Question 1

In which of the following is the option described not a performance obligation?

Accepted Answer

A) Customers accumulate points for every dollar spent at Madeline's Book Store.The points can be redeemed for books once certain levels are met. 
B) Customers can get 5% cash back for every $100 spent on eco-friendly products. 
C) Customers can "buy two,get one free" at a menswear store. 
D) Upon purchase of any name-brand TV,customers can purchase a 5-year extended warranty at a 25% discount. 
A) Customers accumulate points for every dollar spent at Madeline's Book Store.The points can be redeemed for books once certain levels are met. 
B) Customers can get 5% cash back for every $100 spent on eco-friendly products. 
C) Customers can "buy two,get one free" at a menswear store. 
D) Upon purchase of any name-brand TV,customers can purchase a 5-year extended warranty at a 25% discount.

Question 2

Assume that Steffi signed a $50,000 installment note when she signed the franchise agreement.RS has no experience estimating uncollectible accounts associated with these sorts of notes.RS can recognize:

Accepted Answer

A) $50,000 of revenue when Steffi signs the agreement. 
B) $50,000 of revenue as soon as it has assisted Steffi in setting up the store. 
C) Revenue under the installment sales method,starting when Steffi signs the agreement. 
D) Revenue under the installment sales method,as soon as it has assisted Steffi in setting up the store. 
A) $50,000 of revenue when Steffi signs the agreement. 
B) $50,000 of revenue as soon as it has assisted Steffi in setting up the store. 
C) Revenue under the installment sales method,starting when Steffi signs the agreement. 
D) Revenue under the installment sales method,as soon as it has assisted Steffi in setting up the store.

Question 3

In its 2015 year-end balance sheet,Reliable would report installment receivables (net)of:

Accepted Answer

A) $20,000. 
B) $35,000. 
C) $25,909. 
D) $10,000. 
A) $20,000. 
B) $35,000. 
C) $25,909. 
D) $10,000.

Question 4

Return on shareholders' equity is increased if a firm can maintain its return on assets but increase its leverage.

Accepted Answer

A) True 
 B)False

Question 5

The decomposition of return on assets illustrates why some companies with low profit margins can be very profitable if their asset turnover is high.

Accepted Answer

A) True 
 B)False

Question 6

Gunk Goblin sells vacuums and just launched a policy where customers have the right to return a vacuum during a three-year period following purchase.Gunk management has no experience under this sort of policy and does not believe it can accurately estimate returns.What is the longest period of time that Gunk may have to wait before recognizing revenue associated with one of these sales?

Accepted Answer

A) No time delay,recognize revenue upon delivery. 
B) Gunk should recognize revenue as cash is received. 
C) Gunk should defer revenue recognition until costs are recovered. 
D) Three years,after the right of return has expired. 
A) No time delay,recognize revenue upon delivery. 
B) Gunk should recognize revenue as cash is received. 
C) Gunk should defer revenue recognition until costs are recovered. 
D) Three years,after the right of return has expired.

Question 7

Hulkster's 2016 return on shareholders' equity is (rounded):

Accepted Answer

A) 17.1%. 
B) 14.0%. 
C) 12.6%. 
D) 7.1%. 
A) 17.1%. 
B) 14.0%. 
C) 12.6%. 
D) 7.1%.

Question 8

The cost recovery method of accounting for long-term construction contracts under IFRS is sometimes referred to as the:

Accepted Answer

A) "Sales-neutral approach." 
B) "Completed contract method." 
C) "Multi-step approach." 
D) "Zero profit method." 
A) "Sales-neutral approach." 
B) "Completed contract method." 
C) "Multi-step approach." 
D) "Zero profit method."

Question 9

Which of the following does not apply to a seller who is a principal?

Accepted Answer

A) Has control over goods or services 
B) Primarily responsible for providing goods or services to customer 
C) Exposed to risks associated with holding inventory 
D) Primary performance obligation is to facilitate the transfer of goods or services 
A) Has control over goods or services 
B) Primarily responsible for providing goods or services to customer 
C) Exposed to risks associated with holding inventory 
D) Primary performance obligation is to facilitate the transfer of goods or services

Question 10

Other competing sellers in the same region charge an average of $250 for a set of goggles and $750 for the lessons,if sold separately.Beaumont Company usually sells at a 5% discount compared to other shops,since it is a bit farther away from the ocean.Required: What would be Beaumont's stand-alone selling price of the goggles and the lessons,based on adjusted market assessment approach?

Accepted Answer

Under the adjusted market assessment app

Question 11

Hulkster's 2016 average collection period is:

Accepted Answer

A) 73 days. 
B) 104 days. 
C) 109 days. 
D) 128 days. 
A) 73 days. 
B) 104 days. 
C) 109 days. 
D) 128 days.

Question 12

In 2016,Reliable would recognize gross profit of:

Accepted Answer

A) $0. 
B) $ 6,000. 
C) $ 5,000. 
D) $10,000. 
A) $0. 
B) $ 6,000. 
C) $ 5,000. 
D) $10,000.

Question 13

When a contract includes variable consideration,the probability-weighted amount must be used when there are different probabilities of occurrence.

Accepted Answer

A) True 
 B)False

Question 14

Rothbart Manufacturing agrees to manufacture bumper cars for 12 Banners Amusement Parks.Under the terms of the contract,12 Banners will pay Rothbart a total of $60,000,and 12 Banners can cancel the contract if it so chooses but must pay Rothbart for work completed.Rothbart believes that,if 12 Banners cancelled the contract,Rothbart could sell the bumper cars to another amusement park and still make a profit.The manufacturing contract is expected to last six months,and as of December 31,2016,the job is 80% complete.How much revenue should Rothbart recognize in 2016 for this contract?

Accepted Answer

A) $0 
B) $12,000 
C) $48,000 
D) $60,000 
A) $0 
B) $12,000 
C) $48,000 
D) $60,000

Question 15

Assume Emmet estimates variable consideration as the expected value.How much revenue should Emmet recognize on this contract in 2016?

Accepted Answer

A) $25,000 
B) $26,125 
C) $28,750 
D) $50,000 
A) $25,000 
B) $26,125 
C) $28,750 
D) $50,000

Question 16

Companies recognize revenue only when

Accepted Answer

A) A contract is reasonably likely to exist 
B) A performance obligation is designated in a written contract 
C) A written contract is in place and payment is variable 
D) Control over goods or services has been transferred from the seller to the customer 
A) A contract is reasonably likely to exist 
B) A performance obligation is designated in a written contract 
C) A written contract is in place and payment is variable 
D) Control over goods or services has been transferred from the seller to the customer

Question 17

Use the following to answer questions
Missoula Inc.reported the following selected financial statement data:
  
-Required: Compute the asset turnover ratio for 2016.

Accepted Answer

$400,000 /

Question 18

Are the following separate performance obligations: prepayments,quality-assurance warranty,extended warranty,right of return? For each,indicate yes or no,and explain.

Accepted Answer

o Prepayment:No,not a separate performan

Question 19

Prepare Veras' March 31 journal entry to record the revenue earned from March 1 - March 31,as well as any appropriate adjustments to the revenue already presumed recorded as earned from January 1 - February 28.

Accepted Answer

In March,Veras' earns monthly service re

Question 20

Recognition of franchise fee revenue is dependent on judgments of both substantial performance and expected collection of fees.

Accepted Answer

A) True 
 B)False

In which of the following is the option described not a performance obligation?

Assume that Steffi signed a $50,000 installment note when she signed the franchise agreement.RS has no experience estimating uncollectible accounts associated with these sorts of notes.RS can recognize:

In its 2015 year-end balance sheet,Reliable would report installment receivables (net)of:

Return on shareholders' equity is increased if a firm can maintain its return on assets but increase its leverage.

The decomposition of return on assets illustrates why some companies with low profit margins can be very profitable if their asset turnover is high.

Hulkster's 2016 return on shareholders' equity is (rounded):

The cost recovery method of accounting for long-term construction contracts under IFRS is sometimes referred to as the:

Which of the following does not apply to a seller who is a principal?

Hulkster's 2016 average collection period is:

In 2016,Reliable would recognize gross profit of:

When a contract includes variable consideration,the probability-weighted amount must be used when there are different probabilities of occurrence.

Assume Emmet estimates variable consideration as the expected value.How much revenue should Emmet recognize on this contract in 2016?

Companies recognize revenue only when

Use the following to answer questions Missoula Inc.reported the following selected financial statement data: -Required: Compute the asset turnover ratio for 2016.

Are the following separate performance obligations: prepayments,quality-assurance warranty,extended warranty,right of return? For each,indicate yes or no,and explain.

Prepare Veras' March 31 journal entry to record the revenue earned from March 1 - March 31,as well as any appropriate adjustments to the revenue already presumed recorded as earned from January 1 - February 28.

Recognition of franchise fee revenue is dependent on judgments of both substantial performance and expected collection of fees.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters

Exam 5: Income Measurement

In which of the following is the option described not a performance obligation?

Assume that Steffi signed a $50,000 installment note when she signed the franchise agreement.RS has no experience estimating uncollectible accounts associated with these sorts of notes.RS can recognize:

In its 2015 year-end balance sheet,Reliable would report installment receivables (net)of:

Return on shareholders' equity is increased if a firm can maintain its return on assets but increase its leverage.

The decomposition of return on assets illustrates why some companies with low profit margins can be very profitable if their asset turnover is high.

Hulkster's 2016 return on shareholders' equity is (rounded):

The cost recovery method of accounting for long-term construction contracts under IFRS is sometimes referred to as the:

Which of the following does not apply to a seller who is a principal?

Hulkster's 2016 average collection period is:

In 2016,Reliable would recognize gross profit of:

When a contract includes variable consideration,the probability-weighted amount must be used when there are different probabilities of occurrence.

Assume Emmet estimates variable consideration as the expected value.How much revenue should Emmet recognize on this contract in 2016?

Companies recognize revenue only when

Use the following to answer questions Missoula Inc.reported the following selected financial statement data: -Required: Compute the asset turnover ratio for 2016.

Are the following separate performance obligations: prepayments,quality-assurance warranty,extended warranty,right of return? For each,indicate yes or no,and explain.

Prepare Veras' March 31 journal entry to record the revenue earned from March 1 - March 31,as well as any appropriate adjustments to the revenue already presumed recorded as earned from January 1 - February 28.

Recognition of franchise fee revenue is dependent on judgments of both substantial performance and expected collection of fees.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters