A310 Chapter 4

Which of the following is not a characteristic that an economic resource must have in order to be classified as an asset? -Acquired as a result of a past transaction -Future economic benefit -Under the control of the business entity -A transaction which will occur within the next 3 business days

A transaction which will occur within the next 3 business days

Noncurrent assets include all of the following except: -property, plant, and equipment. -investments -accounts receivable -intangibles

Accounts receivable

All of the following must be disclosed for related party transactions except: -nature of the relationship involved. -description and dollar amounts of the transactions. -any amounts due to or from related parties on the balance sheet date. -All of these choices must be disclosed.

All of these choices must be disclosed.

The accounting equation represents the financial position of the company. One of the purposes of the balance sheet is to show that the accounting equation is in balance. What is the accounting equation?

Assets = Liabilities + Shareholders Equity

Which FASB Statement of Financial Accounting Concept defines investments by owners and distributions to owners?

Concept 6

Total shareholders' equity falls into one of the following categories except: -controlling interests. -contributed capital accounts. -earned capital accounts. -noncontrolling interests.

Controlling interests

IFRS require that companies classify assets on the balance sheet as either

Current or concurrent

Assume an asset is measured by the amount of cash (or its equivalent) into which it is expected to be converted in an orderly transaction between market participants on the date of measurement. Which measurement alternative is in use in this case?

Fair Value

GAAP requires that all derivative financial instruments be reported at their

Fair value

All of the following are acceptable ways to measure elements of a balance sheet except: -future value. -fair or market value. -acquisition cost. -net realizable value.

Future value

Cash equivalents are securities that

Have maturity dates of 3 months or less

The amount paid to initially acquire an asset is

Historical cost

A user of financial statements would expect to be able to find in the statement of changes in shareholders' equity -increases in total assets. -increases in total liabilities. -increases from comprehensive income. -increases to net income.

Increases from comprehensive income

_________________ by owners typically involve owners contributing assets (commonly cash) in exchange for a share of ownership in the company.

Investments

Probable future sacrifices of economic benefits arising from present obligations of a company to transfer assets or provide services in the future to other entities as a result of past transactions or events are

Liabilities

Which statement is true? -Stock must have either a par or stated value. -If nominal, par value does not need to be disclosed on the balance sheet. -In most states, stock may be issued at more or less than par value. -Par value does not suggest current fair value.

Par value does not suggest current fair value.

A reader might find information about gain contingencies in an annual report by examining

The footnote disclosures

The steps a company must complete in preparing the balance sheet do not include -identifying the elements that must be recognized. -identifying the changes in the revenues. -measuring the elements. -reporting the elements.

identifying the changes in the revenues.

Current assets are cash or other assets that are reasonable expected to be converted into cash, sold, or consumed within one year or a normal operating cycle. An operating cycle is defined as the company's ability to

spend cash to acquire inventory, which is sold and returned to cash.

The financial statements required under IFRS are

the balance sheet, income statement, statement of shareholders' equity, and statement of cash flows.