Day 11 - A2C & Profit Ratios

Question 1

How is accumulated other comprehensive income presented on a company’s balance sheet?

Answer 1

As an equity item following RE

MCQ-07433

Question 2

The effective tax rate for operations for the full year should include:

Answer 2

Foreign tax rates and Available tax planning alternatives

MCQ-00238

Question 3

Revenue recognition: Input methods

Answer 3

1. Resources consumed
2. Labor hours expanded
3. Costs incurred to total expected costs

MCQ-06240

Question 4

An entity should recognize a refund liability when:

Answer 4

If it receives or expects to receive consideration from a customer and anticipates having to refund a portion or all of the consideration

MCQ-08613

Question 5

How should a company report it’s change from cash basis to accrual basis?

Answer 5

As an error correction (net of tax), by adjusting the begging balance of RE

MCQ-14613

Question 6

Cash to Accrual steps:

Answer 6

1. Add increases in CA to income
2. Subtract decreased in CA to income
3. Add decreases in CL to income
4. Subtract increases in CL to income

MCQ-06929

Question 7

When translating a foreign FS, where would the gains and losses from remeasurement and translation be reported?

Answer 7

Remeasurement = Net Income

Translation = Other Comprehensive Income

MCQ-07434

Question 8

For accelerated filer how many does does a company have to file the form 10-k?

Answer 8

75 days

MCQ-06618

Question 9

The balance in accumulated other comprehensive income from one period to the next will change as a result in changes:

Answer 9

Of other comprehensive income only

MCQ-07442

Question 10

What would not be recognized in other Comprehensive Income?

Answer 10

Gain or lose related to fair value hedge

This is included in CY earnings

MCQ-15675

Question 11

Accrual to cash steps:

Answer 11

1. Subtract increases in CA
2. Add decreases in CA
3. Subtract decreases in CL
4. Add increases in CL

MCQ-08564

Question 12

What is not a common modification used to prepare modified cash basis FS?

Answer 12

Recognizing revenues when earned

Common Modifications include:
- Record of LT liabilities
- Accrual of income taxes
- Capitalizing inventory

MCQ-06396

Question 13

Enhancing Qualitative Characteristics

Answer 13

1. Comparability
2. Verifiability
3. Timeliness
4. Understandability

MCQ-05652

Question 14

Marr Corp. reported rental revenue of $2,210,000 in its cash basis federal income tax return for the year ended November 30, Year 2. Additional information is as follows:

Rents receivable - November 30, Year 2: $1,060,000
Rents receivable - November 30, Year 1: $800,000
Uncollectible rents written off during the fiscal year: ($30,000)

Under the accrual basis, Marr should report rental revenue of:

Answer 14

Rents Receivable Beg. $800,000
Add: Billings accrued XXX,XXX
Sub Total:

Less: Cash Collections ($2,210,000)
Less: Write-Offs ($30,000)
= Rent Receivable $1,060,000

Answer: $2,500,000

MCQ-00615

Question 15

The conversion from Cash to Accrual basis revenue includes the following adjustments when starting with Cash Basis revenue:

Answer 15

1. Add: Ending AR
2. Subtract: Beginning AR
3. Subtract: Ending Unearned Revenue
4. Add: Beginning Unearned Revenue

MCQ-14851

Question 16

Dannon Co. mistakenly reported its expenses of $35,200 on the cash basis. Corporate records revealed the following information:

Beginning prepaid expense: $1,300
Beginning accrued expense: $1,650
Ending prepaid expense: $1,800
Ending accrued expense: $1,200

What amount of expense should Dannon report on its books under the accrual basis?

Answer 16

$35,200 Cash Basis Expense
+ 1,300
- 1,800
- 1,650
+ 1,200

= $34,250 Accrual basis expense

MCQ-05631

Question 17

Equation: Inventory Turnover

Answer 17

COGS = Beg Inv + Purchases - Ending Inv.

Inventory Turnover = COGS / Avg. Inv

MCQ-05956

Question 18

Equation: Working Capital

Answer 18

= CA - CL

MCQ-04909

Question 19

Equation: AR Turnover

Answer 19

= Sales / Avg. AR

MCQ-05460

Question 20

Equation: Asset Turnover

Answer 20

= Sales / Avg. Total Assets

MCQ-04668

Question 21

Equation: Profit Margin

Answer 21

= Net Income / Sales

MCQ-04949

Question 22

Equation: Return on Assets (ROA)

Answer 22

= Net Income / Avg. Total Assets

MCQ-04950

Question 23

If ABC, Inc. sold $100 of Inventory for $100 cash which ratio would decrease?

Answer 23

Net Profit Margin

If Inventory is sold at cost, Net Income does not change but Net Sales Increases

MCQ-04954

Question 24

Equation: Total Debt Ratio

Answer 24

= Total Liabilities / Total Assets

MCQ-04966

Question 25

What are the 3 ways to create a New Partnership Interest with Investment of Additional Capital?

Answer 25

1. Exact
2. Bonus
3. Goodwill

Finger Math:
- Get 1/4 = 4 - 1 = Divide by 3
- Get 1/20 = 20 - 1 = Divide by 19

MCQ-04552

Question 26

In the formation of a partnership, assets are recorded at:

Answer 26

Fair Market Value

MCQ-05089

Question 27

Rule: In the formation of a partnership, tangible assets would be recorded at _______ at the date of the investment

Answer 27

FMV

MCQ-00747

Question 28

Rules: Bonus Method

Answer 28

1. Determine total capital and the interest to the new partner
2. if interest less than amount contributed = bonus to old partners
3. if interest greater than amount contributed, bonus to new partner

MCQ-00871