Intermediate accounting Test questions
When land is purchased and an old building thereon is demolished, the total purchase price plus the demolition cost is the total capitalized value of the land.
True
When preparing the operating activities section of the statement of cash flows under the direct method, an increase in accounts receivable is subtracted from sales.
True
Companies that use the aging−of−receivables method must disclose the percentage of uncollectible amounts for each age category.
false
In the Accounting Standards Codification, the subtopic numbers under each topic are uniform throughout the Codification.
False
Information is relevant if it reliably depicts the substance of an economic event.
False
Liquidity measures a company's ability to meet its long−term obligations as they become due.
False
Net realizable value (NRV) describes the estimated amount of a company's expected cost of uncollectible accounts.
False
Official U.S. GAAP consist of the bulletins, opinions, and statements issued by the CAP, the APB, and the FASB.
False
Standard setters develop accounting standards based on natural economic laws.
False
The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and oversees the audits of public companies in the United States.
False
Comprehensive income may be reported in the financial statements in either of two formats.
True
Currently the FASB and IASB have two separate conceptual frameworks which are partially converged.
True
Earnings per share is presented for continuing operations, discontinued operations, and net income.
True
Financial statements issued under IFRS require additional disclosures relating to executive compensation for related−party transactions.
True
The capitalized value of goodwill is always measured as a residual value.
True
The expected cash flow approach values an asset or liability using a range of estimated future cash flows times the probability of their occurrence discounted at the market rate of interest.
True
The final step in preparing a worksheet is to compute net income or loss.
True
The general rule is that the transaction price should be allocated to the performance obligations based on the relative standalone selling prices. An exception occurs when the contract includes variable consideration.
True
The posting reference in the general ledger is the general journal page number.
True
U.S. GAAP and IFRS set forth the same objective of financial reporting and the same qualitative characteristics in their respective conceptual frameworks
True
U.S. GAAP sets a higher threshold for the assessment of collectibility of consideration from a contract than IFRS.
True
Clowns−R−Us reported the following in the statement of comprehensive income for the year ended December 31: Income from continuing operations before tax - $800,000 Income tax expense - (300,000) Net income - 500,000 Other comprehensive income - 130,000 Comprehensive income - 600,000 During the year, the company paid $103,000 in dividends and purchased treasury stock with a par value of $20,000 at a cost of $95,000. If the balance of Retained Earnings at the beginning of the year was $470,000, what is the balance of Retained Earnings at the end of the year?
$867,000
You have just won the Multi−State Lottery . You have the option of receiving a check for $40,000,000 every year at the end of the next 23 years. The lottery commission also allows you the option of receiving a one−time payment of $414,842,358 when you turn in the winning ticket. What is the approximate interest rate that the lottery commission is using to determine the one−time payment?
8%
The interest coverage ratio
=(Net Income+ Interest Expense+Tax Expense)/Int Payment
Able sells a piece of equipment to Smythe for $1,800 on August 1. The equipment cost $1,000. The equipment is picked up by Smythe on August 10. How many performance obligations are included in this transaction? A. 1 B. 2 C. 3 D. 4
A. 1
Which of the following statements regarding balance sheet presentation is true? A. IFRS does not prescribe the ordering of liabilities within current and noncurrent groups. B. The account format lists liabilities and shareholders' equity directly below the assets. C. The report format lists liabilities and shareholders' equity on the right side of the statement. D. U.S. GAAP allows assets to be listed in either increasing or decreasing order of liquidity.
A. IFRS does not prescribe the ordering of liabilities within current and noncurrent groups.
Which of the following is false? A. If the first payment is received at the end of the fifth period, it means the ordinary annuity is deferred for five periods. B. To calculate the present value of a deferred annuity, determine the present value of an ordinary annuity for the entire period and subtract the present value of the payments which were not received during the deferral period. C. The present value of a deferred annuity is less than the present value of an annuity not deferred. D. The future value of a deferred annuity is equal to the future value of an annuity not deferred.
A. If the first payment is received at the end of the fifth period, it means the ordinary annuity is deferred for five periods.
The White Boar Pub purchased a two year insurance policy for $1,200 on February 1 and recorded it as an asset. On June 30, the adjusting entry that should be made is ________. A. Insurance Expense 250 Prepaid Insurance 250 B. Prepaid Insurance 950 Insurance Expense 950 C. Insurance Expense 950 Prepaid Insurance 950 D. Prepaid Insurance 250 Insurance Expense 250
A. Insurance Expense 250 Prepaid Insurance 250
According to the FASB's conceptual framework, gains include increases in equity from which of the following activities? A. Investments by Owners - No Peripheral Transactions - Yes B. Investments by Owners - Yes Peripheral Transactions - No C. Investments by Owners - No Peripheral Transactions- No D. Investments by Owners - Yes Peripheral Transactions- Yes
A. Investments by Owners - No Peripheral Transactions - Yes
Smith Corporation purchased $68,000 of merchandise on credit. The company uses the perpetual method of recording inventory purchases. What would be the correct journal entry to record the purchase? A. Merchandise Inventory 68,000 Accounts Payable 68,000 B. Purchases 68,000 Interest Payable 68,000 C. Merchandise Inventory 68,000 Cash 68,000 D. Purchases 68,000 Accounts Payable 68,000
A. Merchandise Inventory 68,000 Accounts Payable 68,000
A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct? A. Sales discounts is debited for the amount of discounts taken by customers. B. Accounts receivable is credited for the net amount of cash received from customers. C. Accounts receivable is debited for the gross amount of cash received from customers. D. Sales discounts is credited for the amount of discounts taken by customers.
A. Sales discounts is debited for the amount of discounts taken by customers.
Which of the following statements about the global standard−setting structure is false? A. The IASB oversees the IFRS Advisory Council which advises the Monitoring Board. B. The IFRS Foundation oversees the IASB and finances IASB operations. C. The Monitoring Board was formed to enhance public accountability of the IFRS Foundation. D. The IFRS Interpretations Committee is similar to the EITF in the U.S.
A. The IASB oversees the IFRS Advisory Council which advises the Monitoring Board.
Which of the following statements is false? A. The accounting profession has determined that a working knowledge of IFRS is not important for accountants working in the United States. B. The SEC permits the use of IFRSminus−based financial statements by international companies with shares trading on U.S. stock exchanges. C. Nonminus−U.S. companies operate in the United States but prepare their financial statements using IFRS. D. Accountants must convert to U.S. GAAP the IFRS financial statements of foreign subsidiaries that belong to U.S. companies
A. The accounting profession has determined that a working knowledge of IFRS is not important for accountants working in the United States. Your answer is correct.
following IFRS, which of the following statements is not correct? A. The net realizable value of inventory is calculated as the estimated selling price plus the estimated costs of completion and sale. B. IFRS inventory writeminus−downs can be reversed later if the net realizable value of inventory increases. C. Firms determine the lowerminus−ofminus−costminus−orminus−market value of inventory using individualminus−items or groups of items. D. IFRSminus−reporting firms determine if a writeminus−down for inventory is needed by comparing the historical cost and the net realizable value of inventory.
A. The net realizable value of inventory is calculated as the estimated selling price plus the estimated costs of completion and sale.
Which of the following user groups consists of individuals who expect to receive a return on their investment? A. equity investors B. suppliers and customers C. employees D. creditors
A. equity investors
If a company is facing a bankruptcy from which it is quite doubtful that the firm may ever recover, which underlying assumption would not be valid? A. going concern concept B. monetary unit assumption C. periodicity assumption D. economic entity concept
A. going concern concept Your answer is correct.
Novella Company sells annual memberships to its auto club. The memberships cost $300 each. On January 1, Novella sold 16,000 memberships and received cash. How should Novella record the receipt of cash on January 1? A. liability of $4,800,000 B. liability of $300 C. revenue of $4,800,000 D. revenue of $300
A. liability of $4,800,000
Decreases in equity that result from peripheral transactions of an entity are referred to as ________. A. losses B. dividends C. expenses D. liabilities
A. losses
The Basis for Conclusions for pronouncements under U.S. GAAP are ________. A. not included in the Codification B. authoritative in nature C. both A & B D. neither A nor B
A. not included in the Codification
Which of the following income statement elements is an economic inflow that occurs from primary operations? A. revenue B. gain C. comprehensive income D. net income
A. revenue
Which financial statement is implicitly considered dominant as standard setting shifts toward the asset/liability approach? A. statement of financial position B. statement of shareholders' equity C. statement of comprehensive income D. statement of cash flows
A. statement of financial position
The first financial statement prepared from the adjusted trial balance is the ________. A. statement of net income B. balance sheet C. statement of cash flows D. statement of retained earnings
A. statement of net income
The Henry Store has the following data for inventory: Cost Retail Inventory, January 1 $300,000 $450,000 Purchases for January 340,000 480,000 Sales for January 440,000 The store uses the dollarminus−value LIFO retail method. The price index for the year is 1.08. The price index that pertains to the beginning inventory is 1.00. Round all ratios to four decimal places. What is the cost of the ending inventory at January 31? (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.) A. $302,833 B. $490,000 C. $300,000 D. $453,704
A. $302,833
Teeter Company began 2018 with accounts receivable of $400,000 and an allowance for uncollectible accounts of $29,000 (credit balance). Bad debt expense for the year was $36,000 and the ending balance in the allowance for uncollectible accounts account was $13,000. What was the amount of accounts receivable written off during the year? A. $52,000 B. $416,000 C. $452,000 D. $16,000
A. $52,000
Walker Consulting helped McCall Roofers put various cost saving techniques into place. The contract specifies that Walker will receive a flat fee of $70,000 and an additional $17,000 if McCall attains a target amount of cost savings. Walker estimates a 20% chance that McCall will reach the target for cost savings. Assuming that Walker uses the expected−value approach, what is the transaction price for this product? A. $73,400 B. $70,000 C. $17,000 D. $87,000
A. $73,400
How is reporting for other comprehensive income (OCI) different between U.S. GAAP and IFRS? A. U.S. GAAP allow either a one−statement approach or a two−statement approach while IFRS require a two−statement approach and allow more items to be classified as OCI. B. Both U.S. GAAP and IFRS allow either a one−statement approach or a two−statement approach while IFRS allow more items to be classified as OCI. C. U.S. GAAP allow either a one−statement approach or a two−statement approach while IFRS require a two−statement approach using the direct method. D. Both U.S. GAAP and IFRS allow either a ones−statement approach or a two−statement approach while IFRS require the direct method.
B. Both U.S. GAAP and IFRS allow either a one−statement approach or a two−statement approach while IFRS allow more items to be classified as OCI.
All of the following accounts are permanent accounts except ________. A. Accounts Payable B. Dividends C. Goodwill D. Marketable Securities
B. Dividends
________ occurs when managers manipulate financial information and misrepresent the firm's financial position and performance. A. Decision−making B. Earnings management C. Judgment D. GAAP
B. Earnings management
A company uses the basic retail method to estimate the cost of ending inventory for interim financial statements. Which of the following responses describe the correct treatment of markups and markdowns in the calculation of the cost−to−retail ratio? A. Markups - subtract Markdowns- add B. Markups - add Markdowns - Subtract C. Markups - exclude Markdowns- exclude D. Markups - Add Markdowns- Exclude
B. Markups - add Markdowns - Subtract
Posing the question "Which method of depreciation should TNT Company use for their new equipment?" would most likely occur in which step of the financial accounting research process? A. Step 1 B. Step 2 C. Step 3 D. Step 4
B. Step 2
Which of the following best characterizes the current situation concerning revisions to the conceptual framework? A. The FASB is considering revisions to their conceptual framework but IASB is not. B. The FASB and the IASB are working independently on their conceptual frameworks. C. The FASB and the IASB are working cooperatively on a single conceptual framework. D. The IASB is considering revisions to the conceptual framework but FASB is not.
B. The FASB and the IASB are working independently on their conceptual frameworks.
The inventory turnover ratio equals ________. A. sales revenue divided by average inventory B. cost of goods sold divided by average inventory C. sales revenue divided by cost of goods sold D. 365 divided by average inventory
B. cost of goods sold divided by average inventory
Electroid borrowed $70,000 cash from TechCo by signing a promissory note. TechCo's entry to record the transaction should include a ________. A. debit Accounts Receivable for $70,000 B. debit Note Receivable for $70,000 C. credit Accounts Receivable for $70,000 D. credit Note Receivable for $70,000
B. debit Note Receivable for $70,000
Which of the following errors would cause the adjusted trial balance to not balance? A. omitting the adjusting entry for depreciation expense B. failure to post one side of a journal entry C. posting the debit for accrued interest to insurance expense D. reversing the debits and credits in an adjusting entry
B. failure to post one side of a journal entry
U.S. GAAP requires significant disclosures for goodwill, including all of the following except ________. A. goodwill acquired B. goodwill amortization C. goodwill included in the disposal of a business unit D. goodwill impaired
B. goodwill amortization
Companies should evaluate indefinite life intangible assets at least annually for ________. A. amortization B. impairment C. gains or losses D. useful life
B. impairment
The IFRS element expenses encompasses which U.S. GAAP elements? A. gains and expenses B. losses and expenses C. expenses only D. revenues and expenses
B. losses and expenses
Which of the following is not a characteristic of intangible assets? A. economic value B. not used in operations C. lack physical existence D. longminus−term benefits
B. not used in operations
The future amount of an annuity due is determined ________. A. at the same time as the first cash payment in the series B. one period after the last cash payment in the series C. at the same time as the last cash payment in the series D. one period before the last cash payment in the series
B. one period after the last cash payment in the series
In which of the following situations are a company's receivables held as collateral for a financing situation? A. collateralization B. pledging C. securitization D. factoring
B. pledging
The final step in the accounting cycle is to ________. A. prepare an adjusted trial balance B. prepare a post−closing trial balance C. prepare financial statements D. close temporary accounts
B. prepare a post−closing trial balance
An attitude that includes a questioning mind and a critical assessment of audit evidence is known as ________. A. anchoring bias B. professional skepticism C. unprofessional behavior D. groupthink
B. professional skepticism
Step 3 in the financial accounting research process involves ________. A. establishing the fact pattern associated with the transaction B. searching the authoritative literature C. reading the authoritative literature D. deciding the best financial reporting treatment for the transaction
B. searching the authoritative literature
Which of the following methods of amortization is normally used for intangible assets? A. unitsminus−ofminus−production method B. straightminus−line method C. decliningminus−balance method D. finiteminus−life method
B. straightminus−line method
The expected cash flow approach encompasses all of the following features in determining a present value of an asset or liability except ________. A. the probabilities of various cash−flow outcomes B. the fair value of the asset or liability C. tthe market rate of interest D. a range of estimated future cash flows
B. the fair value of the asset or liability
Angelo's charges $280 per month for catering services. In the first quarter of the year, they collected $19,600. Fifteen customers pre−paid for three months of catering beginning in January, ten customers pre−paid for two months of catering beginning in February, and five customers paid for one month of catering in March. Using the cash basis of accounting, Angelo's will recognize ________ in revenue for January and ________ using the accrual basis. A. $4,200; $0 B. $12,600; $4,200 C. $0; $12,600 D. $7,000; $4,200
B. $12,600; $4,200
The Siempre Store has the following data for inventory: Cost Retail Inventory, March 1 $220,000 $340,000 Purchases for March 370,000 1,000,000 Sales for March 500,000 The store uses the LIFO retail method. Round all ratios to four decimal places. What is the cost of the ending inventory at March 31? (Round your final answer to the nearest dollar.) A. $840,000 B. $405,000 C. $185,000 D. $500,000
B. $405,000
Deluxe Hotels reported revenues of $570,000 for the year ended December 31, 2019. Accounts receivable at December 31, 2018 and 2019 were $67,000 and $47,000. If Deluxe uses the direct method of reporting operating cash flows, the company would report cash collected from customers of ________. A. $550,000 B. $590,000 C. $570,000 D. $503,000
B. $590,000
Which of the following adjustments to net income is correct when using the indirect method for computing cash flows from operating activities? A. Subtract losses from sales of securities. B. Deduct an increase in accounts payable. C. Subtract gains from sales of equipment. D. Add an increase in accounts receivable.
C. Subtract gains from sales of equipment.
All of the following are enhancing characteristics except ________. A. verifiability B. understandability C. consistency D. comparability
C. consistency
Powers Company accrued unpaid wages of $3,000 on January 31. These wages will be included in paychecks totaling $9,000 on February 2. The reversing entry will include a(n) ________. A. debit to Wages Payable for $9,000 B. debit to Wages Expense for $9,000 C. credit to Wages Expense for $3,000 D. credit to Cash for $3,000
C. credit to Wages Expense for $3,000
Which of the following is not an underlying principle of accrual accounting? A. revenue and expense recognition B. bases of measurement C. monetary unit assumption D. general recognition
C. monetary unit assumption
What is a bank overdraft? A. shortminus−term liquid investment with original maturity of three months or less B. reclassification of a cash amount that is restricted from use in the current operating cycle C. negative cash balance that occurs when a company writes a check in an amount that exceeds the account balance D. minimum cash balance required to be maintained by a credit agreement
C. negative cash balance that occurs when a company writes a check in an amount that exceeds the account balance
Which of the following is typically included in the determination of income from continuing operations? A. other comprehensive income B. gain on disposal of discontinued segment C. non-operating gains and losses D. reserved retained earnings
C. non-operating gains and losses
The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________. A. installment sales method B. completed−contract−method C. percentage−of−completion method D. cost recovery method
C. percentage−of−completion method
Which of the following must be known to compute the interest rate incurred from financing an asset purchased with an annuity? A. fair value of the asset purchased, number and dollar amount of the annuity payments B. fair value of the asset and timing of the annuity payments C. present value of the annuity, dollar amount and number of the annuity payments D. future value of the annuity and number of the annuity payments
C. present value of the annuity, dollar amount and number of the annuity payments
Which of the following tables would show the smallest value for an interest rate of 8% for ten periods? A. present value of an ordinary annuity B. future value of $1 C. present value of $1 D. future value of an ordinary annuity
C. present value of $1
The conceptual framework assists with ________. A. the development of a set of standards for auditors to use when looking for material misstatements or fraud B. the development of a set of standards which provide absolute answers for accounting questions C. the development of a set of standards which ensure that accounting standards are coherent and uniform. D. All of the above
C. the development of a set of standards which ensure that accounting standards are coherent and uniform.
In recent years, the FASB standards that have been set indicate that the income statement is more important than the balance sheet.
False
Gordon Company has the following data available: Transaction Units Purchased Unit Cost Units Sold Beginning Inventory 300 $20 March 1 Purchase 200 $12 April 25 Sale 350 June 10 Purchase 380 $14 July 20 Sale 210 October 30 Purchase 250 $14 December 15 Sale 350 If Gordon Company uses a perpetual FIFO inventory system, the cost of ending inventory on December 31 is ________. A. $18,200 B. $4,400 C. $3,080 D. $12,740
C. $3,080
Lorna Company has the following data available: Beginning inventory $170,000 Net purchases $500,000 Net sales $900,000 Gross profit percentage 60% The estimated cost of the ending inventory using the gross profit method is ________. A. $670,000 B. $360,000 C. $310,000 D. $540,000
C. $310,000
The following company information is available: Average accounts receivable $100,000 Average inventories 150,000 Average accounts payable 140,000 Net sales 2,000,000 Cost of goods sold 1,400,000 Purchases 1,160,000 What is the company's accounts payable turnover ratio? (Round your answer to one decimal place, X.X.) A. 14.3 B. 10.0 C. 20.0 D. 8.3
D. 8.3
Disclosures required for revenue include all of the following except ________. A. performance obligations B. assessing constraints on variable consideration C. disaggregation of revenue D. allocating assets
D. allocating assets
Caesar Company needs to purchase a new delivery truck. Rather than taking the time to research which truck would best fit the company's needs, the manager calls his friend to ask which truck he would recommend. The manager is exhibiting ________. A. bad judgment B. overconfidence bias C. anchoring bias D. availability bias
D. availability bias
Which ratio indicates the effectiveness of a company's credit extension policy? A. inventory turnover B. days inventory on hand C. accounts payable turnover D. days sales outstanding
D. days sales outstanding
Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________. A. debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory B. debit Cash and credit Sales Revenue C. debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory D. debit Accounts Receivable and credit Sales Revenue
D. debit Accounts Receivable and credit Sales Revenue
Which financial statement is the first to be prepared? A. statement of cash flows B. statement of shareholders' equity C. balance sheet D. statement of comprehensive income
D. statement of comprehensive income
The noncontrolling interest line item on the income statement represents ________. A. the portion of earnings that belongs to others, which is added to determine net income attributable to the controlling interest B. the portion of the subsidiary owned by others, which is deducted to determine net income C. the portion of the subsidiary owned by the reporting entity, which is added to determine net income D. the portion of earnings that belongs to others, which is deducted to determine net income attributable to the controlling interest
D. the portion of earnings that belongs to others, which is deducted to determine net income attributable to the controlling interest
In ASC 450−20−35−2, 450 represents the ________. A. chapter B. section C. paragraph D. topic
D. topic
Gleason Construction enters into a long−term fixed price contract to build an office building for $27,000,000. In the first year of the contract Gleason incurs $5,000,000 of cost and the engineers determined that the remaining costs to complete the project are $24,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the percentage−of−completion method? A. $0 B. $2,000,000 profit C. $344,828 loss D. $2,000,000 loss
D. $2,000,000 loss
Louise paints seascapes and landscapes. In 2019 she placed nine of her most prized paintings with the Wainwright Studio Gallery. The paintings each carried a price of $6,000, and Louise made a deal with the Gallery to pay them a 40% commission on all paintings sold. At the end of the year, three paintings had been sold. How much revenue will Louise recognize on each of the consignment sales? A. $0 B. $2,400 C. $3,600 D. $6,000
D. $6,000
Annie Laerz wants to invest $20,000 on January 1, 2014, so that she may withdraw 10 annual payments of equal amounts beginning January 1, 2029. If the fund earns 6% annual interest over its life, what will be the amount of each of the withdrawals? (Use spreadsheet software or a financial calculator to calculate your answer. Round intermediary calculations two decimal places and round your final answer to the nearest dollar.) A. $20,000 B. $8,584 C. $6,512 D. $6,144
D. $6,144
The accounting policies footnote would be a good place to look if you want to know ________. A. the depreciation method used by a company B. how the bad debt expense is estimated C. the lives a company uses to depreciate plant assets D. the inventory costing method used by a company E. all of the above
E. all of the above
Accumulated depreciation is a contraminus−expense account that represents total depreciation taken over the life of an asset.
False
Companies should not provide information to financial statement users about warranties and related obligations.
False
Discounting a note receivable is similar to pledging an account receivable.
False
Elements of other comprehensive income are primarily permanent in nature.
False
IFRS requires companies to present specific items on the income statement including writeminus−downs of inventories and litigation settlements.
False
The confirmatory bias is the tendency to use the data that is most readily available or most easily recalled to make a decision.
False
The effective interest rate is the same as the stated interest rate.
False
The final step in the revenue recognition process is the allocation of the transaction price to the performance obligation.
False
The first step in applying the gross profit method of determining inventory is to take a physical count of the goods.
False
Very few amounts reported on the financial statements are based upon assumptions.
False
A deferred annuity is an annuity in which interest is not compounded until a future period
False Payment rcvd or deposited
The FASB promulgates accounting standards in the U.S. and the IFRS issues international accounting standards.
False The FASB promulgates accounting standards in the U.S. and the IASB issues IFRS (International financial reporting standards)
A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.
True
A firm that responds quickly to unexpected circumstances exhibits a high level of financial flexibility.
True
Accountants must often use judgment when deciding when to recognize revenue.
True
An annuity due is a series of equal periodic payments made at the beginning of each period.
True
Following U.S. GAAP, companies commonly report the carrying value of property, plant, and equipment in total or by major class of longminus−term assets on the balance sheet.
True
Following U.S. GAAP, the going concern concept justifies accounting practices such as depreciation.
True
Gains and losses from discontinued operations are shown on the income statement after the provision for income taxes is presented.
True
IFRS allows companies to include in Other Comprehensive Income the increase in fair value of long−lived assets such as buildings.
True
IFRS requires, but U.S. GAAP does not require, a statement of stockholders' equity.
True
If a journal entry has not been posted to the general ledger, the unadjusted trial balance will still balance.
True
If an unearned revenue is initially recorded as a revenue, the end−of−period adjusting entry records the unexpired portion.
True
If costs are declining, using LIFO will result in lower cost of goods sold and a higher net income as compared to FIFO and movingminus−average methods.
True
If the intangible asset has a finite useful life, the company must include in their financial statement disclosures whether to use the useful life or the legal life. Assume U.S. GAAP is followed.
True
In order to be a cash equivalent, an investment must have a maturity date of three months or less when purchased.
True
LIFO Reserve = FIFO Inventory Balance minus− LIFO Inventory Balance.
True
Management is responsible for the fair presentation of a company's financial statements.
True
Notes receivable are classified as current or noncurrent on the balance sheet based on the expected collection date.
True
Purchase returns and purchase discounts are subtracted from purchases to calculate net purchases.
True
Redemption of bonds payable is classified as a financing activity on the statement of cash flows.
True
Rules−based standards rely on theories and concepts that are linked to a well−developed theoretical framework.
True
Rules−based standards result in inconsistencies between standards.
True
Securitization of receivables involves taking many separate receivables and bundling them into a single investment pool.
True
The post−closing trial balance contains only permanent accounts.
True
The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded companies.
True
Under the completed−contract method, revenues are only reported in the last year of the contract.
false
Present value factors are determined by two characteristics: the interest rate and the length of the compounding periods
false- number of compounding periods