Exam 11: Quality of Earnings, corporate Governance, and Ifrs

Tastee Bakery just bought a new delivery truck,which the bakery plans to use for four or five years before replacing it.If the company calculates straight-line depreciation using an estimated useful life of four years,this accounting choice would be considered ________.

What effect will purchasing treasury stock have on earnings per share? Is it ethical for management to repurchase the company's own shares?

Describe how IFRS differ from U.S.GAAP in accounting for impairments of long-term assets.

GB Company had a very bad year in 2011.The controller knew that the company already had a significant loss for the year,so he put the paperwork in his bottom drawer for some of the shipments made in the last two weeks of 2011.As a result,$100,000 of sales were not recorded and the customers weren't billed until 2012.The controller is ________.

RH Company shipped goods to a customer on December 31,2011 that the customer had not ordered.RH Company recorded a credit sale of $75,000.What is the effect of recording this sale on RH Company's 2011 financial statements?

Rent-a-Wreck leases cars and offers low prices to its customers because it requires the customers to pay a full year's rent at the time of signing the lease.Rent a Wreck records the revenue at the time the customer signs the lease.Rent-a-Wreck's accounting choice would be considered ________.

Using a larger salvage value when calculating depreciation expense for long-term assets ________.

Recognizing revenue that belongs in future accounting periods is the type of manipulation where management maximizes its earnings to meet analysts' expectations.

Which of the following may indicate a company is manipulating earnings by creating a cookie jar reserve?

How can you tell if a company is taking big bath charges this year?

Which of the following is a new requirement imposed by the SOX Act?

For the past twenty years,Bijou Company has had a policy of expensing all assets that cost less than $50,even if they are expected to last for more than a year,because it is simpler and easier than depreciating low-cost assets over their useful lives.This year,Bijou bought a new computerized accounting system and decided to depreciate all assets over their useful lives,even low-cost assets like wastebaskets and pencil sharpeners.This accounting choice would be considered ________.

Analyst's emphasis on earnings ________.

U.S.GAAP differs from IFRS in that U.S.GAAP ________.

Microsoft sells its corporate customers large computer systems that include a three-year service contract.Microsoft promises that for three years it will update the systems whenever the customers need modifications and that it will also provide extensive customer support.Microsoft has chosen to recognize all revenue for these systems over the three-year life of the service contracts rather than when the systems are installed.Microsoft's accounting choice would be considered ________.

Out of Africa,a multi-national corporation,was having a very bad year.Management decided to record all shipments made to customers in the first two weeks of the next year as sales in the current year.Management is ________.

Lower than usual expenses may indicate a company is manipulating earnings using big bath charges.

W Company just bought ten new cars for its salespeople to use.The company expects to use these cars for two or three years and then replace them.If W Company calculates straight-line depreciation using an estimated useful life of two years,this accounting choice would be considered ________.

What problems may exist because of Wall Street's over-emphasis on earnings per share?