Multiple choice questions

Which of the following documents is typically issued as part of the due process activities of the financial accounting standards board for amending the FASB accounting standards codification? A) a proposed statement of position B) a proposed accounting standards update C) hey proposed accounting research bulletin D) a proposed staff accounting bulletin

A proposed accounting standards update

The FASB amends the Accounting Standards Codification through the issuance of A) accounting standards updates B) statements of financial accounting standards C) technical Bulletins D) Staff accounting bulletins

Accounting Standards Updates

Which of the following accounts is a contra account? A) acc depr, equip B) Depr exp, office equip C) dividends D) unearned Revenue

Accumulated Depreciation-Equipment

Which one of the following items would not appear on the income statement prepared using IFRS? A) discounted operations B) Gross Profit C) depreciation and amortization D) all items would appear on the income statement when using IFRS

All items would appear on the income statement when using IFRS

The following financial ratios in calculations were based on information from Cole's company, financial statements for the current year Accounts receivable turnover divided by 10 times during the year Total assets turnover divided by two times during the year Average receivables during the year divided by $200,000 What were Cole's average total assets for the year?

$1 million 5(200,000)

Quick Ratio

(Current Assets - Inventory) / Current Liabilities

Redwoods financial statements had the following info at year end Cash 60,000$ AR 180,000$ Allow for uncollectable accts 8,000$ INV 240,000$ Short Term Marketable Securities 90,000$ Prepaid rent 18,000$ Current Liabilities 400,000$ Long term debt 220,000$ What was redwoods Quick Ratio?

.81 to 1 Because (60k+180k - 8K+90K / 400K) =.805

In the 20 x 5 a firm decided to discontinue a segment with a book value of 200, million and a fair value of 250 million the cost to dispose of the segment and 20 x 6 is estimated to be 10 million in the 20 x 5 income statement, what amount of disposal gain or loss will be reported in the discounted operations section? A) 0$ B) 50$ mill loss C) 50$ mill gain D) 40 mill gain

0$

In which of the following circumstances, if any wooden auditor be concerned as to whether or not, the price paid to choir, an asset was the fair value of an asset? 1. The asset was acquired from the acquiring firms, majority shareholder. 2. The asset was acquired in an active exchange market.

1 only

Stents corporation had total assets, $760,000 capital stock of $150,000 and retain earnings of $215,000 what was stents debt to equity ratio

1.08 760k= 150+215K Debt =395/(215+150)=1.08

The statement of changes in equity shares an increase in the common stock account of $2000 and an increase in and the additional paid-in capital account of $10,000 if the common stock has a par value of two dollars and the only transactions are affecting these accounts were the issues of common stock. What was the average issue price of the common stock during the year?

12$ 2000/2=1000 10000/1000= 10$+ par value 2$ =12$

Pine Company acquired goods for resale from its manufacturing subsidiary, Strawco, at Strawco's cost to manufacture of $12,000. Pine subsequently resold the goods to a nonaffiliate for $18,000. Which one of the following is the amount of the elimination that will be needed as a result of the intercompany inventory transaction? $-0- $6,000 $12,000 $18,000

12,000$

Which of the following statements concerning inputs used in ascertaining fair value is/are correct? 1. only observable inputs can be used 2. Inputs that incorporate the entities assumptions may be used.

2 only

The following department information was taken from Baxter's department store, financial statements Inventory on January 1 $100,000 Inventory on December 31 $300,000 Net sales $2,000,000 Net purchases $700,000 What was Baxter's inventory turnover for the year ending December 31?

2.5 Because 100k+700k-300k=500k Avg inv 100k+300k /2 =200k Turnover= 500k/200k = 2.5

The following information pertains to ash which prepares its statement of cash flows using the indirect method Interest payable to beginning of the year $15,000 Interest expense during the year $20,000 Interest payable at the end of the year $5000 What amount of interest should ask report as a supplemental disclosure of cash flow information? A) $10,000 B) $20,000 C) $30,000 D) $35,000

30,000$

The following data pertain to Cowell Inc. for the year ended in December 31, 2004 Net sales 600,000 Net income 150,000 Total assets, January 1, 2004 2,000,000 Total assets December 31, 2004 3,000,000 What was Cowles rate of return on assets for 2004?

6% 150,000/(2,000,000+3,000,000/2)=6%

A non-accelerated Filer established by the US securities and exchange commission, includes companies with less than exactly what amount in public equity float? A) 75 million B) 100 million C 125 million D) 150 million

75 million

Zest company owns 100% of Cinn Inc. on January 2 zest sold equipment with an original cost of $80,000 and a carrying amount of $48,000 to Cinn for $72,000. Zest had been depreciating the equipment over a five year. Using straight line depreciation with no residual value. Cinn is using a straight line depreciation over three years with no residual value. In Zests December 31, 1999, consolidating worksheet five what amount should depreciation expense be decreased? A) 0$ B) 8,000$ C) 16,000$ D) 24,000$

8000$

Tulip company owns 100% of daisy company outstanding common stock, tulips cost of goods sold for the year totals $600,000 and daisies cost of good sold totals $400,000 during the year to live sold inventory costing 60,000 to Daisy for $100,000 by the end of the year, all transferred to inventory was sold to third parties. What amount should be reported as cost of goods sold in the consolidated statement of income? A) 900k B) 940k C) 960k D) 1 million

900,000$

In which of the following circumstances, if any would an auditor be concerned, as to whether or not, the price paid to acquire, an asset was the fair value of an asset? 1. The asset was acquired from the inquiring firms, majority shareholder. 2. The asset was acquired in an active exchange market. A) 1 only B) 2 only C) both 1&2 D) neither 1&2

A) 1 only

Which of the following reports would a company file to meet the US securities and exchange commission's requirements for unaudited interim Financial statements, reviewed by an independent accountant? A) form 10-Q B) form 10-K C) 14A proxy Statement D) Form S-1

A) Form 10-Q

Parco sells goods to its subsidiary Subco, which intern sells the goods to Noco an unaffiliated firm which of these transactions, if any should be eliminated in the consolidating process? A) yes to Parco to Subco yes to Subco to Noco B) yes to Parco to Subco no to Subco to Noco C) No to Parco to Subco Yes to Subco to Noco D) No to Parco to Subco No to Subco to Noco

A) Yes to Parco to Subco yes to Subco to Noco

The SEC is comprised of five commissioners appointed by the president of the United States in five divisions, which one of the following divisions is responsible for overseen compliance with security acts? A) division of corporate finance B) division of enforcement C) division of trading and markets D) division of investment management

A) division of corporate finance

Under IFRS, the asset goodwill may be recognized A) when it is required by purchase B) when it is internally generated or acquired by purchase C) when it is clear, it exists, and has value D) when it has future economic benefits

A) when it is acquired by purchase

Which of the following kinds of transactions should be eliminated in the consolidating process? A) yes to Parent to subsidary, yes subsidary to parent, yes to both subsidiary's B) yes to Parent to Subsidary, yes to Subsidiary to Parent, No to both subsidiary's C) yes Parent to Subsidary, No Subsidary to parent, no to both subsidary D) No parent to subsidary, Yes subsidiary to parent, yes to both subsidiaries

A) yes to all three

For consolidated purposes, what effect will the inner company sale of a fixed asset at a profit or at a loss have a depreciation expense recognized by the buying affiliate? A) overstate at a profit , overstate at a loss B) overstate at a profit, understate at a loss C) understate at a profit, overstate at a loss D) understate at a profit, understate at a loss

B)

Even though the SEC delegates the creation of accounting standards to the private sector, the SEC frequently comments on accounting and auditing issues them in pronouncements, published by the SEC are: A) federal reporting updates (FRU) B) federal reporting releases (FRR) C) staff auditing bulletins (SAB) D) accounting principles, opinions (APO)

B) Federal reporting releases

Which one of the following is the annual report that is filed with the United States securities, and exchange commission? A) form 8-k B) form 10-k C) form S-1 D) form 10-Q

B) form 10-K

Which of the following must be disclosed in a summary of significant accounting policies

Basis of profit, recognition on long-term construction contracts

Which of the following should be disclosed in a summary of significant accounting policies? A) basis of profit recognition on long-term construction contracts B) future minimum lease payments in the aggregate in for each of the five succeeding fiscal years C) depreciation, expense D) composition of sales by segment

Basis of profit, recognition on long-term construction contracts

Under US GAAP, the disclosure requirements, when fair value of measurement is used, are differentiated by which of the following classifications? A) between assets measured at fair value in liabilities, measured at fair value B) between fair value measurements that results in Canes and fair value measurements that results in losses C) between items, measured at fair value on a recurring basis and items measured at fair value on a non-recurring basis D) between items for Rich fair value measurement is required and items for which fair value measurement is elected

Between items measured at fair value on a recurring basis and items measured at fair value on a nonrecurring basis

For affirm that Alex to measure certain of its financial assets and financial liabilities at fair value, required financial statement, disclosures are intended to facilitate which of the following comparisons? 1. Comparisons between entities that use different measurement methods for similar assets and liabilities. 2. Comparisons between assets and liabilities of a single entity that uses different measurement methods for similar to assets and liabilities. A) neither 1 nor 2 B) 1 only C) 2 only D) both 1&2

Both 1&2

How are amendments incorporated into FASB accounting standards Codification? A) by issuing an exposure draft B) by releasing in accounting standards update C) by producing a discussion paper D) By publishing, a statement of financial accounting standards

By releasing an accounting standards update

Which of the following statements about the differences between US GAAP and IFRS in determining whether or not to consolidate an entity is/are correct? 1. IFRS guidelines, for determining the eligibility of an entity to be consolidated are more principles-based than are US GAAP guidelines. 2. In assessing an investor level of ownership of an investor, you both US GAAP in IFRS consider outstanding securities that are exercisable or convertible into voting shares. 3. Under both US, GAAP and I FR us there are circumstances under which immaturity ounce subsidiary does not have to be consolidated A) 1 only B) 1 and 2 only C) 1 & 3 only D) 1 2 and 3

C) 1&3

Which of the following statements if any concerning I FRS for SM is is/are correct? 1. IFRS for SME is this based on accrual basis accounting 2. generally IFRS for SME is maybe used as an alternative to using OCBOA A) 1 only B) 2 only C) both one and two D) neither one

C) Both 1&2

The treasury stock method of entering stock options into the calculation of diluted EPS; A) is used only for dilutive treasury stock B) competes the increase in common shares, outstanding from assumed exercise of options to be the number of shares under option C) it's called the treasury stock method because the proceeds from assumed exercise are assumed to be used to purchase treasury stock. D) assumes the treasury shares are purchased at year end

C) it's called treasury stock method bc the proceeds from assumed to be used to purchase treasury stock

The FASB has maintained that A) the interest of the reporting firms will be primary consideration when developing GAAP B) GAAP should be neutral and not favor any particular reporting objective C) new GAAP should be neutral and not favor any particular reporting objective D) GAAP should result in the most conservative, possible financial statements

C) new GAAP should be neutral and not favor any particular reporting objective

Wood company dividends on non-cumulative preferred stock have been declared, but not paid. Wood has not declared or paid dividends on cumulative preferred stock in the current or the prior year and has reported a net loss in the current year. For the purpose of computer, basic earnings per share how would the income available to common stockholders be calculated? A) the current year dividends, and the dividends in arrears on the cumulative preferred stock should be added to the net loss, but the dividends on the non-cumulative, preferred stock should not be included in the calculation B) the dividends on the non-cumulative preferred stock should be added to the net loss, but the current year dividends, and the dividends and arrears on the cumulative preferred stock should not be included in the calculation. C) the dividends on the non-cumulative, preferred stock and current year dividends on the cumulative preferred stock should be added to the net loss D) neither the dividends on the noncumulative preferred stock, nor the current year did evidence, and the dividends in arrears on the cumulative preferred stock should be included in the calculation.

C. The dividends on the non-cumulative preferred stock in the current year dividends on the cumulative, preferred stock should be added to the net loss

Which of the following items is included in the financing activities section of the statement of cash flows? A) cash affects of transactions involving making and collecting loans B) cash effects of acquiring and disposing of investment property, plant and equipment C) cash effects of transactions, obtaining resources from owners, and providing them with a return on their investment D) cash, affects of transactions that enter into the determination of net income

Cash affects of transactions, obtaining resources from owners, and providing them with a return on their investment

Which one of the following is not a required disclosure in annual financial reports for an entity that uses fair value measurement? A) the level of the fair value hierarchy, within which fair value measurements fall B) evaluation techniques used to measure fair value C) combine disclosures about fair value measurements required by all pronouncements D) a discussion of any change from the Pryor. And valuation techniques used to measure fair value.

Combined disclosures about fair value measurements required by all pronouncements

Neely co disclosed in the notes to its financial statements that a significant number of its unsecured trade account receivables was with companies that operate in the same industry. This disclosure is required to inform financial statement users of the existence of A) concentration of credit risk B) concentration of market risk C) risk of measurement uncertainty D) off balance sheet risk of accounting loss

Concentration of credit risk

IFRS, requires a classified statement of financial position what are required classifications? A) cash trade receivables and payables property plant and equipment, long-term assets and liabilities and other assets and liabilities B) cash, trade receivables and payables property, plant and equipment, and other assets and liabilities C) current, long-term, and other assets and liabilities D) current and noncurrent assets and liabilities

Current and non-current assets and liabilities.

You are securities and exchange commission regulations for the financial statement, presentation and disclosure requirements of SEC filing could be found in A) regulation S-B B) regulation S-K C) regulation S-T D) regulation S-X

D

Which of the following legal forms of business combination will result in the need to prepare consolidated financial statements? 1) merger 2) acquisition 3) Consolidation A) yes to all 3 B) yes to 1&2, no to 3 C) no to 1&2, yes to 3 D) no to 1&3, yes to 2

D)

U.S. GAAP includes a very large set of accounting guidance. Choose the correct statement. A) the FASB accounting standards codification includes guidance about items that are not under the purview of the generally excepted accounting principles such as the income tax basis of accounting B) authoritative guidance from the FASB accounting standards codification does not appear in the codification C) there is an implied hierarchy within the FASB accounting standards, codification with statements, assuming the top level D) international accounting standards are not included in the FASB, accounting standards, codification

D) International accounting standards are not included in the FASB Accounting Standards Codification.

Parker has the following three subsidiaries: Finco, Serco, and Eurco. Finco is a 100% owned finance subsidary. Serco is an 80% owned service company. Euro o is a 100% owned foreign subsidiary that conducts operations west Europe. Which one of the following is the most likely number of entities including Parco to be included in Parcos consolidated financial statements? A) one B) two C) three D) four

D) four

On January 1 prism Inc. acquired all of the outstanding common shares of scarp Inc. for cash, equal to the book value of the stock, the carrying amount of scarps, assets and liabilities approximated their fair values, except the carrying amount of its building, was more than fair value in preparing premiums, 20 by one consolidated income statement, which of the following adjustments would be made? A) depreciation expense would be decreased and Goodwill would be recognized B) depreciation expense would be increased in Goodwill would be recognized C) depreciation expense would be decreased, and no goodwill would be recognized D) depreciation expense would be increased and no Goodwill would be recognized

Depreciation expense would be decreased, and goodwill would be recognized

On March 21 year to accompany with calendar year and issued it's your one financial statements on February 28 either to the companies only manufacturing plant was severely damaged by a storm. It had to be shut down total property losses for 10 million and determined to be material the amount of business disruption losses is unknown. How should the impact of the storm be reflected in the companies here, one financial statements? A) provide no information related to the storm losses in the financial statements until losses in expenses become fully known B) accrue in disclose the property loss with no accrual or disclosure of the business disruption loss C) Do not accrue the property loss or the business disruption loss, but disclose them in the notes to the financial statements D) accruing disclose the property loss, an additional business disruption losses in the financial statements

Do not accrue the property loss or the business disruption loss, but disclose them in the notes to the financial statements

Which of the following is not a source of risk and uncertainty for which disclosures are required by GAAP A) effect of changes in government regulations B) nature of a firms operations C) use of estimates and financial statements D) vulnerability to significant concentrations

Effect of changes in government regulations

When a parent, subsidiary relationship exist, consolidated financial statements are prepared in recognition of the financial accounting concept of? A) Reliability B) materiality C) legal entity D) economic entity

Economic entity

Which one of the following is not a purpose of the fair value framework as set forth an ASC 820 fair value measurement? A) provide a uniform, definition of fair value for GAAP purposes B) provide a framework for determining fair value for GAAP purposes C) establish new measurements requirements for financial D) establish expander disclosures that fair value when it is used

Establish new measurement requirements for financial instruments

Which of the following statements is correct regarding fair value measurement? A) fair value is a market based measurement B) fair value is an entity specific measurement C) fair value measurement does not consider risk D) fair value measurement does not consider restrictions

Fair value is a market based measurement

What group currently writes the generally excepted accounting principles? A internal revenue service B securities, and exchange commission C financial accounting foundation D financial accounting standards board

Financial accounting standards board

Which one of the following is a characteristic of accounting under IFRS for SME's A) interest incurred during construction must be capitalized B) earnings per share must be provided in the financial statements C) goodwill must be amortized D) the LIFO cost flow assumption can be used in valuing inventories

Goodwill must be amortized

For the purpose of consolidating financial interest, a majority voting interest is deemed to be A) 50% of the directly or indirectly owned outstanding vote shares of another entity B) 50% of the directly or indirectly and outstanding voting shares, and at least 50% of the directly or indirectly and outstanding nonvoting shares of another entity C) greater than 50% of the directly or indirectly and outstanding voting shares of another D) greater than 50% of the directly or indirectly and outstanding voting shares, and at least 50% of the directly or indirectly own outstanding nonvoting shares of another entity

Greater than 50% of the directly or indirectly owned, outstanding voting shares of another

In a multi step income statement A) total expenses or subtracted from total revenues B) gross profit margin is shown as a separate item C) cost of sales, an operating expense, or subtracted from total revenues D) other income is added to revenue from sales

Gross profit is shown as a separate item

Reporting accounts receivable at net realizable value as a departure from the accounting principle of: A) conservatism B) fair value C) market value D) historical cost

Historical cost

Under what conditions is disclosure about risk and uncertainty pertaining to concentrations required? A) if the firm has any of the concentrations for which disclosures are required by GAAP B) if events affecting the firm negatively have already occurred with respect to a concentration C) if the firm is vulnerable, to sever impact in the near term because of the concentration, and it is at least reasonably possible that the impact will occur D) if the board of directors is taking a direct action, saying severing to reduce risk and uncertainty within a given concentration

If the firm is vulnerable to a severe impact in the near term because of a concentration, and it is at least reasonably possible that the impact will occur

How should the amortization of a bond discount on a long-term debt be reported, and a statement of cash flows prepared using the indirect method A) as a financing activities, inflow B) as a financing activities outflow C) in operating activities as a deduction from income D) in operating activities as an addition to income

In operating activities as an addition to income

According to the IASBA framework, the financial statement element that is defined as increases an economic benefits during the accounting. In the form of inflows, or enhancements of assets or decreases of liabilities, that results in increases of equity, other than those relating to contributions from equity, participants is? A) Revenue B) income C) profits D) Gains

Income

Gloria Inc acquires an asset for which it will measure the fair value by discounting future cash flows of the asset, which of the following terms best describes the fair value measurement approach? A) market B) income C) cost D) observable inputs

Income

Each of the following would be considered a level two observable and put that could be used to determine an asset or liability, is fair value, except A) quoted price is for identical, assets and liabilities and markets that are not active B) quoted prices for similar assets and liabilities and markets that are active C) internally generated, cash flow projections for a related asset or liability D) interest rates that are observable at commonly quoted intervals

Internally generated, cash flow projections for a related asset or liability

A subsidiary acquired for cash in a business combination, owned inventories with a market value, different from the book value as of the date of combination, a consolidated balance sheet prepared immediately after the acquisition would include this difference as part of; A deferred credits B goodwill C inventories D retained earnings

Inventories

The purpose of financial accounting, a superfine, primarily for which of the following groups, government, Internal Revenue Service, financial accounting, standards, board, or investors and creditors?

Investors and creditors

Under IFRS apparently exclude a subsidiary from consolidation, if all of the following conditions exist, except: A. It is holy or partially owned, and it's other owners do not object non-consolidation. B. It reports only one class of stock in its balance sheet. C. It's parents prepares consolidated financial statements that comply with IFRS. D. It does not have any debt or equity instruments publicly

It reports only one class of stock in its balance sheet

On January 15, 2008, Abel made a significant investment in the debt securities of Baker which intends to hold until the debt matures Ables fiscal year end is December 31 if Abel intends to measure and report its investment and baker debt securities at fair value as permitted by a SC 820 on which of the following dates must Abel Elect to implement the fair value option? A) Jan 15th 2008 B) Jan 31st 2008 C) March 31st, 2008 D) December 31, 2007

Jan 15 2008

Which of the following assumptions means that money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis? A) Growing concern B)periodicity C) monetary unit D) economic entity

Monetary unit

If the account forgets to record salary, expense in the statement of income, what is the result? A) net income is too high B) net income is too low C) retained earnings is too low D) retained earnings is correctly stated as the omission only affects the income statement

Net income is too high

A 70% owned subsidiary company declares and pays a cash dividend. What effect does the dividends have on the retained earnings in noncontrolling interest? Equity reported on the consolidated balance sheet? A) no effect on either retained earnings or noncontrolling interest B) no affect on retained earnings, and a decrease in noncontrolling interest C) decrease in both retained earnings and noncontrolling interest D) a decrease in retain earnings, and no effect on noncontrolling interest

No effect on retained earnings and a decrease in noncontrolling interest

Under which of the following methods of caring a subsidiary on its books, if any, will the carrying value of the investment, normally change following a combination? A) yes to the cost method, yes to the equity method B) yes to the cost method no to the equity method C) no to the cost method, yes to the equity method D) no to the cost method and equity method

No to cost method Yes to Equity method

Which one of the following will occur on consolidated financial statements of an inner company inventory transaction is not eliminated? A) an understatement of sales B) an overstatement of sales C) an understatement of purchases D) an overstatement of accounts receivable

Over statement of sales

Reporting inventory at the lower of cost or market is a departure from the accounting principle of A) historical cost B) consistency C) conservatism D) full disclosure

historical cost

When a parent company uses the cost method on its books to carry its investment and a subsidiary, which one of the following will be recorded by the parent on its books? A) parent share of the subsidiaries net income/net loss B) parents amortization of goodwill, resulting from access investment cost over fair value of subsidiaries net assets C) parent share of subsidiaries cash dividends declared D) parents, depreciation of access investment cost over book values of subsidiaries net assets

Parents share of subsidiaries cash dividends declared

Which of the following is not an aspect of a firms, operations, necessitating disclosure of risks and uncertainties? A) principal markets B) products and services C) pension plan D) geographical location

Pension plan

The FASB is a? A) Private sector body B) Governmental unit C) International organization D) Group of accounting firms

Private sector body that stands for Financial Accounting standards board

Which of the following is not a required components of the 10K filing? A) product market share B) description of the business C) market price of common stock D) executive compensation

Product market share

If everything else is held, constant earnings, per-share is increased by; A) purchase of treasury stock B) issuance of new shares of common stock C) payment of a cash dividends to common stockholders D) payment of a cash dividends to both preferred and common stockholders

Purchase of treasury stock

According to the IAASB framework, the process of reporting an item in the financial statements of an entity is A) Recognition B) statement of financial position C) disclosure D) presentation

Recognition

The statement of changes an equity A) is one of the required financial statements under US GAAP B) includes accounts, such as the retained earnings and common share accounts, but not other comprehensive income items C) is only if a corporation frequently issues common shares D) reconciles all of the beginning and ending balance is in the equity accounts

Reconciles, all of the beginning and ending balance is in the equity accounts

Which of the following is a fundamental qualitative, characteristic of useful financial information, including IASB framework? A) comparability B) Timeliness C) Relevance D) understandability

Relevance

Which of the following must be included in the notes to the financial statements in the companies summary of significant accounting policies? A) description of current year equity transactions B) summary of long-term debt outstanding C) schedule of fixed assets D) revenue, recognition policies

Revenue, recognition policies

When referring to the IFRS which of the following are not included? A) IAS's B) SEC C) IFRIC's D) IFRS Interpretations

SEC

Which of the following sets of financial statements generally cannot be prepared directly from the adjusted trial balance? A) income statement, balance sheet statement of cash flows B) income statement, statement of cash, flows C) statement of cash flows D) balance sheet, and statement of cash flows

Statement of cash flows

A public entity sells steel for used in construction one of its customers accounts for 43% of sales in another customer accounts for 40% of sales. What should the entity disclose and its annual financial statements about these two customers? A) the payment terms of accounts receivable to you from each of the two customers B) the amount of the entities revenue from each of the two customers C) the names of the two customers D) the financial condition of the two customers

The amount of the entities revenue from each of the two customers

Which of the following statements includes the most useful guidance for practicing accountants concerning the FASB, accounting standards, codification A) the codification includes only FASB statements B) the codification is the sole source of US GAAP, for non governmental entities C) the codification significantly modified the content of GAAP when it became effective D) an accountant can be sure that all SEC rules are included in codification

The codification is the sole source of US GAAP for non governmental entities

In reference to the house accounting standards the term negative economic consequences includes? A) the cost of complying with GAAP B) the inability to raise capital C) the cost of government intervention, when not in compliance with GAAP D) the failure of internal controls systems

The inability to raise capital

When should an item that meets the definition of an element be recognized? A) the item has a cost of value that can be measured easily B) it is highly unlikely that any future economic benefit associated with the item will flow to the entity C) both A&B D) neither A or B

The item has a cost or value that can be measured reliably.

If the parent uses the cost method to account for his investment in a subsidiary, the parent will recognize A) the parent share of the subsidiaries net income B) the parents share of the subsidiaries Dividends C) amortization of parents access cost of investment over the book value of the subsidiary D) the parent share of the subsidiaries net loss

The parents share of subsidiary dividends

Which of the following will best protect investors against fraud financial reporting by corporations? A) criminal statutes B) the requirement that financial statements be audited C) the fact that all firms must report the same way D) the integrity of management

The requirement that financial statements be audited

In which one of the following cases is the subsidiary most likely to be reported as an unconsolidated subsidiary A) the subsidiary is an industry unrelated to the parent B) the subsidiary has a fiscal year ends that is one month different from parents year end C) the subsidiary is in legal bankruptcy D) the subsidiary has a controlling interest in another entity

The subsidiary is in legal bankruptcy

What is the primary objective of financial reporting? A) to provide economic information that is comprehensive to all users B) to provide management with an Acura evaluation of their financial performance C) to provide forecast for future cash flows in financial performance D) to provide information that is useful for economic decision making

To provide information that is useful for economic decision making.

Which of the following is a level three input to valuation techniques used to measure the fair value of an asset? A) quoted price is in active markets for identical assets B) quoted prices for similar assets in active markets C) unobservable inputs for the asset Inputs other than quoted prices that are observable for the asset

Unobservable inputs for the asset

Walmart was sued in 2016 of 20 x 8 for breach of contract based on the advice of counsel. Walmart recognized a 2 million estimated lawsuit and liability at December 31. The lawsuit was settled in February 20 x 9 in the amount of 2.2 million before Walmarts 20 x 8 financial statements were available to be issued. What is the appropriate accounting procedure for the 20 x 8 statements? A) Walmart recognizes $.2 million of lawsuit loss and it's 20 x 9 statements B) Walmart recognizes the entire $2.2 million loss and it's 20 x 8 statements C) Walmart reports that the $.2 million amount as a retrospect adjustment to his 20 x 8 statements D) Walmart recognizes the entire $2.2 million loss and it's 20 x 9 statements

Walmart recognizes that the entire 2.2 million loss in its 20 x 8 statements.

Which one of the following is not a characteristic of intercompany bonds? A) intercompany bonds may occur on the date of a business combination or subsequent a business combination B) when bones become intercompany, it is as though the bonds have been retired for consolidated purposes C) intercompany bonds can result in the recognition of a gain or loss for consolidating purposes D) when bonds become intercompany, they are written off the books of the issuing affiliate in the investing affiliate

When bonds become intercompany, they are written off of the books of the issuing affiliate and the investing affiliate.

Which one of the following would be of concern in preparing consolidated financial statements at the end of operating. Following a business combination, that would not be a concern in preparing financial statements, immediately following a combination? A) whether or not, there are intercompany accounts, receivables/accounts payable B) whether or not Goodwill resulted from the business combination C) whether the parent carries its investment in the subsidiary, using the cost method or the equity method D) whether or not, there is a non-controlling interest in the subsidiary

Whether the parent carries its investment in the subsidiary, using the cost method or the equity method

The preparation of consolidated statements will likely require the following information about the subsidiaries assets and liabilities at the date of acquisition, book value, fair value A) yes to book value, no to fair value B) no to book value, yes to fair value C) yes to book and fair value D) no to book value and no to fair value

Yes to book and fair value

Following a business combination accomplished through a legal acquisition, transactions between the affiliated entities can originate with the/a: A) yes to parent company and subsidary company B) yes to parent company no to subsidiary company C) no, it's a parent company. Yes to subsidiary company. D) no to the parent company no to the subsidiary company

Yes to subsidiary and parent company

According to the IASB framework for the preparation and presentation of financial statements the qualitative characteristic of faithful representation includes A) timeliness, predictive value, and feedback value B) neutrality completeness in freeform error C) predictive value confirmatory value and materiality D) comparability, and consistency

neutrality, completeness, free from error

Within the context of the qualitative characteristics of accounting information, which of the following is a fundamental qualitative characteristic? A) Relevance B) Timeliness C) Comparability D) Confirmatory Value

relevance

Debt to Equity Ratio Formula

total liabilities/total equity