Question 1

Which financial statement provides information about the transactions in a company's financing, investing, and operating cycle?

Accepted Answer

A) Statement of Comprehensive Income 
B) Statement of Financial Position 
C) Statement of Cash Flows 
D) Statement of Changes in Changes in Equity 
A) Statement of Comprehensive Income 
B) Statement of Financial Position 
C) Statement of Cash Flows 
D) Statement of Changes in Changes in Equity C

Question 2

What is the effect of overstating 2012 depreciation expense?

Accepted Answer

A) Accumulated depreciation will be understated for 2012. 
B) Net income for 2012 will be overstated. 
C) Ending retained earnings for 2012 will be understated. 
D) Ending retained earnings for 2012 will be overstated. 
A) Accumulated depreciation will be understated for 2012. 
B) Net income for 2012 will be overstated. 
C) Ending retained earnings for 2012 will be understated. 
D) Ending retained earnings for 2012 will be overstated. C

Question 3

Which of the following would result in an overstatement in reported net income?

Accepted Answer

A) Failure to record $45,000 collection of accounts receivable. 
B) Expensing rather than capitalizing the $12,500 cost of a capital asset. 
C) Failure to record an accrued revenue of $24,000. 
D) Failure to record an accrued expense of $18,000. 
A) Failure to record $45,000 collection of accounts receivable. 
B) Expensing rather than capitalizing the $12,500 cost of a capital asset. 
C) Failure to record an accrued revenue of $24,000. 
D) Failure to record an accrued expense of $18,000. D

Question 4

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 5

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

Accepted Answer

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

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

In North America, the balance sheet

Accepted Answer

A) should separate current and non-current elements. 
B) should be prepared on the liquidity basis. 
C) should show non-current assets before current assets. 
D) should show other comprehensive income. 
A) should separate current and non-current elements. 
B) should be prepared on the liquidity basis. 
C) should show non-current assets before current assets. 
D) should show other comprehensive income.

Question 8

Using the data provided below, determine whether the income statement will be formatted by "function of expense" or by "nature of expense." Briefly explain your response.

Accepted Answer

The income statement will be formatted b

Question 9

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 10

What is meant by the phrase "true and fair view" of financial reporting?

Accepted Answer

A) The financial statements provide a true representation of the company's economic conditions and performance. 
B) The financial statements provide an unbiased representation of the company's economic conditions and performance. 
C) The financial statements provide a fair representation of the company's economic conditions and performance. 
D) The financial statements provide an accurate representation of the company's economic conditions and performance. 
A) The financial statements provide a true representation of the company's economic conditions and performance. 
B) The financial statements provide an unbiased representation of the company's economic conditions and performance. 
C) The financial statements provide a fair representation of the company's economic conditions and performance. 
D) The financial statements provide an accurate representation of the company's economic conditions and performance.

Question 11

Which of the following is an example of a change in accounting estimate?

Accepted Answer

A) Switching from straight-line to the declining balance method of depreciation. 
B) Using 3% for the allowance for bad debts, instead of 1% as stated in the company's procedures manual. 
C) Using 5% for the allowance for bad debts because of the increased possibility of bankruptcy by customers. 
D) Changing from weighted average to the first-in, first-out method of inventory valuation. 
A) Switching from straight-line to the declining balance method of depreciation. 
B) Using 3% for the allowance for bad debts, instead of 1% as stated in the company's procedures manual. 
C) Using 5% for the allowance for bad debts because of the increased possibility of bankruptcy by customers. 
D) Changing from weighted average to the first-in, first-out method of inventory valuation.

Question 12

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2013. A machine was purchased on January 1, 2011, at a cost of $150,000. The machine has an estimated useful life of 10 years and a residual value of $9,000. Assume that net income before tax NIBT)was $102,000 for fiscal 2012. What is the appropriate accounting for fiscal 2012?

Accepted Answer

A) Retrospective adjustment and revised NIBT of $87,900. 
B) Retrospective adjustment and revised NIBT of $126,000. 
C) Retrospective adjustment and revised NIBT of $111,900. 
D) No accounting is necessary in fiscal 2012. 
A) Retrospective adjustment and revised NIBT of $87,900. 
B) Retrospective adjustment and revised NIBT of $126,000. 
C) Retrospective adjustment and revised NIBT of $111,900. 
D) No accounting is necessary in fiscal 2012.

Question 13

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 14

Using the data provided below, determine what amounts will appear on the income statement that is prepared by "nature of expenses."
   Note 1 - Distribution costs include $13,000 of employee wages and $10,000 of depreciation.
Note 2 - Cost of goods sold includes $10,000 for depreciation; the remaining amount relates to the net change in inventory and purchases during the year.
Note 3 - General and administrative expenses include $20,000 of employee wages and $5,000 of depreciation.

Accepted Answer

Instead of Distribution, Cost of Goods S

Question 15

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2013. A machine was purchased on January 1, 2011 at a cost of $150,000. The machine has an estimated useful life of 10 years and a residual value of $9,000. What should have been booked as depreciation expense in fiscal 2012?

Accepted Answer

A) $9,900 
B) $14,100 
C) $24,000 
D) $30,000 
A) $9,900 
B) $14,100 
C) $24,000 
D) $30,000

Question 16

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 17

A company's cash flows are $3,600. Based on economic conditions during the year, the company booked allowances of $1,500. As a result of contractual incentives, the company booked a further $700 in accruals. What is the total reported earnings of the company?

Accepted Answer

A) $1,400 
B) $2,200 
C) $3,600 
D) $5,800 
A) $1,400 
B) $2,200 
C) $3,600 
D) $5,800

Question 18

Winder Corporation had total shareholders' equity of $665,000 at the beginning of the year and $773,000 at the end of the year. Shareholders invested an additional $75,000 during the year. Also during the year, cash dividends of $20,000 were declared and paid. Calculate the net income or loss for the year.

Accepted Answer

A) $33,000 
B) $53,000 
C) $108,000 
D) $128,000 
A) $33,000 
B) $53,000 
C) $108,000 
D) $128,000

Question 19

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2013. A machine was purchased on January 1, 2011, 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 2013. 
B) Retrospective adjustment for fiscal 2011 and 2012. 
C) Prospective adjustment from fiscal 2012 going forward. 
D) Error correction for fiscal 2013. 
A) Retrospective adjustment for fiscal 2013. 
B) Retrospective adjustment for fiscal 2011 and 2012. 
C) Prospective adjustment from fiscal 2012 going forward. 
D) Error correction for fiscal 2013.

Question 20

Handy Corp. retired bonds payable with a carrying value of $980,000. What effect does this transaction have on total assets and shareholders' equity?

Accepted Answer

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

Which financial statement provides information about the transactions in a company's financing, investing, and operating cycle?

What is the effect of overstating 2012 depreciation expense?

Which of the following would result in an overstatement in reported net income?

Which statement is not correct?

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

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

In North America, the balance sheet

Using the data provided below, determine whether the income statement will be formatted by "function of expense" or by "nature of expense." Briefly explain your response.

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

What is meant by the phrase "true and fair view" of financial reporting?

Which of the following is an example of a change in accounting estimate?

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

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.

A company's cash flows are $3,600. Based on economic conditions during the year, the company booked allowances of $1,500. As a result of contractual incentives, the company booked a further $700 in accruals. What is the total reported earnings of the company?

Handy Corp. retired bonds payable with a carrying value of $980,000. What effect does this transaction have on total assets and shareholders' equity?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Revenue 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

Which financial statement provides information about the transactions in a company's financing, investing, and operating cycle?

What is the effect of overstating 2012 depreciation expense?

Which of the following would result in an overstatement in reported net income?

Which statement is not correct?

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

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

In North America, the balance sheet

Using the data provided below, determine whether the income statement will be formatted by "function of expense" or by "nature of expense." Briefly explain your response.

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

What is meant by the phrase "true and fair view" of financial reporting?

Which of the following is an example of a change in accounting estimate?

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

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.

A company's cash flows are $3,600. Based on economic conditions during the year, the company booked allowances of $1,500. As a result of contractual incentives, the company booked a further $700 in accruals. What is the total reported earnings of the company?

Handy Corp. retired bonds payable with a carrying value of $980,000. What effect does this transaction have on total assets and shareholders' equity?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Revenue 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