Sub:Fi

nanci
alst
atementanay
sis

Cl
ass:Account
ing3r
dyear

MU.

Ti
tl
e:Chapt
er3and4MCQANSWERS.

Mul
ti
ple-
choi
cequest
ions:
A.Whi
choft
hef
oll
owi
ngaccount
swoul
dnotappearonaconv
ent
ional
bal
ancesheet
?

1.Account
sRecei
vabl
e

2.Account
sPay
abl
e

3.Pat
ent
s

4.Gai
nfr
om Sal
eofLand

5.CommonSt
ock.

Answer
:4

B.Cur
rentasset
sty
pical
l
yincl
udeal
lbutwhi
choft
hef
oll
owi
ngasset
s?

1.Cashr
est
ri
ctedf
ort
her
eti
rementofbonds

2.Unr
est
ri
ctedcash

3.Mar
ket
abl
esecur
it
ies

4.Recei
vabl
es

5.I
nvent
ori
es

Answer
:1

C.TheCur
rentLi
abi
l
iti
essect
ionoft
hebal
ancesheetshoul
dincl
ude

1.Land.

2.CashSur
renderVal
ueofLi
feI
nsur
ance.

3.Account
sPay
abl
e.
4.BondsPay
abl
e.

5.Pr
efer
redSt
ock.

Answer
:3

D.I
nvent
ori
esar
ethebal
anceofgoodsonhand.I
namanuf
act
uri
ngf
ir
m,t
heyi
ncl
ude
al
lbutwhi
choft
hefol
lowi
ng?

1.Rawmat
eri
als

2.Wor
kinpr
ocess

3.Fi
nishedgoods

4.Suppl
i
es

5.Const
ruct
ioni
npr
ocess

Answer
:5

E.Whi
choft
hef
oll
owi
ngaccount
swoul
dnotusual
l
ybecl
assi
fi
edasacur
rentl
i
abi
l
ity
?

1.Account
sPay
abl
e

2.WagesPay
abl
e

3.Unear
nedRentI
ncome

4.BondsPay
abl
e

5.TaxesPay
abl
e

Answer
:4

F.Fort
hei
ssui
ngf
ir
m,r
edeemabl
epr
efer
redst
ockshoul
dbecl
assi
fi
edwher
efor
anal
ysi
s

pur
poses?

1.Mar
ket
abl
esecur
it
y

2.Long-
ter
minv
est
ment

3.I
ntangi
ble
4.Li
abi
li
ti
es

5.Shar
ehol
der
s’equi
ty

Answer
:4

G.Whi
choft
hef
oll
owi
ngaccount
swoul
dnotbecl
assi
fi
edasani
ntangi
ble?

1.Goodwi
l
l

2.Pat
ent
.

3.Account
sRecei
vabl
e

4.Tr
ademar
ks

5.Fr
anchi
ses

Answer
:3

H.Whi
choft
hef
oll
owi
ngi
snott
ruer
elat
ingt
oint
angi
bles?

1.Researchanddev
elopmentusual
lyr
epr
esent
sasi
gni
fi
canti
ntangi
bleont
he
fi
nancial

st
atement
s.

2.Goodwi
l
lar
isesf
rom t
heacqui
sit
ionofabusi
nessf
orasum gr
eat
ert
hant
hephy
sical
asset

v
alue.

3.Pur
chasedgoodwi
l
lisnotamor
ti
zedbuti
ssubj
ectt
oannual
impai
rmentr
evi
ews.

4.Thegl
obal
treat
mentofgoodwi
l
lvar
iessi
gni
fi
cant
ly.

5.I
ntangi
blesar
eusual
l
yamor
ti
zedov
ert
hei
rusef
ull
i
vesorl
egal
li
ves,
whi
chev
eri
s

shor
ter
.

Answer
:1

I
.Gr
owt
hCompanyhadt
otal
asset
sof$100,
000andt
otal
li
abi
l
iti
esof$60,
000.Whati
s
t
he

bal
anceoft
hest
ockhol
der
s’equi
ty?
1.$0

2.$40,
000

3.$60,
000

4.$100,
000

5.Noneoft
heabov
e

Answer
:2

J.
TheCur
rentAsset
ssect
ionoft
hebal
ancesheetshoul
dincl
ude

1.I
nvent
ory
.

2.TaxesPay
abl
e.

3.Land.

4.Pat
ent
s.

5.BondsPay
abl
e.

Answer
:1

K.Whi
choft
hef
oll
owi
ngi
snotat
ypi
cal
cur
rentl
i
abi
l
ity
?

1.Account
spay
abl
e

2.Wagespay
abl
e

3.I
nter
estpay
abl
e

4.Pensi
onl
iabi
li
ti
es

5.Taxespay
abl
e

Answer
:4

L.
Whi
choft
hef
oll
owi
ngi
sacur
rentl
i
abi
l
ity
?

1.Unear
nedr
enti
ncome

2.Pr
epai
dint
erest

3.Land
4.Commonst
ock

5.Noneoft
heabov
e

Answer
:1

M.Tr
easur
yst
ocki
sbestcl
assi
fi
edasa

1.Cur
rentl
i
abi
l
ity
.

2.Cur
rentasset
.

3.Reduct
ionofst
ockhol
der
s’equi
ty.

4.Cont
raasset
.

5.Cont
ral
i
abi
l
ity
.

Answer
:3

N.Consi
der
ingI
FRSs,
whi
choft
hef
oll
owi
ngst
atement
swoul
dbeconsi
der
edf
alse?

1.I
FRSsdonotr
equi
reast
andar
dfor
matf
ort
hebal
ancesheet
.

2.Wit
hIFRSs,
usual
l
ynonconcur
rentasset
sar
epr
esent
edf
ir
st,
fol
l
owedbycur
rent
asset
s.

3.UnderI
FRSf
orl
i
abi
l
iti
esandowner
s’equi
ty,
capi
tal
andl
i
stedr
eser
vesar
eusual
l
y
l
ist
ed

f
ir
st,
thennoncur
rentl
i
abi
l
iti
es,
andt
hencur
rentl
i
abi
l
iti
esl
ast
.

4.Ther
eser
vessect
ionofcapi
tal
andr
eser
veswoul
dnotbepar
tofU.
S.GAAP.

5.Al
loft
hesei
temswoul
dbeconsi
der
edt
obet
rue.

Answer
:5

O.Consi
der
ingI
FRSs,
whi
choft
hef
oll
owi
ngst
atement
swoul
dbeconsi
der
edf
alse?

1.Whenusi
ngI
FRSs,
local
lawsorsecur
it
iesr
egul
ati
onsmayspeci
fydi
scl
osur
esi
n
addi
ti
on
t
othoser
equi
redbyI
FRSs.

2.IASintr
oducedanumberoft
ermi
nol
ogychanges.Thenewt
it
lesf
ort
hef
inanci
al
statements

ar
enotmandat
ory
.

3.TheI
FRSmodelconsol
idat
edbal
ancesheet
,aspr
esent
edbyDel
oit
teTouche,
put
s
anem-

phasi
sonl
iqui
dit
y.

4.UnderI
FRS,
noncont
rol
l
ingi
nter
est
sar
eusual
l
ypr
esent
edast
hel
asti
tem i
ntot
al
equi
ty.

5.Noneoft
hesest
atement
swoul
dbeconsi
der
edf
alse.
Answer
:3

MULTI
PLECHOI
CEQUESTI
ONSANDTHEI
RANSWERSCHAPTER4.

Par
tone.
a.Whichoft
hefol
lowi
ngit
emswoul
dbeclassi
fi
edasoper
ati
ngr
evenueorexpenseon
anincomestat
ementofamanuf
act
uri
ngf
irm?

1.I
nter
estexpense

2.Adv
ert
isi
ngexpense

3.Equi
tyi
ncome

4.Di
vi
dendi
ncome

5.Cumul
ati
veef
fectofchangei
naccount
ingpr
inci
ple

Answer
:2
b.Whi
choft
hef
oll
owi
ngi
sar
ecur
ri
ngi
tem?

1.Er
rorofapr
iorper
iod

2.Equi
tyi
near
ningsofnonconsol
i
dat
edsubsi
diar
ies

3.Ext
raor
dinar
yloss

4.Cumul
ati
veef
fectofchangei
naccount
ingpr
inci
ple

5.Di
scont
inuedoper
ati
ons

Answer
:2

c.Thefol
l
owingrel
atetotheincomestat
ementofGr
owt
hCompanyf
ort
hey
earended
2010.Whati
sthebeginni
nginventor
y?

Pur
chases$180,
000

Pur
chaser
etur
ns5,
000

Sal
es240,
000

Costofgoodssol
d210,
000

Endi
ngi
nvent
ory30,
000

1.$6,
000

2.$65,
000

3.$50,
000

4.$55,
000

5.$70,
000

Answer
:2

d.Whi
choft
hef
oll
owi
ngi
temsar
econsi
der
edt
obenonr
ecur
ri
ngi
tems?

1.Equi
tyear
nings

2.Unusual
ori
nfr
equenti
tem di
scl
osedsepar
atel
y

3.Di
scont
inuedoper
ati
ons
4.Ext
raor
dinar
yit
em

5.Cumul
ati
veef
fectofchangei
naccount
ingpr
inci
ple

Answer
:3,
4,
5ar
ecor
rect
s.

e.I
ftheinvest
orcompanyowns30%ofthestockoftheinvesteecompanyandthe
i
nvesteecompanyrepor
tspr
ofi
tsof$150,
000,thent
heinvestorcompanyrepor
tsequi
ty
i
ncomeof

1.$25,
000.

2.$35,
000.

3.$45,
000.

4.$50,
000.

5.$55,
000.

Answer
:3

f.Whichoft
hef
oll
owi
ngwoul
dbecl
assi
fi
edasanext
raor
dinar
yit
em ont
hei
ncome
stat
ement?

1.Lossf
rom t
ornado

2.Lossondi
sposal
ofasegmentofbusi
ness

3.Wr
it
e-downofi
nvent
ory

4.Cor
rect
ionofaner
roroft
hecur
rentper
iod

5.Lossf
rom st
ri
ke.

Answer
:1

g.Whi
choft
hef
oll
owi
ngi
str
uewhenacashdi
vi
dendi
sdecl
aredandpai
d?

1.Thef
ir
misl
eftwi
thal
i
abi
l
ityt
opayt
hedi
vi
dend.

2.Ret
ainedear
ningsi
sreducedbyt
heamountoft
hedi
vi
dend.

3.Ret
ainedear
ningsi
sincr
easedbyt
heamountoft
hedi
vi
dend.

4.Ret
ainedear
ningsi
snoti
nfl
uencedbyt
hedi
vi
dend.
5.St
ockhol
der
s’equi
tyi
sincr
eased.

Answer
:2

h.Whi
choft
hef
oll
owi
ngi
str
uewhena10%st
ockdi
vi
dendi
sdecl
aredanddi
str
ibut
ed?

1.Ret
ainedear
ningsi
sincr
eased.

2.St
ockhol
der
s’equi
tyi
sincr
eased.

3.St
ockhol
der
s’equi
tyi
sdecr
eased.

4.Aut
hor
izedshar
esar
eincr
eased.

5.Theoveralleff
ectist
oleavestockhol
ders’equi
tyintotalandeachowner
’sshar
eof
stockhol
ders’equit
yisunchanged;however
,thetotalnumberofsharesi
ncr
eases.

Answer
:5

Par
ttwo.
a.Thef
oll
owi
ngr
elat
etoOwensdat
ain2010.Whati
stheendi
ngi
nvent
ory
?

Pur
chases$580,
000

Begi
nni
ngi
nvent
ory80,
000

Pur
chaser
etur
ns8,
000

Sal
es900,
000

Costofgoodssol
d520,
000

1.$150,
000

2.$132,
000

3.$152,
000

4.$170,
000

5.$142,
000

Answer
:2
b.Changesi
naccountbal
ancesofGr
ossFl
ower
sdur
ing2010wer
easf
oll
ows:

I
ncr
ease

Asset
s $400,
000

Li
abi
l
iti
es 150,
000

Capi
tal
stock120,
000

Addi
ti
onal
pai
d-i
ncapi
tal
110,
000

b.Assumi
ngther
ewerenochar
gestoret
ainedear
ningsot
hert
handi
vi
dendsof
$20,
000,t
heneti
ncome(l
oss)f
or2010was

1.$(
20,
000)
.

2.$(
40,
000)
.

3.$20,
000.

4.$40,
000.

5.$60,
000.

Answer
:4

c.Whichoft
hef
oll
owi
ngwoul
dbecl
assi
fi
edasanext
raor
dinar
yit
em ont
hei
ncome
stat
ement?

1.Lossondi
sposal
ofasegmentofbusi
ness

2.Cumul
ati
veef
fectofachangei
naccount
ingpr
inci
ple

3.Asal
eoff
ixedasset
s

4.Aner
rorcor
rect
iont
hatr
elat
est
oapr
iory
ear
5.Al
ossf
rom af
loodi
nal
ocat
iont
hatwoul
dnotbeexpect
edt
ofl
ood

Answer
:5

d.Neti
ncome–noncont
rol
l
ingi
nter
estcomesf
rom whi
choft
hef
oll
owi
ngsi
tuat
ions?

1.Acompanyhasbeenconsol
idat
edwithouri
ncomest
atement
,andourcompany
ownslesst
han100%oftheothercompany.

2.Acompanyhasbeenconsoli
dat
edwi
thouri
ncomest
atement
,andourcompany
owns100%oftheothercompany.

3.Ourcompanyownsl
esst
han100%ofanot
hercompany
,andt
hest
atement
sar
enot
consol
idat
ed.

4.Ourcompanyowns100%ofanot
hercompany
,andt
hest
atement
sar
enot
consol
idat
ed.

5.Noneoft
heabov
e

Answer
:1

e.Whi
choft
hef
oll
owi
ngwi
l
lnotbedi
scl
osedi
nret
ainedear
nings?

1.Decl
arat
ionofast
ockdi
vi
dend

2.Adj
ust
mentf
oraner
roroft
hecur
rentper
iod

3.Adj
ust
mentf
oraner
rorofapr
iorper
iod

4.Neti
ncome

5.Netl
oss

Answer
:2

f.Bel
lCompanyhas2mi l
li
onsharesofcommonst ockwit
hparof$10.Addi ti
onalpaid-
i
ncapital
totals$15mil
li
on,andretai
nedearni
ngsi
s$15mi ll
ion.Thedirect
orsdeclar
ea
5%stockdividendwhenthemarketvaluei
s$10.Thereducti
onofr et
ainedearni
ngsas
aresul
tofthedeclar
ati
onwi l
lbe

1.$0.

2.$1mi
ll
ion.

3.$800,
000.
4.$600,
000.

5.Noneoft
heabov
e.

Answer
:2

g.Thestockhol
der
s’equi
tyofGaf
fneyCompanyatNov ember30,2010,
ispresented
bel
ow.Commonst ock,parval
ue$5,author
ized200,
000shar
es,100,
000sharesissued
andoutstandi
ng $500,
000

Pai
d-i
ncapi
tal
inexcessofpar 100,
000

Ret
ainedear
nings 300,
000

Tot
al $900,
000

OnDecember1, 2010,t
heboar
dofdir
ectorsofGaff
neyCompanydeclareda5%stock
div
idend,t
obedistr
ibut
edonDecember20.Themar ketpr
iceoft
hecommonst ockwas
$10onDecember1and$12onDecember20.Whati stheamountofthechangeto
ret
ainedearni
ngsasaresul
toft
hedeclar
ationanddist
ri
buti
onofthi
sstockdi
vi
dend?

1.$0

2.$40,
000

3.$50,
000

4.$60,
000

5.Noneoft
heabov
e.

Answer
:3

h.SchroederCompanyhad200,000sharesofcommonst ockoutstandingwi
tha$2par
val
ueandr etai
nedearni
ngsof$90,
000.In2008,ear
ningspersharewer e$0.
50.I
n2009,
thecompanyspl i
tthest
ock2for1.Whichofthefol
lowingwouldresultfr
om t
hestock
spli
t?

1.Ret
ainedear
ningswi
l
ldecr
easeasar
esul
toft
hest
ockspl
i
t.

2.At
otalof400,
000shar
esofcommonst
ockwi
llbeout
standi
ng.

3.Theparv
aluewoul
dbecome$4par
.

4.Ret
ainedear
ningswi
l
lincr
easeasar
esul
toft
hest
ockspl
i
t.
5.Noneoft
heabov
e.

Answer
:2

i
.Whichoft
hef
oll
owi
ngi
snotacat
egor
ywi
thi
naccumul
atedot
hercompr
ehensi
ve
i
ncome?

1.For
eigncur
rencyt
ransl
ati
onadj
ust
ment
s

2.Unr
eal
i
zedhol
dinggai
nsandl
ossesonav
ail
abl
e-f
or-
sal
emar
ket
abl
esecur
it
ies

3.Changest
ost
ockhol
der
s’equi
tyr
esul
ti
ngf
rom addi
ti
onal
mini
mum pensi
onl
i
abi
l
ity

4.Unr
eal
i
zedgai
nsandl
ossesf
rom der
ivat
ivei
nst
rument
s

5.Ext
raor
dinar
yit
em.

Answer
:5

Wr
oteby
:MohamedHassanMohamedkul
miy
e