Module 3 Prep Quiz

Which balance sheet account is usually reported at net realizable value?

Accounts Receivable.

Which of the following is not a component of contributed capital?

Earned Capital

Which of the following statements about executory contracts is false?

Executory contracts are contracts in the process of begin filled.

Which financial statement is also called the statement of financial position?

The balance sheet

On the balance sheet, treasury stock is presented as a

contra shareholders' equity account.

The measurement of an asset's value based on the discounted future cash flows relating to the asset is

present value.

All of the following are examples of subsequent events that would be disclosed in the footnotes to the financial statements except

the write off of a significant uncollectible account.

The SEC requires disclosure of quarterly high and low market prices for

two years.

Which of the following assets is reported at net realizable value on the balance sheet?

Accounts receivable

Which of the following is a measurement method that reflects historical value?

Acquisition cost

What element is a probable future economic benefit controlled and previously acquired by a company?

Asset

Which of the following elements is not recognized on the balance sheet?

Expense

Which of the following statements about fair value is true?

Fair value accounting is also known as "mark-to-market" accounting.

The expected exit value is also referred to as the

Fair value.

Asset measurement methods that reflect historical values include acquisition cost and residual value.

False

Equity is defined as a residual claim such that assets plus liabilities equals equity.

False

The elements recognized on the balance sheet are assets, liabilities, revenues, and expenses.

False

Which is not a required characteristic for a liability to be recognized?

Service potential

Which of the following financial statements reports changes in financial position of the company during the accounting period?

Statement of cash flows

Asset measurement methods that reflect historical values include fair value, present value, replacement cost, and net realizable value.

TRUE

Companies typically recognize monetary assets and liabilities using present values.

True

The balance sheet reports the financial position of a company at a specific date in time whereas all other financial statements report changes in the financial position of the company over a period of time.

True

In preparing a statement of changes in shareholders' equity, the company includes land given to a shareholder as a dividend. This transaction is included in the statement because it represents

a distribution to a shareholder that decreases equity.

All of the following items would appear on the balance sheet except

a realized gain on the sale of a equipment

All of the following are non-monetary assets except

accounts receivable.

A subsequent event is an event that occurs

between the end of the accounting period and the date the annual report is issued.

The amount a company would pay to acquire an asset it now holds is the asset's

current replacement cost.

A negative balance for retained earnings due to cumulative net losses is called a(n)

deficit

A deficit occurs when a company's

dividends and cumulative losses are greater than cumulative net income.

The residual interest in a company's assets after deducting liabilities is

equity.

GAAP requires that all derivative financial instruments be reported at their

fair value.

A balance sheet shows the

financial position of a company at a particular date.

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

footnote disclosures.

A reader of a set of financial statements would expect to be able to find in the statement of changes in shareholders' equity

increases from other comprehensive income.

A component of equity that arises when a parent company owns a majority of the common shares of a subsidiary company is known as

noncontrolling interest.

Distributions to owners include all of the following except

noncontrolling interests.

Activities between affiliated entities such as subsidiaries must be disclosed in the financial statements of a corporation as

related party transactions.

The primary attribute of all assets is

service potential.

Additional paid-in capital represents

the difference between par value and market value.