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Question 1 4 points Save Revenues and gains are

Customer Question

Question 1
4 points        Save   

     Revenues and gains are generally recognized when they are realized or realizable and they have been earned through substantial completion of the activities involved in the earnings process                     
     

True

False
                    
   Question 2
3 points        Save   

     The completed contract method was developed to relate recognition of revenue on long term construction type contracts to the activities of a firm in fulfilling these contracts.                    
     

True

False
                    
   Question 3
3 points        Save   

     The proportional performance method has been developed to reflect revenue earned on service contracts under which many acts or services are to be performed before the contract is completed.                     
     

True

False
                    
   Question 4
3 points        Save   

     If no pattern of performance can be determined on a service contract, revenue recognition should be deferred until all services have been rendered.                     
     

True

False
                    
   Question 5
3 points        Save   

     The cost recovery method is often used when the circumstances surrounding a sale are too uncertain to use the installment sale method.                     
     

True

False
                    
   Question 6
3 points        Save   

     If a company is heavily involved in installment sales, the operating cycle of the business is normally defined as the average period of the installment contracts.                     
     

True

False
                    
   Question 7
30 points        Save   

     The Golden Crest Corporation uses the indirect method for preparation of its Statement of Cash Flows. The statement included the following sections and related disclosures
Decrease in the prepaid insurance balance                    
     

Decrease in Prepaid insurance balance


Gain on sale of investment securities (not cash equivalents)


Distribution of cash dividends to shareholders


Acquisition of land by issuing preferred stock


purchase of treasury stock for cash


acquisition of land and buildings by the issuance of common stock


Depreciation expense


interest paid


Payment received on note receivable for sale of a manufacturing plant


proceeds from issuance of bonds

     
a.     Additions to income
b.      Subtractions from income
c.      cash received from investing
d.      Cash payments for investing
e.      cash received from financing
f.     Cash payments for financing
g.      Disclosed in the notes to the financial statements or presented in supplemental schedules

                    
   Question 8
3 points        Save   

     A gain on the sale of a plant asset in the ordinary course of business should be presented in a statement of cash flows prepared using the indirect method as                     
     

a.     a cash inflow from investing activities

b.     a cash inflow from financing activities

c.     an addition to net income

d.     a deduction from net income
                    
   Question 9
3 points        Save   

     In a statement of cash flows, payments to acquire debt instruments of other entities would typically be classified as cash outflows for                     
     

a.     financing activities

b.     investing activities

c.     operating activities

d.     equity activities
                    
   Question 10
3 points        Save   

     When preparing a statement of cash flows using the indirect method, amortization of trademarks should be reported as a(n)                     
     

a.     increase in cash flows from investing activities

b.     reduction in cash flows from investing activities

c.     increase in cash flows from operating activities

d.     reduction in cash flows from oeprating activities
                    
   Question 11
3 points        Save   

     In a statement of cash flows (indirect method), depreciation is treated as an adjustment to reported net income because depreciation                     
     

a.     reduces the reported net income but does not involve an outflow of cash

b.     reduces the reported net income and involves an outflow of cash

c.     is an inflow of cash to a reserve account for asset replacement

d.     usually represents a significant portion of operating expenses.
                    
   Question 12
3 points        Save   

     A decrease in accounts receivable should be presented in a statement of cash flows (indirect method) as                     
     

a.     an inflow and outflow of cash

b.     An outflow of cash

c.     a deduction from net income

d.     an addition to net income
                    
   Question 13
3 points        Save   

     The most likely situation in which reported earnings are positive, but operations are consuming rather than generating cash would be:                     
     

a.     a rapidly growingcompany

b.     a company reporting large noncash expenses

c.     a company using very conservative accounting standards

d.     A company paying large cash dividends to shareholders
                    
   Question 14
3 points        Save   

     In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would be classified as a(n)                     
     

a.     transfer activity

b.     operating activity

c.     investing activity

d.     financing activity
                    
   Question 15
3 points        Save   

     Which of the following would be an example of an investing activity                     
     

a.     issuance of long term bonds

b.     issuance of common stock

c.     payment of cash dividends

d.     sale of plant assets
                    
   Question 16
24 points        Save   

     Select the term that best fits each of the following definitions and descriptions. Indicate your answer by placing the appropriate letter in the space provided.                     
     

A revenue recognition method that recognizes gross profit as cash is received


An accounting method that recognizes the receipt of cash and the unearned revenue prior to begining work on the contract


Modifications to the terms of agreement of an original contract


measures of the earnings process in percentage of completion accounting based on cost or efforts devoted to a contract


A revenue recognition method that requires the recovery of cost(investment) prior to the recognition of revenue


Measures of the earnings process in percentage of completion accounting based on units produced, contract milestones reached, or value added


A transfer of property without a transfer of title and risk of ownership


An accounting method for recording service revenue and related expenses prior to completion of the service contract

     
a.     installment sales method
b.     Consignment sales
c.     Change orders
d.     Substantial performance
e.     input measures
f.     Efforts expended methods
g.     cost recovery method
h.     completed contract method
i.     proportional performance method
j.     percentage of completion method
k.     deposit method
l.     output measures

                    
   Question 17
3 points        Save   

     In a statement of cash flows, proceeds from the sale of a company's own bonds or mortgages should be classified as cahs inflows from                     
     

a.     leveraging activities

b.     operating activities

c.     investing activities

d.     financing activities
Submitted: 5 years ago.
Category: Homework

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