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2010-03-28 194914 Intermediate 2
2010-03-28 194914 Intermediate 2
(Points: 5) has all CPAs in the United States vote on a new Statement. enables interested
parties to express their views on issues under consideration. identifies the accounting
issues that are the most important. requires that all accountants receive a copy of financial
standards.
2. (TCO A) The IASB: (Points: 5) governs accounting standards in the U.S. is working
on a convergence project with the FASB. sets the accounting standards for only
European countries. plays only a minor part in accounting rule making throughout the
world.
4. (TCO A) Information is neutral if it: (Points: 5) provides benefits which are at least
equal to the costs of its preparation. can be compared with similar information about an
enterprise at other points in time. would have no impact on a decision maker. is free from
bias toward a predetermined result.
6. (TCO A) Issuance of common stock for cash affects which basic element of financial
statements? (Points: 5) Revenues Losses Liabilities Equity
8. (TCO A) Which basic assumption may not be followed when a firm in bankruptcy
reports financial results? (Points: 5) Economic entity assumption Going concern
assumption Periodicity assumption Monetary unit assumption
9. (TCO A) What is the quality of information that enables users to better forecast future
operations? (Points: 5) Reliability. Materiality. Comparability. Relevance.
11. (TCO A) Which of the following is true with regard to the element "comprehensive
income"? (Points: 5) includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. is optional for
financial statement preparers. is not in accordance with GAAP. came into law with the
passing of the Sarbanes-Oxley Act.
12. (TCO A) Which of the following basic accounting assumptions is threatened by the
existence of severe inflation in the economy? (Points: 5) Monetary unit assumption.
Periodicity assumption. Going-concern assumption. Economic entity assumption.
13. (TCO D) One criticism not normally aimed at a balance sheet prepared using current
accounting and reporting standards is (Points: 5) failure to reflect current value
information. the extensive use of separate classifications. an extensive use of estimates.
failure to include items of financial value that cannot be recorded objectively.
14. (TCO D) The amount of time that is expected to elapse until an asset is realized or
otherwise converted into cash is referred to as (Points: 5) solvency. financial flexibility.
liquidity. exchangeability.
15. (TCO D) The net assets of a business are equal to (Points: 5) current assets minus
current liabilities. total assets plus total liabilities. total assets minus total stockholders'
equity. none of these.
16. (TCO D) Houghton Company has the following items: common stock, $720,000;
treasury stock, $85,000; deferred taxes, $100,000 and retained earnings, $313,000. What
total amount should Houghton Company report as stockholders' equity? (Points: 5)
$848,000 $948,000 $1,048,000 $1,118,000
17. (TCO D) The current assets section of the balance sheet should include (Points: 5)
machinery patents goodwill inventory
18. (TCO D) An example of an item which is not an element of working capital is:
(Points: 5) accrued interest on notes receivable. goodwill. goods in process. temporary
investments.
19. (TCO D) Which of the following is not an acceptable major asset classification?
(Points: 5) Current assets Long-term assets Property, plant, and equipment Deferred
charges
20. (TCO D) The presentation of long-term liabilities in the balance sheet should
disclose: (Points: 5) maturity dates interest rates conversion rights all of the above
21. (TCO D) Equity or debt securities held to finance future construction of additional
manufacturing plants should be classified on the balance sheet as: (Points: 5) current
assets. property, plant and equipment. intangible assets. long-term investments.
22. (TCO D) Treasury stock should be reported as a(n) (Points: 5) current asset.
investment other asset. reduction of stockholder's equity.