hello I would like the answers for the multiple choice questions in the forum
These are the questions in the forum that you answered for someoneelse some time ago. they are 45 multiple choice questions.
Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?
A. A change in accounting principle in which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
B. A change in accounting principle in which the financial statements for prior periods included for comparative purposes should be restated.
C. A change in accounting estimate in which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
D. A change in accounting estimate in which the financial statements for prior periods included for comparative purposes should be restated.
2) Which of the following is accounted for as a change in accounting principle?
A. A change from the cash basis of accounting to the accrual basis of accounting
B. A change in inventory valuation from average cost to FIFO
C. A change in the estimated useful life of plant assets
D. A change from expensing immaterial expenditures to deferring and amortizing them as they become material
3) Which of the following is NOT treated as a change in accounting principle?
A. A change to a different method of depreciation for plant assets
B. A change from completed-contract to percentage-of-completion
C. A change from LIFO to FIFO for inventory valuation
D. A change from full-cost to successful efforts in the extractive industry
4) Hannah Company began operations on January 1, 2007, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:
Net Income (computed under the FIFO method)
Based upon the above information, a change to the LIFO method in 2008 would result in net income for 2008 of
5) On January 1, 2005, Baden Co. purchased a machine, which was its only depreciable asset, for $300,000. The machine has a 5-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2008, for financial statement reporting, Baden decided to change to the straight-line method for depreciation of the machine. Assume that Baden can justify the change. Baden's income before depreciation, before income taxes, and before the cumulative effect of the accounting change, if any, for the year ended December 31, 2008, is $250,000. The income tax rate for 2008, and for 2005 through 2007, is 30%. What amount should Baden report as net income for the year ended December 31, 2008?
6) During 2008, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. The following lists include gross profit figures under both methods for the past 3 years:
Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of what?
A. $390,000 on the 2008 income statement
B. $600,000 on the 2008 income statement
C. $390,000 on the 2008 retained earnings statement
D. $600,000 on the 2008 retained earnings statement
7) Interperiod tax allocation results in a deferred tax liability from
A. the amount of deferred tax consequences attributed to temporary differences that result in net deductible amounts in future years.
B. an income item partially recognized for financial purposes but fully recognized for tax purposes in any year.
C. the amount of deferred tax consequences attributed to temporary differences that result in net taxable amounts in future years.
D. an income item fully recognized for tax and financial purposes in any one year.
8) The rationale for interperiod income tax allocation is to
A. recognize a distribution of earnings to the taxing agency.
B. recognize a tax asset or liability for the tax consequences of temporary differences that exist at the balance sheet date.
C. adjust income tax expense on the income statement to be in agreement with income taxes payable on the balance sheet.
D. reconcile the tax consequences of permanent and temporary differences appearing on the current year's financial statements.
9) The deferred tax expense is the
A. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.
B. increase in balance of deferred tax asset minus the increase in balance of deferred tax liability.
C. decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability.
D. increase in balance of deferred tax asset plus the increase in balance of deferred tax liability.
10) Mortonson Corporation factored, with recourse, $300,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Mortonson estimates the recourse obligation at $7,200. What amount should Mortonson report as a loss on sale of receivables?
11) Joe Novak Corporation factored, with recourse, $100,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Joe Novak estimates the recourse obligation at $2,400. What amount should Joe Novak report as a loss on sale of receivables?
12) Mike McKinney Corporation had accounts receivable of $100,000 o January 1st The only transactions affecting accounts receivable were sales of $600,000 and cash collections of $550,000. What is the accounts receivable turnover?
13) Which of the following items is a current liability?
A. Bonds due in 3 years
B. Bonds for which there is an adequate sinking fund properly classified as a long-term investment, due in 3 months
C. Bonds to be refunded when due in 8 months, there being no doubt about the marketability of the refunding issue
D. Bonds, for which there is an adequate appropriation of retained earnings, due in 11 months
14) Which of the following statements is false?
A. Cash dividends should be recorded as a liability when they are declared by the board of directors.
B. Under the cash basis method, warranty costs are charged to expense as they are paid.
C. FICA taxes withheld from employees' payroll checks should never be recorded as a liability because the employer will eventually remit the amounts withheld to the appropriate taxing authority.
D. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis and demonstrates an ability to complete the refinancing.
15) Stock dividends distributable should be classified on the
A. balance sheet as an asset.
B. balance sheet as a liability.
C. balance sheet as an item of stockholders' equity.
D. income statement as an expense.
16) The primary purpose of the statement of cash flows is to provide information
A. that is useful in assessing cash flow prospects.
B. about the cash receipts and cash payments of an entity during a period.
C. about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.
D. about the operating, investing, and financing activities of an entity during a period.
17) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
A. estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.
B. eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.
C. eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.
D. rerecording all income statement transactions that directly affect cash in a separate cash flow journal.
18) An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as
A. a deduction from net income in arriving at net cash flow from operating activities.
B. a cash outflow from investing activities.
C. a cash outflow from financing activities.
D. an addition to net income in arriving at net cash flow from operating activities.
130 days and 12 hours ago.
19) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did not record the transaction. What would be the effect of this on its financial statements for January 31?
A. Net income was correct and current assets were understated.
B. Net income and current assets were overstated and current liabilities were understated.
C. Net income, current assets, and retained earnings were understated.
D. Net income, current assets, and retained earnings were overstated.
20) If the beginning inventory for 2006 is overstated, what are the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively?
A. Overstatement, understatement, and no effect
B. Understatement, overstatement, and overstatement
C. Understatement, overstatement, and no effect
D. Overstatement, understatement, and overstatement
21) Valuation of inventories requires the determination of all of the following EXCEPT
A. The physical goods to be included in inventory
B. The cost of goods held on consignment from other companies
C. The cost flow assumption to be adopted
D. The costs to be included in inventory
22) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be
A. written off as an extraordinary loss in the year the hotel is torn down.
B. capitalized as part of the cost of the land.
C. capitalized as part of the cost of the new hotel.
D. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.
23) The cost of land does not include
A. costs of improvements with limited lives.
B. special assessments.
C. costs of removing old buildings.
D. costs of grading, filling, draining, and clearing.
24) The cost of land typically includes the purchase price and all of the following costs EXCEPT
A. Private driveways and parking lots
B. Assumption of any liens or mortgages on the property
C. Street lights, sewers, and drainage systems cost
D. Grading, filling, draining, and clearing costs
25) On October 1, 2007, Lyman Co. purchased to hold to maturity, 200 of the $1,000 face value, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1 and the bonds mature on December 1, 2011. Lyman uses straight-line amortization. Ignoring income taxes, what was the amount reported in Lyman's 2007 income statement from this investment?
26) On its December 31, 2006, balance sheet, Quinn Co. reported its investment in available-for-sale securities, which had cost $600,000, at fair value of $550,000. At December 31, 2007, the fair value of the securities was $585,000. What should Quinn report on its 2007 income statement as a result of the increase in fair value of the investments in 2007?
A. Realized gain of $35,000
B. Unrealized gain of $35,000
C. Unrealized loss of $15,000
27) During 2007, Ellis Company purchased 20,000 shares of Hiller Corp. common stock for $315,000 as an available-for-sale investment. The fair value of these shares was $300,000 at December 31, 2007. Ellis sold all of the Hiller stock for $17 per share on December 3, 2008, incurring $14,000 in brokerage commissions. What should Ellis Company should report a realized gain on the sale of stock in 2008?
28) Which of the following best describes current practice in accounting for leases?
A. All long-term leases are capitalized.
B. All leases are capitalized.
C. Leases similar to installment purchases are capitalized.
D. Leases are not capitalized.
29) An essential element of a lease conveyance is that the
A. property that is the subject of the lease agreement must be held for sale by the lessor prior to the drafting of the lease agreement.
B. term of the lease is substantially equal to the economic life of the leased property.
C. lessee provides a sinking fund equal to one year's lease payments.
D. lessor conveys less than his or her total interest in the property.
30) Although only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that
A. a lease reflects the purchase or sale of a quantifiable right to the use of property.
B. during the life of the lease the lessee can effectively treat the property as if it were owned by the lessee.
C. at the end of the lease the property usually can be purchased by the lessee.
D. all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal.
31) The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
A. an amount received or paid to obtain a new debt instrument and, as such, should be amortized over the life of the new debt.
B. a difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption.
C. an amount that should be considered a cash adjustment to the cost of any other debt issued over the remaining life of the old debt instrument.
D. an adjustment to the cost basis of the asset obtained by the debt issue.
32) A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation?
A. The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period.
B. The balance of mortgage payable at a given balance sheet date will be reported as a long-term liability.
C. The amount of interest expense will remain constant over the 10-year period.
D. The balance of mortgage payable will remain a constant amount over the 10-year period.
33) Treasury bonds should be shown on the balance sheet as
A. a reduction of stockholders' equity.
B. an asset.
C. both an asset and a liability.
D. a deduction from bonds payable issued to arrive at net bonds payable and outstanding.
34) Benton Company issues $10,000,000 of 10-year, 9% bonds on March 1, 2007, at 97 plus accrued interest. The bonds are dated January 1, 2007, and pay interest on June 30 and December 31. What is the total cash received on the issue date?
35) A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2007. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2007?
36) Limeway Company issues $5,000,000, 6%, 5-year bonds dated January 1, 2007, on January 1, 2007. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?
Present value of a single sum for 5 periods
Present value of a single sum for 10 periods
Present value of an annuity for 5 periods
Present value of an annuity for 10 periods
37) The accumulated benefit obligation measures
A. an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
B. the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
C. the shortest possible period for funding to maximize the tax deduction.
D. the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
38) The projected benefit obligation is the measure of pension obligation that
A. requires the longest possible period for funding to maximize the tax deduction.
B. requires pension expense to be determined solely on the basis of the plan formula applied to years of service to date and based on existing salary levels.
C. is required to be used for reporting the service cost component of pension expense.
D. is not sanctioned under generally accepted accounting principles for reporting the service cost component of pension expense.
39) The interest on the projected benefit obligation component of pension expense
A. is the same as the expected return on plan assets.
B. reflects the rates at which pension benefits could be effectively settled.
C. reflects the incremental borrowing rate of the employer.
D. may be stated implicitly or explicitly when reported.
40) Noncumulative preferred dividends in arrears
A. are disclosed as a liability until paid.
B. must be paid before any other cash dividends can be distributed.
C. are not paid or disclosed.
D. are paid to preferred stockholders if sufficient funds remain after payment of the current preferred dividend.
41) Assume common stock is the only class of stock outstanding in the B-Bar-B Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called
A. stated value per share.
B. par value per share.
C. book value per share.
D. market value per share.
42) Dividends are not paid on
A. treasury common stock.
B. Dividends are paid on all of these.
C. noncumulative preferred stock.
D. nonparticipating preferred stock.
43) Which of the following is NOT a generally practiced method of presenting the income statement?
A. The consolidated statement of income
B. Including gains and losses from discontinued operations of a component of a business in determining net income
C. Including prior period adjustments in determining net income
D. The single-step income statement
44) In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements?
Identifiable Profit (Loss)
A. Option 3
B. Option 4
C. Option 1
D. Option 2
45) Parr, Inc. is a multidivisional corporation which has both intersegment sales and sales to unaffiliated customers. Parr should report segment financial information for each division meeting which of the following criteria?
A. Segment revenue is 10% or more of combined revenue of all the company segments.
B. Segment revenue is 10% or more of consolidated revenue.
C. Segment profit or loss is 10% or more of consolidated profit or loss.
D. Segment profit or loss is 10% or more of combined profit or loss of all company segments.
Posted by Bizhelp 130 days and 12 hours ago.
Response From Expert
Hello,There are too many questions for the listed price. Could you break up these questions into smaller posts or even individually ? Since you are a subscriber, no extra charge will be made for this. Please post these questions in groups of 5-15 on my profile here.
130 days and 11 hours ago.
130 days and 9 hours ago.
Thank you so much. without your help I would get 36/45. Thanks to you is 43/45.
Here is some additional information on items you missed:
Topic: [New Question]
Topic: Explain the methodology used to determine deferred taxes. Readings: Refer to Week One materials
Topic: [New Question] Topic: Apply inventory cost determination concepts. Readings: Refer to Week Three materials