acct 253 ch 24

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acct 253 ch 24
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2010-09-01 22:29:50
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acct 253 ch 24
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  1. Areas directly affected by FASB standards included all of the following except
    A. financial statements
    B. notes to the financial statements
    C. supplementary information
    D. management's discussion and analysis
    D. management's discussion and analysis
    (this multiple choice question has been scrambled)
  2. Which of the following is not a reason for the increase in disclosure requirements?
    A. accounting as a control and monitoring device
    B. complexity of the business environment
    C. full disclosure principle
    D. necessity for timely information
    C. full disclosure principle
    (this multiple choice question has been scrambled)
  3. Common notes to the financial statements include disclosures for all of the following except
    A. property, plant & equipment
    B. executive compensation
    C. credit claims
    D. equity holders' claims
    B. executive compensation
    (this multiple choice question has been scrambled)
  4. The financial statements are not corrected for
    A. errors
    B. illegal acts
    C. related party transactions
    D. irregularities
    C. related party transactions
    (this multiple choice question has been scrambled)
  5. A subsequenty event that would require adjustment of the financial statements is the
    A. loss of plant or inventories from a flood
    B. sale of bonds or capital stock
    C. settlement of litigation when the event causing the claim took place after the balance sheet date
    D. loss on an accounts receivable resulting from a customer's bankruptcy
    D. loss on an accounts receivable resulting from a customer's bankruptcy
    (this multiple choice question has been scrambled)
  6. An operating segment is identified as a reportable segment if
    a its revenue is greater than 10% of the combined revenue of all the company's operating segments
    b. its identifiable assets are greater than 10% of the combined assets of all operating segments
    c. the absolute amount of its profit (loss) is 10% or more of the greater of the combined operating segments' profit or the combined operating segments' loss
    d. any of the options are satisfied
    • c. the absolute amount of its profit (loss) is 10% or more of the
    • greater of the combined operating segments' profit or the combined
    • operating segments' loss
  7. The FASB requires that a company report all of the following information except
    A. major customers
    B. all of the options are reported
    C. segment assets
    D. information about products and services
    B. all of the options are reported
    (this multiple choice question has been scrambled)
  8. Which of the following statements related to interm reporting is not correct?
    A. Companies may use the gross profit method for annual inventory pricing, but disclosure of the method is required
    B. inventory market declines should not be deferred beyond the interm period unless they are temporary
    C. When LIFO inventories are liquidated at an interm date and are expected to be replaced by year end, cost of goods sold should include the expected cost of replacing the liquidating LIFO base
    D. planned variances under a standard cost system ordinarily should be deferred
    A. Companies may use the gross profit method for annual inventory pricing, but disclosure of the method is required
    (this multiple choice question has been scrambled)
  9. Extraordinary items that occur in interim reports are
    A. absorbed entirely in the quarter in which they occur
    B. disclosed only by note
    C. prorated over the 4 quarters
    D. omitted from the quarterly net income
    A. absorbed entirely in the quarter in which they occur
    (this multiple choice question has been scrambled)
  10. In preparing the auditor's report, the auditor follows all of the following reporting standards except the report shall
    A. identiry circumstances in which accounting principles have not been consistently observed in the current period in relation to the prior period
    B. contain either an expression of opinion regarding the financial statements or an assertion that an opinion cannot be expressed
    C. all of the options are followed by the auditor
    D. state whether the financial statements are presented in accordance with generally accepted auditing standards
    D. state whether the financial statements are presented in accordance with generally accepted auditing standards
    (this multiple choice question has been scrambled)
  11. When the scope of the auditor's examination is limited or affected by conditions or restrictions, the auditor would
    A. express an adverse opinion
    B. disclaim an opinion
    C. express a qualified opinion
    D. issue an unqualified opinion
    C. express a qualified opinion
    (this multiple choice question has been scrambled)
  12. Management's discussion and analysis (MD & A) section covers all of the following financial aspects of an enterprise's business except
    A. results of operations
    B. cash flows
    C. capital resources
    D. liquidity
    B. cash flows
    (this multiple choice question has been scrambled)
  13. Propspective financial statements that present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and cash flows is a financial
    A. forecast
    B. estimate
    C. projection
    D. forecast or projection
    A. forecast
    (this multiple choice question has been scrambled)
  14. Arguments for requiring published forecasts include all of the following except that
    A. investment decisions are based on future expectations
    B. circumstances now change so rapidly that historical information is no longer adequate for prediction
    C. forecasts are already circulated informally, but are uncontrolled
    D. disclosure of forecasts will be beneficial to organizations
    D. disclosure of forecasts will be beneficial to organizations
    (this multiple choice question has been scrambled)
  15. Which of the following would not be an opportunity for fraudulent financial reporting?
    A. all of the options would be opportunities
    B. weak or nonexistent internal accounting controls
    C. accounting estimates, requiring significant subjective judgment
    D. unusual or complex transactions
    A. all of the options would be opportunities
    (this multiple choice question has been scrambled)
  16. Which of the following should be disclosed in Summary of Significant Accounting Policies?
    A. Depreciation method followed
    B. Amount for cumulative effect or change in accounting principle
    C. Claims of equity holders
    D. Types of executory contracts
    A. Depreciation method followed
    (this multiple choice question has been scrambled)
  17. An example of an inventory accounting policy that should be disclosed in a Summary of Significant Accounting Policies is the
    A. composition of inventory into raw materials, work in process, and finished goods
    B. major backlogs of inventory orders
    C. method used for pricing inventory
    D. amound of income resulting from the involuntary liquidiation of LIFO
    C. method used for pricing inventory
    (this multiple choice question has been scrambled)
  18. The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
    A. enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision
    B. disclosure of any financial facts significant enough to influence the judgment of an informed reader
    C. all information related to an entity's business and operating objectives is required to be disclosed in the financial statements
    D. information about each account balance appearing in the financial statements is to be included in the notes to the financial statements
    B. disclosure of any financial facts significant enough to influence the judgment of an informed reader
    (this multiple choice question has been scrambled)
  19. If a business entity entered into certain related party transaction, it would be required to disclose all of the following information except the
    A. dollar amount of the transactions for each of the periods for which an income statement is presented
    B. amounts due from or to related parties as of the date of each balance sheet presented
    C. nature of any future transactions planned between the parties and the terms involved
    D. nature of the relationship between the parties to the transactions
    C. nature of any future transactions planned between the parties and the terms involved
    (this multiple choice question has been scrambled)
  20. Events that occur after December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable shoud be
    A. disclosed in the Notes to the Financial Statements
    B. used to record an adjustment directly to the Retained Earnings account
    C. discussed only in the MD&A section of the annual report
    D. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008
    D. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008
    (this multiple choice question has been scrambled)
  21. Which of the following post balance sheet events would generally require disclosure, but no adjustment of the financial statements?
    A. employee strikes
    B. retirement of the company president
    C. issue of a large amount of capital stock
    D. settlement of litigation when the event that gave rise to the litigation occurred prior to the balance sheet date
    C. issue of a large amount of capital stock
    (this multiple choice question has been scrambled)
  22. Which of the following subsequent events (post balance sheet events) would require adjustment of the accounts before issuance of the financial statements?
    A. loss on an uncollectible account receivable resulting from a customer's major flood loss
    B. changes in the quoted market prices of securities held as an investment
    C. loss on a lawsuit, the outcome of which was deemed uncertain at year end
    D. loss of plant as a result of fire
    C. loss on a lawsuit, the outcome of which was deemed uncertain at year end
    (this multiple choice question has been scrambled)
  23. A segment of a business enterprise is to be reported separately when the revenues of the segment exceed 10% of the
    A. total combined revenues of all segments reporting profits
    B. combined net income of all segments reporting profits
    C. total export and foreign sales
    D. total revenues of all the enterprise's industry segments
    D. total revenues of all the enterprise's industry segments
    (this multiple choice question has been scrambled)
  24. The profession requires disaggregated information in the following ways
    A. all of these
    B. major customers
    C. products or services
    D. geographic areas
    A. all of these
    (this multiple choice question has been scrambled)
  25. APB Opinion No. 28 indicates that
    A. the 3 basic financial statments should be presented each time an interim period is reported upon
    B. the discrete view is the most appropriate approach to take in preparing interim financial reports
    C. all companies that issue an annual report should issue interim financial reports
    D. the same accounting princeiples used for the annual report should be employed for interim reports
    D. the same accounting princeiples used for the annual report should be employed for interim reports
    (this multiple choice question has been scrambled)
  26. In considering interim financial reporting, how does the profession conclude that such reporting should be viewed?
    A. as useful only if activity is evenly spread throughout the year so that estimates are unnecessary
    B. as reporting for an intergral part of an annual period
    C. as a "special" type of reporting that need not follow generally accepted accounting principles
    D. as reporting for a basic accounting period
    B. as reporting for an intergral part of an annual period
    (this multiple choice question has been scrambled)
  27. The required approach for handling extraordinary items in interm repots is to
    A. disclose them only in the notes
    B. prorate them over the current and remaining quareters
    C. change or credit the loss or gain in the quarter that it occurs
    D. prorate them over all 4 quarters
    C. change or credit the loss or gain in the quarter that it occurs
    (this multiple choice question has been scrambled)
  28. If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be
    A. unqualified
    B. qualified
    C. adverse
    D. exceptional
    B. qualified
    (this multiple choice question has been scrambled)
  29. The MD&A section of an entrerprise's annual report is to cover the following 3 items:
    A. income statement, balance sheet, and statement of cash flows
    B. changes in stock price, mergers, and acquisitions
    C. income statement, balance sheet, and statement of owners' equity
    D. liquidity, capital resources, and results of operations
    D. liquidity, capital resources, and results of operations
    (this multiple choice question has been scrambled)
  30. Which of the following best characterizes the difference between a financial forecast and a financial projections?
    a. forecasts include a complete set of financial statements, while projections include only summary financial data
    b. a forecast is normally for a full year or more and a projection presents data for less than a year
    c. a forecast attempts to provide information on what is expected to happen, whereas a projection may provide information on what is not necessarily expected to happen
    d. a forecast includes data which can be verified about future expectations, while the data in a projection is not susceptible to verification
    • c. a forecast attempts to provide information on what is expected to
    • happen, whereas a projection may provide information on what is not
    • necessarily expected to happen
  31. Theoretically, in computing the receivables turnover, the numerator should include
    A. net sales
    B. net credit sales
    C. sales
    D. credit sales
    B. net credit sales
    (this multiple choice question has been scrambled)
  32. The rate of return on common stock equity is calculated by dividing
    A. net income less preferred dividends by average common stockholders' equity
    B. net income by ending common stockholders' equity
    C. net income less preferred dividends by ending common stockholders' equity
    D. net income by average common stockholders' equity
    A. net income less preferred dividends by average common stockholders' equity
    (this multiple choice question has been scrambled)
  33. The payout ratio is calculated by dividing
    A. cash dividends by market price per share
    B. cash dividends by net income less preferred dividends
    C. cash dividends by net income plus preferred dividends
    D. dividends per share by earnings per share
    B. cash dividends by net income less preferred dividends
    (this multiple choice question has been scrambled)
  34. Which of te following ratios measures long term solvency?
    A. receivables turnover
    B. current ratio
    C. acid test ratio
    D. debt to total assets
    D. debt to total assets
    (this multiple choice question has been scrambled)
  35. The calculation of the number of times interest is earned involves dividing
    A. none of these
    B. net income plus income taxes by annual interest expense
    C. net income by annual interest expense
    D. net income plus income taxes and interest expense by annual interest expense
    D. net income plus income taxes and interest expense by annual interest expense
    (this multiple choice question has been scrambled)

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