intermediate accounting 450022

1. (TCO 1) The International Accounting Standards Board: (Points : 5)

was the predecessor to the IASC.
can overrule the FASB when their policies disagree.
promotes the use of high quality, understandable global accounting standards.
has its headquarters in Geneva.

2. (TCO 2) The FASB’s conceptual framework’s qualitative characteristics of accounting information includes: (Points : 5)

full disclosure.
relevance.
going concern.
historical cost.

3. (TCO 3) Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in exchange. Mary Parker Co.’s journal entry to record this transaction would include a: (Points : 5)

debit to investments.
credit to retained earnings.
credit to capital stock.
debit to expense.

4. (TCO 3) When a tenant makes an end of period adjusting entry credit to the “Prepaid rent” account: (Points : 5)

(s)he usually debits cash.
(s)he usually debits an expense account.
(s)he debits a liability account.
(s)he does none of the above.

5. (TCO 3) Temporary accounts would not include: (Points : 5)

salaries payable.
depreciation expense.
supplies expense.
cost of goods sold.

6. (TCO 4) Notes payable: (Points : 5)

is a current liability account.
usually has a debit balance.
is a non current liability account.
cannot determine its classification without additional information.

7. (TCO 4) Which of the following is not a financing ratio? (Points : 5)

Time interest earned ratio.
The debt to equity ratio.
The current ratio.
All of the above are financing ratios.

8. (TCO 5) Popson Inc. incurred a material loss which was not unusual in character, but was clearly an infrequent occurrence. This loss should be reported as: (Points : 5)

an extraordinary loss.
a separate line item between income from continuing operations and income from discontinued operations.
a separate line item within income from continuing operations.
a separate line item in the retained earnings statement.

9. (TCO 5) A voluntary change in accounting principle is accounted for by: (Points : 5)

a cumulative effect on income in the year of the change.
a retrospective reporting of all comparative financial statements shown.
a prior period adjustment.
a separate line component of income.

10. (TCO 5) In the operating activities section of the statement of cash flows, we start with net income: (Points : 5)

in the direct method.
in the indirect method.
in both the direct and the indirect methods.
in neither the direct nor the indirect methods.

11. (TCO 5) Each of the following would be reported as items of other comprehensive income except: (Points : 5)

foreign currency translation gains.
unrealized gains on investments accounted for as securities available for sale.
deferred gains from derivatives.
gains from the sale of equipment.

12. (TCO 5) Expenses in an income statement prepared under International Financial Reporting Standards: (Points : 5)

must be classified by function.
must be classified by natural description.
can be classified either by function or by natural description.
none of the above is correct.

13. (TCO 4) Current assets include cash and all other assets expected to become cash or be consumed: (Points : 5)

within one year.
within one operating cycle.
within one year or one operating cycle, whichever is shorter.
within one year or one operating cycle, whichever is longer.

14. (TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared? (Points : 5)

Customers
Suppliers
Employees
All of the above are external users of financial statements.

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