ACCT 304 Week 4 Midterm : Comprehensive Income and Time Value of Money
100% All correct answers + Instructors explanations
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1. Question : (TCO 1) GAAP is an abbreviation for:
generally authorized accounting procedures.
generally applied accounting procedures.
generally accepted auditing practices.
generally accepted accounting principles.
2. Question : (TCO 2) The conceptual framework’s qualitative characteristic of faithful representation includes:
predictive value.
neutrality.
confirmatory value.
timeliness.
3. Question : (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:
debit to investments.
credit to retained earnings.
credit to capital stock.
debit to expense.
4. Question : (TCO 3) When a tenant makes an end-of-period adjusting entry credit to the “Prepaid rent” account:
(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. Question : (TCO 3) Permanent accounts would not include:
cost of goods sold.
inventory.
current liabilities.
accumulated depreciation.
6. Question : (TCO 4) Notes payable:
is a current liability account.
usually has a debit balance.
is a non-current liability account.
cannot determine its classification without additional information.
7. Question : (TCO 4) The acid-test ratio is also known as the:
current ratio.
debt equity ratio.
times interest earned ratio.
quick ratio.
8. Question : (TCO 5) The difference between single-step and multiple-step income statements is primarily an issue of:
consistency.
presentation.
measurement.
valuation.
9. Question : (TCO 5) A voluntary change in accounting principle is accounted for by:
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. Question : (TCO 5) Cash flows from investing activities do not include:
proceeds from issuing bonds.
payment for the purchase of equipment.
proceeds from the sale of marketable securities.
cash outflows from acquiring land.
11. Question : (TCO 5) Comprehensive income is the change in equity from:
owner transactions.
non-owner transactions.
owner or non-owner transactions.
capital transactions.
12. Question : (TCO 5) In a statement of cash flows prepared under International Financial Reporting Standards, each of the following items is typically classified as a financing cash flow except:
interest paid.
dividends paid.
proceeds from the issuance of long-term debt.
dividends received.
13. Question : (TCO 4) The balance sheet reports:
net income at a point in time.
cash flows for a period of time.
assets and equities at a point in time.
assets and liabilities for a period of time.
14. Question : (TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared?
Customers
Suppliers
Employees
All of the above are external users of financial statements.
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1. Question : (TCO 5) Please identify the subtotals that would be reported on the income statement (including the amount) as Misty’s earnings per share (EPS)?
Misty’s effective tax rate is 40% and there were 1,000 shares of common stock outstanding.
2. Question : (TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.
What would Symphony report as total assets? Hint: Dont forget to deduct the contra assets.
What would Symphony report as total shareholders’ equity? Hint: You will need to deduct dividends.
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1. Question : (TCO 4) Briefly explain the purpose of the disclosure note on significant accounting policies. Provide two examples of what might be found in this note.
2. Question : (TCO 2) Briefly describe the materiality constraint.
3. Question : (TCO 5) What is the purpose of the statement of cash flows? List the three major categories of cash flows and give an example of a cash transaction for each category.
4. Question : (TCO 3) What is the purpose of the closing process?