acct 301 final wonik choi

If revenue from a single operating segment is _____% or greater, then a company must disclose the segment information, together with the information at the company level.

10

An amount is deposited for eight years at 8%. If compounding occurs quarterly, then the table value is found

2% for 32 periods.

Titans changed its Bad Debt Expense computation to 4% of annual credit sales. Previously, it had used 3% of annual sales for the computation. What is the appropriate treatment of this under U.S. GAAP?

As a change in accounting estimate

Titans wrote-off part of its inventory due to obsolescence. What is the appropriate treatment of this under U.S. GAAP?

As an unusual or infrequent gain or loss

Which of the following is a characteristic of a perpetual inventory system?

Cost of goods sold is recorded with each sale.

Which of the following is included in the normal journal entry to record the collection of accounts receivable previously written off when using the allowance method?

Debit Accounts Receivable, credit Allowance for Doubtful Accounts.

Smith Manufacturing paid rent on its manufacturing plan for the next two years and charged the entire expenditure to rent expense. Which is the basic assumption or principle that was violated?

Expense Recognition Principle

What organization is the private sector body responsible for setting accounting standards in the United States?

FASB

Peter invests $100,000 in a 3-year certificate of deposit earning 3.5% at his local bank. Which time value concept would be used to determine the maturity value of the certificate?

Future value of one.

Which of the following are methods for manipulating income?

Income statement classification and Income shifting

What is meant by "comparability" when discussing financial accounting information?

Information that is measured and reported in a similar fashion across companies or countries.

Which statement is not true about the gross profit method of inventory valuation?

It may be used to estimate inventories for annual statements.

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for

Operating activities

Which of the following methods of determining annual bad debt expense best achieves the matching between revenue and expense?

Percentage of sales

What is the primary function of financial accounting?

Provide useful information to users external to the business

Which of the following statements is true about the accrual basis of accounting?

Revenues are recognized in the period the performance obligation is satisfied, regardless of the time period the cash is received.

Which of the following statements is false regarding an assumption of inventory cost flow?

The assumption selected may be changed each accounting period.

Which of the following is true when accounts receivable are factored without recourse?

The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables

Jerry recently was offered a position with a major accounting firm. The firm offered Jerry either a signing bonus of $23,000 payable on the first day of work or a signing bonus of $26,000 payable after one year of employment. Assuming that the relevant interest rate is 10%, which option should Jerry choose?

The signing bonus of $26,000 payable after one year of employment.

Why would a company sell receivables to another company?

To accelerate access to amounts collected.

A consensus among different individuals appraising the value of a specific land describes which qualitative accounting characteristics?

Verifiability

If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

a deduction from sales in the income statement.

The following groups are typical users of financial accounting information about a company...

a.The company's existing and prospective shareholders b. Current suppliers of products and services c. The company's prospective employees

When a customer purchases merchandise inventory from a business organization, she may be given a discount which is designed to induce prompt payment. Such a discount is called a(n)

cash discount

All of the following may be included under the heading of "cash equivalent" except

certified checks

Which of the following statements is false regarding the use of LIFO when prices are rising?

ending inventory will be overstated

To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should

include markups but not markdowns.

One example of earnings management behaviors is income smoothing. The main feature of income smoothing is that:

income should not vary wildly from year to year

Lower-of-cost-or-market

is most conservative if applied to individual items of inventory.

Dolan Co. received merchandise on consignment. As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be

net income was correct and current assets and current liabilities were overstated.

Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?

prices decreased

What are the fundamental qualities in the hierarchy of qualitative characteristics of financial reporting information?

relevance and faithful representation

Bank overdrafts, if material, should be

reported as a current liability

To better analyze earnings quality, an analyst requires to:

separate company's recurring and nonrecurring earnings

The primary need for a conceptual framework in accounting is to...

to develop a coherent set of standards and more quickly solve emerging practical problems