MISSED MCQS

Question 1

Why are nonconvertible cumulative preferred stock shares deducted from NI whether or not an actual liability exists?

Answer 1

Cumulative preferred stock owners must receive any dividends in arrears before future dividend distributions can be made to common stockholders.

Question 2

DILUTED EPS CALCULATION

Answer 2

(NI + CONVERTIBLE PREFERRED DIV + DEBT INTEREST)/(OUTSTANDING SHARES + CONVERTIBLE SECURITIES)

Question 3

R&D Cost Elements according to FASB

Answer 3

1. Materials, Equipment, & Facilities
2. Personnel
3. Intangibles purchased from others
4. Contract Services
5. Indirect Costs - not General or Admin

Question 4

Are R&D costs capitalized or expensed in the period incurred?

Answer 4

Intangibles purchased from others and Materials, Equipment, and Facilities may be capitalized if they have an alternative future use. Otherwise, all R&D should be expensed in the period incurred.

Question 5

Does IFRS allow profit or loss of equity securities in NI or OCI?

Answer 5

IFRS allows profit/loss on securities to be recorded on the I/S if equity securities are held-for-trading (to make profit on price appreciation). Otherwise, profit/loss must be recorded as OCI.

Question 6

Chain Discounts

Answer 6

Multiple trade discounts allowed to be applied to the list price. each discount must be applied in steps. If terms are listed (ie 2/10 net 30), those would be applied after all trade discounts.

Question 7

Net Method recording of purchases

Answer 7

Recording purchases net of trade discounts

Question 8

When are loss contingencies recognized

Answer 8

Loss Contingencies are recognized when both of the following are true:

1. Info available indicates that a loss is probable (an asset has been impaired or a liability has been incurred) AND
2. The amount of the loss can be reasonably estimated.

Question 9

When are gain contingencies recognized

Answer 9

Unlike loss contingencies, GAIN contingencies are only recognized when a specific event actually occurs, because to do so would recognize the gain prior to its realization.

Question 10

What Financial Statements should not for profit hospitals provide?

Answer 10

1. Statement of Change in Assets
2. Statement of Operations
3. Balance Sheet
4. Statement of Cash Flows

Question 11

Under what conditions is a corporation’s capital structure considered “simple?”

Answer 11

A corporation’s capital structure is considered “simple” if it consists only of common stock or does not included potentially dilutive securities that could dilute EPS upon conversion or exercise.

Question 12

EPS Calculation

Answer 12

(Net Income - Div on cumulative preferred & declared Div on noncumulative preferred stock)/weighted avg # of shares outstanding

Question 13

What are the balance sheet measurements

Answer 13

1. Historical Cost
2. Depreciated Historical Cost
3. Market (Fair) Value
4. Realizable Net Value
5. Present Value

Question 14

A deferred tax liability is computed using what tax laws

Answer 14

current tax laws, unless enacted future tax laws are different.