Question 1

All of the following are typically recognized as accounting liabilities except:

Accepted Answer

A)  Obligations with Fixed Payment Dates and Amounts 
B)  Obligations under Mutually Unexecuted Contracts 
C)  Obligations Arising from Advances from Customers on Unexecuted Contracts and Agreements 
D)  Obligations with Fixed Payment Amounts but Estimated Payment Dates 
A)  Obligations with Fixed Payment Dates and Amounts 
B)  Obligations under Mutually Unexecuted Contracts 
C)  Obligations Arising from Advances from Customers on Unexecuted Contracts and Agreements 
D)  Obligations with Fixed Payment Amounts but Estimated Payment Dates

Question 2

Income or loss from discontinued operations would best be regarded by an analyst as:

Accepted Answer

A)  sustainable earnings. 
B)  impairments. 
C)  transitory earnings. 
D)  permanent earnings. 
A)  sustainable earnings. 
B)  impairments. 
C)  transitory earnings. 
D)  permanent earnings.

Question 3

Accounting information should provide a fair and complete representation about a number of a firm's characteristics.Which of the following is not one of those characteristics?

Accepted Answer

A)  risk 
B)  position 
C)  performance 
D)  conservatism 
A)  risk 
B)  position 
C)  performance 
D)  conservatism

Question 4

Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:

Accepted Answer

A)  using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings. 
B)  conservatism. 
C)  comparability. 
D)  materiality. 
A)  using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings. 
B)  conservatism. 
C)  comparability. 
D)  materiality.

Question 5

Creighton Corp. ,a textile manufacturer,reported net income of $258,000 in 2012.During 2012 Creighton reported a gain of $29,800 from the sale of three used delivery trucks.The gain was included as part of income from continuing operations.Assuming that the gain is a one-time event and that Creighton has an effective tax rate of 35% calculate Creighton's adjusted net income.Show all of your calculations for credit.
In addition,discuss why analysts might make an adjustment of this type.

Accepted Answer

@#IMG-DLM& The analyst may decide to adjust income

Question 6

When evaluating the quality of accounting information the user should consider the ____________________ of the measurements made.

Accepted Answer

The answer of When evaluating the quality of accounting information...

Question 7

When evaluating the quality of accounting information the user should consider the ____________________ of the firm's disclosures.

Accepted Answer

The answer of When evaluating the quality of accounting information...

Question 8

Which of the following is not considered a motive to manage earnings?

Accepted Answer

A)  To create optimal manager compensation payments 
B)  To create optimal job security for senior management 
C)  To create optimal measures of assets and liabilities for balance sheet purposes 
D)  To manage reported earnings in order to reduce industry-specific actions 
A)  To create optimal manager compensation payments 
B)  To create optimal job security for senior management 
C)  To create optimal measures of assets and liabilities for balance sheet purposes 
D)  To manage reported earnings in order to reduce industry-specific actions

Question 9

During July 2013,Ralston Company decides to dispose of one of its subsidiaries,which qualifies for accounting as a discontinued operation.At the July 2013 measurement date,Ralston Company estimates that it will report net income of $300,0000 dollars from the measurement date until the disposal date,which is expected to be in April 2014.In addition,Ralston estimates that it will lose 100,000 on the sale of the segment.How much gain or loss on discontinued operations will Ralston report in its 2012 income statement (net of income taxes)?

Accepted Answer

A)  $200,000 gain 
B)  $0 
C)  $100,000 loss 
D)  $300,000 loss 
A)  $200,000 gain 
B)  $0 
C)  $100,000 loss 
D)  $300,000 loss

Question 10

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Accepted Answer

reasonable

Question 11

Users of financial statements should consider which of the following when evaluating the quality of accounting information?

Accepted Answer

A)  Economic faithfulness of accounting measurements and classifications. 
B)  Reliability of the measurements. 
C)  Reasonableness of the estimates made in applying GAAP or IFRS. 
D)  All of these should be considered. 
A)  Economic faithfulness of accounting measurements and classifications. 
B)  Reliability of the measurements. 
C)  Reasonableness of the estimates made in applying GAAP or IFRS. 
D)  All of these should be considered.

Question 12

Firms' choices and estimates within U.S.GAAP or IFRS should be determined by all of the following except:

Accepted Answer

A)  firms' underlying economic circumstances. 
B)  conditions in the company's industry. 
C)  the company's competitive strategy. 
D)  accelerated management efforts to meet earnings projections. 
A)  firms' underlying economic circumstances. 
B)  conditions in the company's industry. 
C)  the company's competitive strategy. 
D)  accelerated management efforts to meet earnings projections.

Question 13

Many times a financial analyst may decide to make adjustments to the financial statements in order to make the statements more useful.Which of the following would not require an adjustment to the financial statement?

Accepted Answer

A)  A company signs a new contract with a customer. 
B)  A delivery company incurs a loss from disposition of used delivery trucks. 
C)  A company changes the useful life of its equipment from 5 years to 8 years. 
D)  A company incurs a charge related restructuring its operations. 
A)  A company signs a new contract with a customer. 
B)  A delivery company incurs a loss from disposition of used delivery trucks. 
C)  A company changes the useful life of its equipment from 5 years to 8 years. 
D)  A company incurs a charge related restructuring its operations.

Question 14

The _________________________ is the date on which a firm commits itself to a formal plan to dispose of a business segment.

Accepted Answer

The answer of The _________________________ is the date on which...

Question 15

All of the following are the general principles underlying the valuation of liabilities except:

Accepted Answer

A)  Liabilities requiring future cash payments appear at the present value of the required future cash flows discounted at an interest rate that reflects the uncertainty that the firm will be able to make the cash payments. 
B)  The fair value of a liability cannot differ from the amount appearing on the balance sheet,particularly for long-term debt. 
C)  Liabilities representing cash advances from customers appear at the amount of the cash advance. 
D)  Liabilities requiring the future delivery of goods or services appear at the estimated cost of those goods and services. 
A)  Liabilities requiring future cash payments appear at the present value of the required future cash flows discounted at an interest rate that reflects the uncertainty that the firm will be able to make the cash payments. 
B)  The fair value of a liability cannot differ from the amount appearing on the balance sheet,particularly for long-term debt. 
C)  Liabilities representing cash advances from customers appear at the amount of the cash advance. 
D)  Liabilities requiring the future delivery of goods or services appear at the estimated cost of those goods and services.

Question 16

U.S.GAAP requires that changes in estimates be accounted for by recognizing the effect ________________________________________ period(s).

Accepted Answer

over curre

Question 17

Many users of financial statements believe that the quality of accounting information for intangible assets is low because firms seldom report intangible asset resources on the balance sheet.However,from the perspective of accounting quality what are arguments in favor of expensing most intangibles and not recording them on the balance sheet?

Accepted Answer

The answer of Many users of financial statements believe that...

Question 18

Gains and losses differ from revenues and expenses in that they are produced by ____________________ activities.

Accepted Answer

The answer of Gains and losses differ from revenues and...

Question 19

Which of the following does not describe an extraordinary gain or loss?

Accepted Answer

A)  infrequent in occurrence 
B)  peripheral to the company's core business 
C)  unusual in nature 
D)  material in amount 
A)  infrequent in occurrence 
B)  peripheral to the company's core business 
C)  unusual in nature 
D)  material in amount

Question 20

All of the following are typically recognized as accounting liabilities except:

Accepted Answer

A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable 
A)  Bonds Payable 
B)  Rental Fees Received in Advance 
C)  Loan Guarantees 
D)  Taxes Payable

All of the following are typically recognized as accounting liabilities except:

Income or loss from discontinued operations would best be regarded by an analyst as:

Accounting information should provide a fair and complete representation about a number of a firm's characteristics.Which of the following is not one of those characteristics?

Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:

When evaluating the quality of accounting information the user should consider the ____________________ of the measurements made.

When evaluating the quality of accounting information the user should consider the ____________________ of the firm's disclosures.

Which of the following is not considered a motive to manage earnings?

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Users of financial statements should consider which of the following when evaluating the quality of accounting information?

Firms' choices and estimates within U.S.GAAP or IFRS should be determined by all of the following except:

Many times a financial analyst may decide to make adjustments to the financial statements in order to make the statements more useful.Which of the following would not require an adjustment to the financial statement?

The _________________________ is the date on which a firm commits itself to a formal plan to dispose of a business segment.

All of the following are the general principles underlying the valuation of liabilities except:

U.S.GAAP requires that changes in estimates be accounted for by recognizing the effect ________________________________________ period(s).

Gains and losses differ from revenues and expenses in that they are produced by ____________________ activities.

Which of the following does not describe an extraordinary gain or loss?

All of the following are typically recognized as accounting liabilities except:

Overview of Financial Reporting,financial Statement Analysis,and Valuation

Asset and Liability Valuation and Income Recognition

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

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Exam 6: Accounting Quality

All of the following are typically recognized as accounting liabilities except:

Income or loss from discontinued operations would best be regarded by an analyst as:

Accounting information should provide a fair and complete representation about a number of a firm's characteristics.Which of the following is not one of those characteristics?

Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:

When evaluating the quality of accounting information the user should consider the ____________________ of the measurements made.

When evaluating the quality of accounting information the user should consider the ____________________ of the firm's disclosures.

Which of the following is not considered a motive to manage earnings?

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Users of financial statements should consider which of the following when evaluating the quality of accounting information?

Firms' choices and estimates within U.S.GAAP or IFRS should be determined by all of the following except:

Many times a financial analyst may decide to make adjustments to the financial statements in order to make the statements more useful.Which of the following would not require an adjustment to the financial statement?

The _________________________ is the date on which a firm commits itself to a formal plan to dispose of a business segment.

All of the following are the general principles underlying the valuation of liabilities except:

U.S.GAAP requires that changes in estimates be accounted for by recognizing the effect ________________________________________ period(s).

Gains and losses differ from revenues and expenses in that they are produced by ____________________ activities.

Which of the following does not describe an extraordinary gain or loss?

All of the following are typically recognized as accounting liabilities except:

Overview of Financial Reporting,financial Statement Analysis,and Valuation

Asset and Liability Valuation and Income Recognition

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters