.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not be considered a subsequent event to financial statements?

Accepted Answer

A) A major customer declares bankruptcy subsequent to the balance sheet date,but prior to issuing the statements.This event was not considered on the balance sheet date. 
B) A major purchase of a subsidiary to the balance sheet date,but prior to issuing the statements. 
C) Substantial debt incurred subsequent to the balance sheet date,but prior to issuing the statements. 
D) Substantial stock issued subsequent to the balance sheet date,but prior to issuing the statements. 
E) Hiring of employees for a new store,subsequent to the balance sheet date,but prior to issuing the statements. 
A) A major customer declares bankruptcy subsequent to the balance sheet date,but prior to issuing the statements.This event was not considered on the balance sheet date. 
B) A major purchase of a subsidiary to the balance sheet date,but prior to issuing the statements. 
C) Substantial debt incurred subsequent to the balance sheet date,but prior to issuing the statements. 
D) Substantial stock issued subsequent to the balance sheet date,but prior to issuing the statements. 
E) Hiring of employees for a new store,subsequent to the balance sheet date,but prior to issuing the statements.

Question 18

The balance sheet is presented with the assets equal to liabilities plus equity.When this presentation is presented side by side,it is called the account form.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would not appear on a conventional balance sheet?

Accepted Answer

A) Income taxes payable 
B) Funds from operations 
C) Cash surrender value of life insurance 
D) Appropriation for contingencies (restriction of retained earnings) 
E) Patents 
A) Income taxes payable 
B) Funds from operations 
C) Cash surrender value of life insurance 
D) Appropriation for contingencies (restriction of retained earnings) 
E) Patents

Question 20

Noncontrolling interest reflects the ownership of noncontrolling shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

Accepted Answer

A) True 
 B)False

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Subsequent events are those that occur after the balance sheet date,but before the statements are issued.

Warranty obligations are estimated in order to recognize the obligation at the balance sheet date and to charge the expense to the period of the sale.

Match each account to the proper account description;not all letters will be used. -Common Stock

Which of the following is not a proper use of notes?

When the bond market interest rate is 6% and the bond contractual interest rate is 8%,the bond will sell at a premium.

Match each account to the proper account description;not all letters will be used. -Noncontrolling Interest

A quasi-reorganization is an accounting procedure equivalent to an accounting fresh start.

Match each account to the proper account description;not all letters will be used. -Accounts Receivable

The most popular depreciation method for financial reporting is the following:

Tangible assets on the balance sheet should include:

The financial statements of legally separate entities may be issued to show the financial position and income as they would appear if the companies were one legal entity.Such statements reflect a legal,rather than an economic,concept of the entity.

Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

Current assets are listed on the balance sheet in order of liquidity.

The Internal Revenue Code penalizes borrowing for an ESOP.

Which of the following would not be considered a subsequent event to financial statements?

The balance sheet is presented with the assets equal to liabilities plus equity.When this presentation is presented side by side,it is called the account form.

Which of the following would not appear on a conventional balance sheet?

Noncontrolling interest reflects the ownership of noncontrolling shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 3: Balance Sheet

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Subsequent events are those that occur after the balance sheet date,but before the statements are issued.

Warranty obligations are estimated in order to recognize the obligation at the balance sheet date and to charge the expense to the period of the sale.

Match each account to the proper account description;not all letters will be used. -Common Stock

Which of the following is not a proper use of notes?

When the bond market interest rate is 6% and the bond contractual interest rate is 8%,the bond will sell at a premium.

Match each account to the proper account description;not all letters will be used. -Noncontrolling Interest

A quasi-reorganization is an accounting procedure equivalent to an accounting fresh start.

Match each account to the proper account description;not all letters will be used. -Accounts Receivable

The most popular depreciation method for financial reporting is the following:

Tangible assets on the balance sheet should include:

The financial statements of legally separate entities may be issued to show the financial position and income as they would appear if the companies were one legal entity.Such statements reflect a legal,rather than an economic,concept of the entity.

Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

Current assets are listed on the balance sheet in order of liquidity.

The Internal Revenue Code penalizes borrowing for an ESOP.

Which of the following would not be considered a subsequent event to financial statements?

The balance sheet is presented with the assets equal to liabilities plus equity.When this presentation is presented side by side,it is called the account form.

Which of the following would not appear on a conventional balance sheet?

Noncontrolling interest reflects the ownership of noncontrolling shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters