Chapter 4 Pre- and Post- Test

____ is the net cash (selling price less selling costs) that the firm would receive if it sold the asset today, in orderly fashion in an arm's-length transaction. It is an example of an exit value, b/c it reflects a price that the firm would receive in a transaction in which an asset leaves the firm a. Net Realizable Value b. Present Value of Future Net Cash Flows c. Current Replacement Cost d. Acquisition cost e. Fair Value

a. Net Realizable Value

_____ arise from relatively infrequent transactions, and there can be no assurance that they will recur in any future period a. gains/losses b. revs c. exps d. assets e. liabilities

a. gains/losses

The sum of NI and other comprehensive income is: a. Comprehensive NI b. Comprehensive Income c. Comprehensive RE d. NI after comprehensive income items e. none of these choices are correct

b. comprehensive income

The firm recognizes an expense when the following condition(s) hold(s): a. the consumption of the asset results from a transaction that leads to the recognition of revenue b. the consumption of the asset results from the passage of time c. the expenditures on advertising must be recognized as expense in the period of expenditure d. the expenditures on research must be recognized as expense in the period of expenditure e. all of these choices support recognition of an expense

e. all of these choices support recognition of an expense

Both US GAAP and IFRS require the presentation of an IS and the presentation of the items of Other Comprehensive Income. US GAAP permits the following reporting format(s) except for: a. a single statement of comprehensive income that shows all the changes in net assets except from transactions with owners b. a two-statement presentation that includes an IS and a separate statement of comprehensive income c. a separate display of the items comprising Other Comprehensive Income within a statement of changes in SE d. a separate display of the items comprising Other Comprehensive Income within a statement of RE e. all of these choices are acceptable reporting formats

d. a separate display of the items comprising Other Comprehensive Income within a statement of RE

Both US GAAP and IFRS specify the asset measurement basis for financial reporting and ____ is the initial measurement attribute for most assets a. net realizable value b. PV of Future Net Cash Flows c. current replacement cost d. acquisition cost e. fair value

d. acquisition cost

What criteria most sales transactions meet in order for the seller to recognize revs before collecting cash? a. the revs must be earned (the firm must have achieved substantial performance) b. the amount to be received must qualify as an asset (there must be a future economic benefit and the amount must be measured with sufficient reliability) c. the firm must have a reasonable expectation that it will collect the amount owed from the customer d. all of these choices must be met e. none of these choices must be met

d. all of these choices must be met

All of the following are considered to be external users of financial statements except: a. lenders b. regulators c. tax authorities d. the BOD e. the shareholders

d. the BOD

IFRS defines _____ as a current exchange value, which can mean either a current entry price a current exit price a. net realizable value b. PV of Future Net Cash Flows c. current replacement cost d. acquisition cost e. Fair value

e. Fair Value

The _____ of an asset as defined in US GAAP is an opportunity cost in the sense that it reflects an amount that the firm could receive if it sold the asset today. It is the amount the firm forgoes by not selling the asset. In US GAAP, in reflects a market participant perspective, so that the intentions of managers regarding how they plan to use the asset do not determine the measurement a. Net Realizable Value b. PV of Future Net Cash Flows c. Current Replacement Cost d. acquisition cost e. Fair Value

e. Fair Value

Which of the following is not a business activity? a. est goals and strategies b. obtaining financing c. making investments d. conducting operations e. all of these choices are business activities

e. all of these choices are business activities

The managers of a business prepare financial statements to present meaningful information about that business's activities to external users. Who are the external users? a. owners b. lenders c. regulators d. tax authorities e. all of these choices are correct

e. all of these choices are correct

Revenue recognition is among the most complex issues in financial reporting. The quantity and complexity of the authoritative guidance for recognizing revenues result from a. misreporting of revs b. reporting revs before the firm earns them c. reporting nonexistent revs d. firms bundling products and services and selling them in multiple-element arrangements e. all of these choices are true

e. all of these choices are true

All of the following are operating activities expect: a. purchasing raw materials b. human resources management c. overseeing the distribution of products d. creating new processes or services e. financing company operations through bonds

e. financing company operations through bonds