Question 1

Which of the following will not cause the percent earned on operating property of a utility to fall?

Accepted Answer

A) Sale of a fully depreciated asset at a loss 
B) Building a new plant 
C) Increase in operating expenses 
D) Decrease in borrowing and interest expense 
E) Decrease in revenue

Question 2

A characteristic common to banks,utilities,and transportation is that they:

Accepted Answer

A) are all government owned. 
B) are not subject to the rules of the FASB. 
C) are monopolies. 
D) each have a uniform system of accounts established by a federal regulatory agency. 
E) never go bankrupt.

Question 3

A profitable utility will maintain a high operating ratio.

Accepted Answer

A) True 
 B)False

Question 4

The passenger load factor measures the percent that a carrier is filled,based on capacity.

Accepted Answer

A) True 
 B)False

Question 5

Uniformity of accounting for interstate electric companies is prescribed by the Interstate Commerce Commission.

Accepted Answer

A) True 
 B)False

Question 6

A basic issue,still unresolved,relates to whether oil and gas exploration cost should be expensed or capitalized.

Accepted Answer

A) True 
 B)False

Question 7

The regulated utility is building into the cost base an amount for an assumed rate of return on equity funds by increasing the balance sheet account (Construction Work in Progress)for an assumed rate of return on equity funds.

Accepted Answer

A) True 
 B)False

Question 8

Equity capital to total assets for a bank is a measure of leverage.

Accepted Answer

A) True 
 B)False

Question 9

For a regulated utility,the first item listed under liabilities and equity is capitalization.

Accepted Answer

A) True 
 B)False

Question 10

Total deposits times capital is:

Accepted Answer

A) a type of interest coverage ratio. 
B) a profit measure. 
C) a type of debt to equity ratio. 
D) similar to net working capital. 
E) a type of asset to liability ratio.

Question 11

Under the full-cost approach to oil and gas accounting:

Accepted Answer

A) costs related to successful efforts are expensed and others capitalized. 
B) cost related to successful efforts are capitalized and others expensed. 
C) all costs are expensed as incurred. 
D) all costs are capitalized as incurred. 
E) only the cost of buildings and equipment are capitalized.

Question 12

There are basically four types of insurance organizations.Which of the following is not one of these four types?

Accepted Answer

A) Group 
B) Stock companies 
C) Mutual companies 
D) Fraternal benefit societies 
E) Assessment companies

Question 13

Accounting for regulated utilities,banks,and transportation firms is similar in that:

Accepted Answer

A) all are monopolies. 
B) all report property,plant,and equipment first on the balance sheet. 
C) all are controlled by the Interstate Commerce Commission. 
D) all carry heavy inventory. 
E) all utilize some form of uniform accounting system.

Question 14

Generally accepted accounting principles for insurance companies developed much sooner than statutory accounting practices.

Accepted Answer

A) True 
 B)False

Question 15

The manner of recognizing revenue on insurance contracts is unique for the insurance industry.In general,the duration of the contract governs the revenue recognition.

Accepted Answer

A) True 
 B)False

Question 16

In order for ratio analysis to be meaningful for a bank holding company,a large portion of the services should be bank-related.

Accepted Answer

A) True 
 B)False

Question 17

Interest margin is the spread between interest income and net income for a bank.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following organizations does not require that banks report to it?

Accepted Answer

A) Internal Revenue Service 
B) Federal Reserve System 
C) Comptroller of the Currency 
D) Federal Deposit Insurance Corporation 
E) Interstate Commerce Commission

Question 19

For a bank,loans are not earning assets.

Accepted Answer

A) True 
 B)False

Question 20

Large oil and gas companies tend to select a variation of the full-cost method to account for exploration and production costs.

Accepted Answer

A) True 
 B)False

Exam 12: Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Which of the following will not cause the percent earned on operating property of a utility to fall?

A characteristic common to banks,utilities,and transportation is that they:

A profitable utility will maintain a high operating ratio.

The passenger load factor measures the percent that a carrier is filled,based on capacity.

Uniformity of accounting for interstate electric companies is prescribed by the Interstate Commerce Commission.

A basic issue,still unresolved,relates to whether oil and gas exploration cost should be expensed or capitalized.

The regulated utility is building into the cost base an amount for an assumed rate of return on equity funds by increasing the balance sheet account (Construction Work in Progress)for an assumed rate of return on equity funds.

Equity capital to total assets for a bank is a measure of leverage.

For a regulated utility,the first item listed under liabilities and equity is capitalization.

Total deposits times capital is:

Under the full-cost approach to oil and gas accounting:

There are basically four types of insurance organizations.Which of the following is not one of these four types?

Accounting for regulated utilities,banks,and transportation firms is similar in that:

Generally accepted accounting principles for insurance companies developed much sooner than statutory accounting practices.

The manner of recognizing revenue on insurance contracts is unique for the insurance industry.In general,the duration of the contract governs the revenue recognition.

In order for ratio analysis to be meaningful for a bank holding company,a large portion of the services should be bank-related.

Interest margin is the spread between interest income and net income for a bank.

Which of the following organizations does not require that banks report to it?

For a bank,loans are not earning assets.

Large oil and gas companies tend to select a variation of the full-cost method to account for exploration and production costs.