Inter. Acct. 2

which of the following causes a temporary difference between taxable and pretax accounting income

MACRS used for depreciating equipment

when stock is issued in exchange for property the best evidence of fair value might be any of the following except the

average book value of outstanding stock

the valuation allowance account that is used in conjunction with deferred tax assets is an

contra asset

Which of the following is not a collection for a third party

customer deposits

at times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent

liabilities until the product or service is provided

Which of the following investment securities held by Zoogle Incorporated are not reported at fair value in its balance sheet?

Debt securities held-to-maturity

the pension expense includes periodic changes that occur in the

PBO and the plan assets

When stock is issued in exchange for property, the best evidence of fair value might be any of the following except the

average book value of outstanding stock

The income statement reports changes in fair value for which type of investment securities?

Trading securities

When cash is received from customers in the form of a refundable deposit, the cash account is increased with a corresponding increase in

a current liability

Which of the following is not a current liability

a note payable due in two years

Of the following, which typically would not be classified as a current liability?

a six-month bank loan to be paid with the proceeds from the sale of common stock

basic earnings per share ignores

all potential common shares

compensation associated with restricted stock under a stock award plan is

allocated to expense over the service period which usually is the vesting period

the compensation associated with restricted stock under a stock award plan is

allocated to expense over the service period which usually is the vesting period

sources of shareholders equity include each of the following except

amounts borrowed from financial institutions

Which of the following is the best definition of a current liability

an obligation expected to be satisfied with current assets or by the creation of other current liabilities

preferred stock is called preferred because it usually has two preferences. these preferences relate to

assets at liquidation and dividends

amortizing prior service cost for pension plans will

decrease retained earnings

the amortization of a net gain has what effect on pension expense

decreases it

interest expense is the

effective interest rate times the amount of the debt outstanding during the interest period

the interest rate that determines the amount of interest expense each interest date is referred to as the

effective rate

regardless of the form of share based compensation the accounting objective is to record compensation expense as the

fair value of the compensation expensed over the vesting period

Investments in debt securities available-for-sale are reported at

fair value on the reporting date

all other things equal, what is the effect on earnings per share when a corporation acquires shares of its own stock on the open market

increase

Short term obligations can be reported as long term liabilities if the firm

intends to and has the ability to refinance as long term

the balance of the plan assets can change due to

investment returns, employer contributions, and the payment of benefits

a stock split results in an

larger number of less valuable shares

GAAP regarding fair value accounting for investments in equity securities will generally apply to an investment when the percentage of ownership of another company is

less than 20%

nonconvertible bonds affect the calculation of

none of these answer choices are correct

the valuation allowance account that is used in conjunction with deferred taxes relates

only to deferred tax assets

from the perspective of the lessor, two possible lease classifications are

operating or sales-type

two of the three primary account classification within shareholders equity are

paid in capital and retained earnings

two of the three primary account classifications within shareholders equity are

paid in capital and retained earnings

Bonds usually sell at their

present value

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

probable and the amount of the loss can be reasonably estimated

straight-line amortization of bond discount or premium

provides the same total amount of interest over the life of the bond issue as does the effective interest method

which of the following results in increasing basic earnings per share

purchasing treasury stock

payment of retirement benefits

reduces the PBO

treasury shares are most often reported as an

reduction of total shareholders equity

All investments in debt securities that don't fit the definitions of the other reporting categories are classified as

securities available-for-sale

the three components of pension expense that are present most often are

service cost, interest cost, and expected return on plan assets

the interest rate that determines the amount of cash interest paid each interest date is referred to as the

stated rate

which of the following will require a recalculation of weighted average shares outstanding for all years presented

stock dividend and stock splits

which of the following will require a recalculation of weighted-average shares outstanding for all years presented

stock dividends and stock splits

which of the following does not give rise to a permanent difference

subscriptions collected in advance

interest cost will increase

the PBO and increase pension expense

the five criteria provided in GAAP for distinguishing a finance lease from an operating lease do not include which of the following?

the collectability of the lease payments must be reasonably predictable

Which of the following situations would not require that long term liabilities be reported as current liabilities on a classified balance sheet?

the company intended to refinance the debt and did so prior to issuance of the financial statements

Which of the following is a contingency that should be accrued?

the company offers a two year warranty and the expenses can be reasonably estimated

When the equity method of accounting for investments is used by the investor, the investment account is increased when

the investee reports net income for the year

service cost with regard to pension plans increases

the projected benefit obligation and increases pension expense

pension gains related to plan assets occur when

the return on plan assets is higher than expected

The most common type of liability is one:

to be paid in cash and for which the amount and timing are known

basic earnings per share is computed using

weighted average common shares outstanding for the year

basic earnings per share is computed using

weighted-average common shares outstanding for the year

Volt Electronics sell equipment that includes a three-year warranty. Repairs under the warranty are performed by an independent service company under contract with Volt. Based on prior experience, warranty costs are estimated to be $25 per item sold. Volt should recognize these warranty costs

when the equipment is sold