Assignement /1

Total Marks : 10
Course Title: Intermédiate Accounting I Date : 18-2-2021
Time : 9-10
Course Code: BCAC 321
Duration :one hour
Section: T11
CRN: 19207
Name : ___________________________ 1945460
Student ID: _________________________

PLEASE READ THE INSTRUCTIONS BEFORE YOU START TO ANSWER:

▪ Write your full Name and ID clearly in the given space.
▪ Number of exam pages (includes cover page): […5…] pages.
▪ Materials Allowed: [……………].
▪ Number of question parts: […40…] (All are compulsory).
▪ Don’t write more than one answer for each question.
▪ Be sure to answer ALL questions.

CLOS AND GRADES DISTRIBUTION:

Total
Questions CLOs Domain Student's Marks
Marks
1 1.1 K 5
2 1.2 K 5

Total 10
K: Knowledge
S: Skills

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Question 1: 5 marks CLO 1.1
Part 1.1: True – False Statements
1.Comprehensive income includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners.

2.The historical cost principle would be of limited usefulness if not for the going concern assumption.

3.The economic entity assumption means that economic activity can be identified with a particular legal
entity.

4.The expense recognition principle states that debits must equal credits in each transaction.

5.Revenues are realizable when assets received or held are readily convertible into cash or claims to cash.

6.Supplementary information may include details or amounts that present a different perspective from that
adopted in the financial statements.

7.A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to
consistent standards.

8.The first level of the conceptual framework identifies the recognition and measurement concepts used in
establishing accounting standards.

9.Timeliness and neutrality are two ingredients of relevance.

10.Verifiability and predictive value are two ingredients of reliability.

Part 1.2: Multiple Choice Questions.

11. Which of the following is a primary characteristic of useful accounting information?
a. Comparability. b. Relevance. c. Consistency. d. Materiality.

12. Which of the following is an ingredient of relevance?

a. Verifiability. b. Representational faithfulness. c. Neutrality. d. Timeliness.

13. Which of the following is an ingredient of reliability?

a. Predictive value. b. Timeliness. c. Neutrality. d. Feedback value.

14. Which accounting assumption or principle is being violated if a company provides financial reports
in connection with a new product introduction?
a. Economic entity. b. Periodicity. c.Revenue recognition. d. Full disclosure.

15.Which of the following basic accounting assumptions is threatened by the existence of severe inflation
in the economy?
a. Monetary unit assumption. b. Periodicity assumption.
c. Going-concern assumption. d. Economic entity assumption.

16.The economic entity assumption

a. is inapplicable to unincorporated businesses.
b. recognizes the legal aspects of business organizations.
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 c. requires periodic income measurement.
d. is applicable to all forms of business organizations.

17. The assumption that a business enterprise will not be sold or liquidated in the near future is known as
the
a. economic entity assumption. b. monetary unit assumption.
c. conservatism assumption. d. none of these.

18. Generally, revenue from sales should be recognized at a point when

a. management decides it is appropriate to do so.
b. the product is available for sale to the ultimate consumer.
c. the entire amount receivable has been collected from the customer and there remains no further
warranty liability.
d. none of these.

19. Revenue generally should be recognized

a. at the end of production. b. at the time of cash collection.
c. when realized d. when realized or realizable and earned.

20. Which of the following is not a time when revenue may be recognized?
a. At time of sale b. At receipt of cash
c. During production d. All of these are possible times of revenue recognition.

Question 2: 5 marks CLO 1.2

Part 2.1: True – False Statements
21. Companies report the results of operations of a component of a business that will be disposed of
separately from continuing operations.

22. Gains or losses from exchange or translation of foreign currencies are reported as extraordinary
items.

23. Discontinued operations, extraordinary items, and unusual gains and losses are all reported net of tax
in the income statement.

24. Intraperiod tax allocation relates the income tax expense of the period to the specific items that give
rise to the amount of the tax provision.

25. A company that reports a discontinued operation or an extraordinary item has the option of reporting
per share amounts for these items.

26. The transaction approach of income measurement focuses on the income-related activities that have
occurred during the period.
27. Companies frequently report income tax expense as the last item before net income on a single-step
income statement.

28. Gross profit and income from operations are reported on a multiple-step but not a single-step income
statement.

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 29. Use of a multiple-step income statement will result in the company reporting a higher net income
than if they used a single-step income statement.

30. The income statement is useful for helping to assess the risk or uncertainty of achieving future cash
flows.
Part 2.2: Multiple Choice Questions
31. The single-step income statement emphasizes
a. the gross profit figures. b.total revenues and total expenses.
c. extraordinary items and accounting changes more than these are emphasized in the multiple-step
income statement.
d. the various components of income from continuing operations.

32. Which of the following is not a selling expense?

a. Advertising expense b. Office salaries expense
c. Freight-out d. Store supplies consumed.

33.Which of the following items will not appear in the retained earnings statement?
a. Net loss b. Prior period adjustment
c. Discontinued operations d. Dividends

34.The major elements of the income statement are

a. revenue, cost of goods sold, selling expenses, and general expense.
b. operating section, nonoperating section, discontinued operations, extraordinary items, and
cumulative effect.
c. revenues, expenses, gains, and losses. d. all of these.

35.Information in the income statement helps users to

a. evaluate the past performance of the enterprise.
b. provide a basis for predicting future performance.
c. help assess the risk or uncertainty of achieving future cash flows.
d. all of these.

❖ Use the following information for questions 36 and 37.

At Ruth Company, events and transactions during 2010 included the following. The tax rate for all items
is 30%.
- Depreciation for 2008 was found to be understated by $30,000.
- A strike by the employees of a supplier resulted in a loss of $25,000.
- The inventory at December 31, 2008 was overstated by $40,000.
- A flood destroyed a building that had a book value of $500,000. Floods are
very uncommon in that area.

36. The effect of these events and transactions on 2010 income from continuing operations net of tax
would be.
a. $17,500. b. $38,500. c. $66,500. d. $416,500.

37.The effect of these events and transactions on 2010 net income net of tax would be
a. $17,500. b. $367,500. c. $388,500. d. $416,500.

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38.Ortiz Co. had the following account balances:
Sales $ 120,000 - Cost of goods sold $60,000 -Salary expense $10,000 -Depreciation expense $20,000 -
Dividend revenue $4,000 -Utilities expense $8,000- Rental revenue $20,000 -Interest expense
$12,000 -Sales returns $11,000 - Advertising expense $13,000.
What would Ortiz report as total revenues in a single-step income statement?
a. $133,000 b. $ 10,000 c.$144,000 d.$120,000

39. For Mortenson Company, the following information is available:

Cost of goods sold $ 60,000 - Dividend revenue $2,500 - Income tax expense $6,000 -
Operating expenses $23,000 - Sales $ 100,000
In Mortenson’s single-step income statement, gross profit
a.should not be reported. b.should be reported at $13,500.
c.should be reported at $40,000. d.should be reported at $42,500.

40.Dole Company, with an applicable income tax rate of 30%, reported net income of $210,000. Included
in income for the period was an extraordinary loss from flood damage of $30,000 before deducting the
related tax effect. The company's income before income taxes and extraordinary items was
a. $240,000. b. $300,000. c. $330,000. d. $231,000.

End Assignment/1