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Question 1

A change in an accounting principle is a/an

Answer 1

accounting change.

Question 2

A change in an accounting estimate is a/an

Answer 2

accounting change.

Question 3

A change in a reporting entity is a/an

Answer 3

accounting change.

Question 4

The correction of an error in previously issued financial statements is not a/an

Answer 4

accounting change.

Question 5

What comprises operations and cash flows that can be clearly distinguished, both operationally and for financial reporting purposes from the rest of an entity?

Answer 5

Component of an Entity

Question 6

How can a component of an entity be reported?

Answer 6

reportable segment
operating segment
reporting unit
a subsidiary
an asset group

Question 7

The gains and losses and the operating results from discontinuing a business segment is known as

Answer 7

discontinued operations.

Question 8

Does the business segment have to be a separate line of business or class of customers when being discontinued?

Answer 8

Yes

Question 9

To be reported as discontinued operations, what must a disposal represent?

Answer 9

a strategic shift

Question 10

What is a strategic shift?

Answer 10

Something that has a major effect on the entity’s operations and financial results.

Question 11

The condition that exists when the amount of a long-lived asset (or asset group) carried on an organization’s books exceeds its fair value is known as

Answer 11

impairment.

Question 12

When should an impairment loss be recognized?

Answer 12

Only if the carrying amount of a long-lived asset (or asset group) is not recoverable and exceeds its fair value.

Question 13

When is the carrying amount of a long-lived assets (or asset group) not recoverable?

Answer 13

If it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (or asset group). [That assessment is based on the carrying amount of the asset at the date it is tested for recoverability, whether in use or under development.

Question 14

How is an impairment loss measured?

Answer 14

As the amount by which the carrying amount of a long-lived asset exceeds its fair value.

Question 15

What distinguishes a not-for-profit entity from a business entity?

Answer 15

-A contribution of significant resources from providers who do not expect proportionate return
- operating purposes other than to provide goods and services for profit
-absence of ownership interests in like business enterprises

-The IRS stipulates that no part of the organization’s net earnings can inure for the benefit of any specific person or persons.

Question 16

Where are discontinued operations presented in an income statement?

Answer 16

Just below income from continuing operations.

Question 17

What is needed to be able to report something as a discontinued operation?

Answer 17

a strategic shift

Question 18

What must a strategic shift do in order to be treated as a discontinued operation?

Answer 18

It must have a major effect on the entity’s operations and financial results.

Question 19

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