ACC 311 - Final Exam Study Q's - Chapter 4 (Self-Review)

During 2013, customers purchased gift cards from LatteBucks, all of which expire on December 31, 2015. At the end of 2014, some of the gift cards still have not been redeemed. How should the unredeemed gift cards be reported on LatteBucks's 2014 year-end financial statements? A. As a current liability on the balance sheet B. As an expense on the income statement C. As a prepaid asset on the balance sheet D. As sales revenue on the income statement

A. As a Current Liability on the Balance Sheet

On the balance sheet, inventories would fall under A. Current Assets. B. Property, Plant, and Equipment. C. Current Liabilities. D. Long-Term Liabilities.

A. Current Assets

Which of the following ratios measures a company's liquidity? A. current ratio and quick ratio. B. current ratio and inventory turnover ratio. C. quick ratio and account receivable turnover ratio. D. all of these.

A. Current Ratio and Quick Ratio

Under U.S. GAAP, which of the following would be included in accumulated other comprehensive income as a component of stockholders' equity on the balance sheet? Assume no fair value election for reporting investments. I. Unrealized fair value gains or losses on held-to-maturity investments II. Foreign currency translation adjustments III. Certain gains and losses on derivative financial instruments designated as fair value hedges. A. II only. B. III only. C. I and III only. D. I, II, and III.

A. II only

Common-size analysis A. presents financial statement items as a percentage of a base amount. B. converts financial statement items to a common currency. C. is useful only if the companies analyzed are of similar size. D. may only be used for intercompany comparisons.

A. Presents Financial Statement items as a percentage of a base amount. ** for B/S, usually use Total A/ Total SE & L **for I/S, use Net Sales

1. Which of the following represents the financial position of a company? A. income statement. B. balance sheet. C. statement of cash flows. D. statement of shareholders' equity.

B. Balance Sheet

Which of the following is not considered an appropriate means of measuring an element of financial reporting in monetary terms? A. Replacement cost B. Expected fair value C. Present value D. Net realizable value

B. Expected Fair Value

Maholm Company declared a cash dividend payable to common stockholders of record as of December 24, 2014. The dividend was declared on December 10, 2014 and will be paid on January 7, 2015. On what date or dates will stockholders' equity decrease as a result of the dividend? A. January 7, 2015 only B. December 10, 2014 and January 7, 2015 C. December 10, 2014 only D. December 24, 2014 only

C. December 10, 2014 only

Which of the following would not be reported on the balance sheet? A. assets. B. liabilities. C. expenses. D. shareholders' equity.

C. Expenses

Regarding a company's reporting of assets on the balance sheet, which of the following statements is correct? A. The removal of any outside restriction on the use of the asset must be at least probable. B. The asset must have at least provided benefits in the past. C. In certain circumstances, valuable resources which are likely to provide future economic benefits to the company (such as a brand name) may not be reported on the balance sheet if they are not reliably measurable. D. Acquisition of the asset must be at least probable.

C. In certain circumstances, valuable resources which are likely to provide future economic benefits to the company (such as a brand name) may not be reported on the Balance Sheet if they are not reliably measurable.

Which of the following ratios measures how profitably a company is using its resources? A. debt-to-assets ratio. B. debt-to-equity ratio. C. return on assets. D. inventory turnover ratio.

C. Return on Assets

Which of the following is not required of private companies, who may show the information in a supporting schedule or note? A. income statement. B. balance sheet. C. statement of shareholders' equity. D. none of these choices.

C. Statement of Shareholders' Equity

Which of the following need not be disclosed in the financial statements? A. an innovative application of GAAP. B. a contingent gain that is probable and reasonably estimated. C. the fair values of all financial instruments. D. a contingent loss that is not probable and not reasonably estimated.

D. A Contingent Loss that is not probable and not reasonably estimated.

An economic resource must have which of the following characteristics to be considered an asset? A. probable future economic benefit. B. acquired through completed transaction by the company. C. under control of the company. D. all of these choices.

D. All of these choices

The statement of shareholders' equity shows A. beginning balances of the equity accounts. B. changes in the equity accounts over the accounting period. C. ending balances of the equity accounts. D. all of these choices.

D. All of these choices

When must a company report the accounting principles and methods it adopts? A. when there are acceptable alternative choices provided by GAAP. B. when its principles and methods are unique to its industry. C. when it adopts unusual or innovative applications of GAAP. D. all of these choices.

D. All of these choices

The level 1 input for fair value measurement of an asset is A. observable market prices for similar assets. B. quoted prices in active markets for identical assets. C. estimates and assumptions used to calculate fair value. D. all of these choices.

D. All of these choices.

Advance payments from customers for the future performance of services are classified as A. accrued expenses under Current Assets. B. accrued expenses under Current Liabilities. C. deferred revenues under Current Assets. D. deferred revenues under Current Liabilities.

D. Deferred Revenues under Current Liabilities

Companies typically recognize monetary assets and liabilities using A. acquisition costs. B. fair values. C. historical costs. D. present values.

D. Present Values