Day 27

Question 1

The measurement focus of governmental type funds is on the determination of:

Answer 1

1. Current financial resources
2. Financial position

MCQ-00893

Question 2

A method of estimating Uncollectible accounts that emphasis asset validation rather than income measurement is the allowance method based on:

Answer 2

Aging the receivables

MCQ-00171

Question 3

What are characteristics of governmental funds?

Answer 3

1. Current financial resources measurement is the focus
2. Modified Accrual accounting
3. There is often a budgetary focus

MCQ-07910

Question 4

Equation: Goodwill

Answer 4

= Fair Value of Sub (what you paid)
Less: FMV of net assets acquired

MCQ-00590

Question 5

Equation: Comprehensive Income

Answer 5

= Net Income + OCI

MCQ-05649

Question 6

On 01/01 year 1 a CEO was awarded a $200k bonus to be paid in two $100k installments in year 3 and 4. What amount should the company expense in years 2 and 3?

Answer 6

Year 2 = $100k
Year 3 = $0

Deferred comp, the cost of the benefits should be associated with the service period required, year 1 and 2

When the payment occurs in year 3 and 4 there is no effect on the income Stmt

MCQ-04227

Question 7

How should the acquirer recognize a bargain purchase in a business acquisition?

Answer 7

As a gain in earnings at the acquisition date

In a business combination, assets and Liabilities must be valued at FMV

MCQ-08232

Question 8

Reporting requirements for post employment benefits

Answer 8

all four must be met to meet reporting requirements

1. The employers obligation related to employees rights to receive compensation for future absences is attributable to services rendered
2. The obligation related to rights that vest or accumulate
3. Payment of compensation is probable
4. The amount can be reasonably estimated

MCQ-00704

Question 9

Accruing warranty costs for financial reporting purposes creates what?

Answer 9

Deferred Tax Asset (temporary difference)

MCQ-04504

Question 10

Accrued Vacation conditions:

Answer 10

All four conditions must be met to accrue

1. Services already rendered
2. The liability relates to rights that vest or accumulated
3. Payment of compensation is Probable
4. Reasonably Estimated

Note: if only three conditions are met = disclosure in a note in the FS

MCQ-07879

Question 11

What is included in Comprehensive Income?

Answer 11

All changes in Equity during a period, EXCEPT OWNER TRANSACTIONS

MCQ-15674

Question 12

List Balance Sheet FS Disclosures:

Answer 12

1. All Deferred Tax Liabilities
2. All Deferred Tax Assets
3. The valuation allowance for Deferred Tax Assets
4. The net change during the year in the total valuation allowance
5. The Tax Effect of Temporary Differences and Carryforwards

MCQ-05207

Question 13

An NOL creates what?

Answer 13

Deferred Tax Asset

US GAAP does not recognize the Net Operating Loss Carry Forward in the year of loss

MCQ-00857

Question 14

How should Preferred Stock DIV in arrears be reported?

Answer 14

As a note to the FS

Note: Since no DIV were declared, no journal entry is made nor are Liabilities or Equity affected

MCQ-04505

Question 15

Equation: Common Stockholders’ Equity Formula

Answer 15

A - L = Total SH Equity
Less: Preferred Stock Outstanding
Less: Cumulative Preferred DIV in arrears
———————————————————————
= Common SH Equity

MCQ-05940

Question 16

How is Common Stock with an unconditional redemption feature reported on the books?

Answer 16

As a Liability

MCQ-08252

Question 17

What amount of RE should be appropriated when Treasury stock that cost $15k was reissued for $8k?

Answer 17

$0

Rule: There is no requirement to appropriate RE for any purpose

Note: “Losses” on Treasury Stock would reduce Paid In Capital in Excess of Par

MCQ-01527