WorksheetsIntermediate Accounting 1
Total questions: 61
Worksheet time: 43mins
Financial Accounting is the process that culminates in the preparation of financial reports on the enterprise for use by:
only internal users
only external users
only shareholders of the enterprise
both internal and external users
Corporations whose securities are listed on a U.S. stock exchange are required to file audited financial statements with the Securities Exchange Commission
True
False
Financial Accounting Concepts are a major type of pronouncement issued by the FASB
True
False
Which of the following was established by the federal government to help develop and standardize financial information presented to stockholders?
AICPA (American Institute of Certified Public Accountants)
SEC (Securities and Exchange Commission)
FASB (Financial Accounting Standards Board)
CAP (Committee on Accounting Procedure)
Which group selects members of the FASB
AICPA (American Institute of Certified Public Accountants)
SEC (Securities and Exchange Commission)
FAF (Financial Accounting Foundation)
FASAC (Financial Accounting Standards Advisory Council)
International Financial Reporting Standards (IFRS) are issued by the
AICPA (American Institute of Certified Public Accountants)
SEC (Securities and Exchange Commission)
FASB (Financial Accounting Standards Board)
IASB (International Accounting Standards Borad)
Revenues for services performed but not yet received in cash.
Defferal
Accrual
Expenses incurred but not yet paid in cash or recorded.
Defferal
Accrual
Expenses paid in cash before they are used or consumed.
Defferal
Accrual
Cash received before services are performed.
Defferal
Accrual
The statement of owner's equity demonstrates how successful a company was in controlling expenses during the year
True
False
Capital Allocation is the process of determining how and at what cost money is allocated among competing interests
True
False
Lighthouse Inc. is determining the extent of information to include in the notes of the financial statements. They want to make sure that there is sufficient information to aid users with their decision-making. What principle does this reflect?
Revenue Recognition
Full DIsclosure
Measurement
Cost Constraint
The role of the SEC in the foundation of the accounting standards can best be described as
it develops all accounting standards by itself
it allows the FASB to develop all accounting standards by itself
varied - the SEC relies on FASB to develop standards but gives advice and recommendations to the private sector as needed
non-existent
Politics play no role in establishing GAAP
True
False
IFRS assumes that financial statements are prepared on an accrual basis
True
False
1
2
3
4
IFRS is more " rules based" in its approach to standards than U.S. GAAP
True
False
The AICPA is responsible for setting the International Financial Reporting Standards
True
False
The hierarchy of accounting qualities identifies relevance and faithful representation as
contraints
enhancing qualities
fundamental qualities
foundational qualities
The passage of new FASB guidance is the form of an Accounting Standards Update requires the support of ________ of ________ Board members
(a)
As per the (a) principle, companies must weight the costs of providing the information against the benefits that can be derived for using it.
All of the following are true regarding the FASB Codification except:
The goal of the Codification was to provide one place where all authoritative literature about a particular topic could be found
the purpose of the Codification is to create new GAAP
the Codification was created to simplify user access
the Codification changes the way GAAP is documented, presented, and updated
Consistency is considered a form of comparibility
True
False
Elements of financial statements are classified into two groups. Which of the following is an element that describes an effect to a company during a period of time?
asets
equity
expenses
liabilities
Which of the following is not transferred to Retained Earnings at the end of the period?
Revenue
Dividends
Expenses
Common Stock
When a corporation purchases a computer for cash?
liabilities will be credited
stockholder's equity will be debited
the net effect on assets will be debited
the account cash will be credited
Which of the following is an external activity?
A transaction with another entity
Using machinery in operations
A change in the price of a good that an entity buys or sells
A flood
A trail balance...
proves that debits and credits are equal in the ledger
chronologically lists transactions and other events
proves that a company recorded all transactions
all are correct
What are the four elements of a journal entry?
The adjusting entry to record an accrued expense includes a debit to:
a liability and a credit to an expense account
a liability and a credit to a revenue account
a expense and a credit to a revenue account
a expense and a credit to a liability expense
Adjustments are often prepared
after the balance sheet date, but dated as of the balance sheet date
after the balance sheet date, and dated after the balance sheet date
before the balance sheet date, but dated as of the balance sheet date
before the balance sheet date, and dated after the balance sheet date
Financial statements are usually prepared directly from the adjusted trial balance
True
False
When a merchandiser prepares closing entries, COGS is credited and Income Summary is debited
True
False
Which of the following columns are generally found on a worksheet?
Chart of accounts
Statement of cash flows
Income Statement
Trial Balance
Adjustments
Which of the following is a nominal account?
Interest Payable
Dividends
Cash
Retained Earnings
When a cash dividend is declared:
assets decrease
liabilities increase
stockholders equity decreases
all are correct
When a dividend is paid ________ decrease and _________ decrease
(a)
If an adjusting entry was not made for a deferred revenue which was initially credited to an unearned revenue account, which of the following results?
Liabilities are understated
Revenues are over stated
Assets are unaffected
All are correct
If the adjusting entry for an accrued revenue is not made:
assets will be overstated
revenues will be overstated
liabilities will be understated
equity will be undersated
What is the proper sequence of financial statement preparation?
If the entry to close Income Summary to Retained Earnings includes a debit to Income Summary:
The company has incurred a net loss
RE will be increased by the current period's net income
Dividends paid exceed the net income earned for the period
Expenses exceed revenue
Due to an addition error, the net income on Park Inc.'s income statement in $750 higher than it should be. Assuming all the amounts listed on Park's adjusted trial balance are correct, which of the following problems would you also expect to find on Park's financial statements?
The ending balance on Park's retained earnings state will be $750 lower, and the firm's balance sheet will not balance because the total liabilities and stockholders' equity amount will be $750 higher than the total assets.
The ending balance on Park's retained earnings state will be $750 lower, and the firm's balance sheet will not balance because the total liabilities and stockholders' equity amount will be $750 lower than the total assets.
The ending balance on Park's retained earnings state will be $750 higher, and the firm's balance sheet will not balance because the total liabilities and stockholders' equity amount will be $750 higher than the total assets.
The ending balance on Park's retained earnings state will be $750 higher, and the firm's balance sheet will not balance because the total liabilities and stockholders' equity amount will be $750 lower than the total assets.
$ (a)
which of the following is true regarding income presentation under GAAP and IFRS?
requirements for minimum items on the income statement are set out under GAAP but not IFRS
requirements for minimum items on the income statement are set out under IFRS but not GAAP
both IFRS and GAAP have certain item requirement that are more rigorous than SEC rules
only the SEC rule set out certain minimum requirements
The income statement can be used to asses
profitability
Investment value
liquidity
creditworthiness
solvency
Which of the following is an acceptable method of presenting the income statement?
A classified income statement
A current operating performance income statement
A condensed income statement
A multiple-step income statement
A single-step income statement
Which of the following items would require a retrospective adjustment?
Change in estimate
Immaterial error
Change in accounting principle
Post acquisition of a subsidiary to reflect what the prior years earnings would have been
Ivanhoe Enterprises has an unusual or infrequent loss of $317,000, an unusual gain of $728,000, and a tax rate of 30%. At what amount should Ivanhoe report each item?
1
2
3
4
A change in the method of inventory pricing from FIFO to average-cost would be accounted for as a (an):
part of discontinued operations
accounting error
change in accounting principle
change in estimate
A multiple-step income statement
highlights certain intermediate components of income that analysts use to compute ratios for assessing the performance of the company
separates operating transactions from nonoperating transactions
matches costs and expenses with related revenues
all of the answer choices are correct
Losses as a result of a strike are considered unusual and infrequent
True
False
Prior period adjustments are reported as
an unusual gain or loss in the income statement
an addition to (or deduction from) net income in the income statement
an addition to (or a deduction from) the beginning balance or retained earnings
an addition to (or a deduction from) the ending balance or retained earnings
$ (a)
Alpha Industries enters into a contract to sell Bravo Aviation an airplane from its inventory and provide two years of maintenance as a part of the sale price. Does this contract represent one or two performance obligations?
It represents one because both the sale and the maintenance obligation represent explicit promises
It represents two because the obligations are no dependent upon each other and should be accounted separately
It represents two because revenue for the place generate a different type of revenue then the maintenance obligation
It represents two because the sale of the airplane generates revenue, while the maintenance obligation does not
In which of the following situations would it be more appropriate for a company to use the expected value to estimate variable consideration?
The company has a large number of contracts with similar characteristics
The company is entering into a contract that has only two possible outcomes
The company has a small number of contracts with similar characteristics
The company is entering into a contract that has only one possible outcome
Which of the following IS a reason that investors and creditors would examine the income statement?
to predict the amount of future cash flows
to predict the sources of future cash flows
to predict the uncertainty of future cash flows
to predict the timing of future cash flows
$___________ and $_____________
(a)
Which of the following would an accountant report on both the Statement of Stockholders' Equity and the Balance Sheet?
Accumulated other comprehensive income
total assets
total revenue
total expenses
What are the five steps in Revenue Recognition?
Epic, inc. had the following transactions:
I. Posted $15,000 income from a sale on June 28 in the sales journal on July 1.
II. Posted $39,780 of salaries payable on September 30 for the payroll period September 26 - October 2 paid on October 8
III. Received a check for $8,100 on January 23, and posted the receipt on January 31.
IV. Bought consumable supplies on March 14, waited to post the expense until April 30 after receiving a large payment from a customer.
Which transaction(s) would be considered earnings management?
I.
II.
III.
IV.
