acct 253 ch 24

  1. Areas directly affected by FASB standards included all of the following except

    C. management's discussion and analysis
  2. Which of the following is not a reason for the increase in disclosure requirements?

    C. full disclosure principle
  3. Common notes to the financial statements include disclosures for all of the following except

    C. executive compensation
  4. The financial statements are not corrected for

    B. related party transactions
  5. A subsequenty event that would require adjustment of the financial statements is the

    D. loss on an accounts receivable resulting from a customer's bankruptcy
  6. An operating segment is identified as a reportable segment if
    a its revenue is greater than 10% of the combined revenue of all the company's operating segments
    b. its identifiable assets are greater than 10% of the combined assets of all operating segments
    c. the absolute amount of its profit (loss) is 10% or more of the greater of the combined operating segments' profit or the combined operating segments' loss
    d. any of the options are satisfied
    • c. the absolute amount of its profit (loss) is 10% or more of the
    • greater of the combined operating segments' profit or the combined
    • operating segments' loss
  7. The FASB requires that a company report all of the following information except

    C. all of the options are reported
  8. Which of the following statements related to interm reporting is not correct?

    B. Companies may use the gross profit method for annual inventory pricing, but disclosure of the method is required
  9. Extraordinary items that occur in interim reports are

    D. absorbed entirely in the quarter in which they occur
  10. In preparing the auditor's report, the auditor follows all of the following reporting standards except the report shall

    B. state whether the financial statements are presented in accordance with generally accepted auditing standards
  11. When the scope of the auditor's examination is limited or affected by conditions or restrictions, the auditor would

    D. express a qualified opinion
  12. Management's discussion and analysis (MD & A) section covers all of the following financial aspects of an enterprise's business except

    B. cash flows
  13. Propspective financial statements that present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and cash flows is a financial

    A. forecast
  14. Arguments for requiring published forecasts include all of the following except that

    B. disclosure of forecasts will be beneficial to organizations
  15. Which of the following would not be an opportunity for fraudulent financial reporting?

    D. all of the options would be opportunities
  16. Which of the following should be disclosed in Summary of Significant Accounting Policies?

    B. Depreciation method followed
  17. An example of an inventory accounting policy that should be disclosed in a Summary of Significant Accounting Policies is the

    C. method used for pricing inventory
  18. The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

    C. disclosure of any financial facts significant enough to influence the judgment of an informed reader
  19. If a business entity entered into certain related party transaction, it would be required to disclose all of the following information except the

    D. nature of any future transactions planned between the parties and the terms involved
  20. Events that occur after December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable shoud be

    B. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008
  21. Which of the following post balance sheet events would generally require disclosure, but no adjustment of the financial statements?

    A. issue of a large amount of capital stock
  22. Which of the following subsequent events (post balance sheet events) would require adjustment of the accounts before issuance of the financial statements?

    D. loss on a lawsuit, the outcome of which was deemed uncertain at year end
  23. A segment of a business enterprise is to be reported separately when the revenues of the segment exceed 10% of the

    B. total revenues of all the enterprise's industry segments
  24. The profession requires disaggregated information in the following ways

    C. all of these
  25. APB Opinion No. 28 indicates that

    A. the same accounting princeiples used for the annual report should be employed for interim reports
  26. In considering interim financial reporting, how does the profession conclude that such reporting should be viewed?

    D. as reporting for an intergral part of an annual period
  27. The required approach for handling extraordinary items in interm repots is to

    A. change or credit the loss or gain in the quarter that it occurs
  28. If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be

    D. qualified
  29. The MD&A section of an entrerprise's annual report is to cover the following 3 items:

    B. liquidity, capital resources, and results of operations
  30. Which of the following best characterizes the difference between a financial forecast and a financial projections?

    • D. a forecast attempts to provide information on what is expected to
    • happen, whereas a projection may provide information on what is not
    • necessarily expected to happen
  31. Theoretically, in computing the receivables turnover, the numerator should include

    D. net credit sales
  32. The rate of return on common stock equity is calculated by dividing

    D. net income less preferred dividends by average common stockholders' equity
  33. The payout ratio is calculated by dividing

    D. cash dividends by net income less preferred dividends
  34. Which of te following ratios measures long term solvency?

    D. debt to total assets
  35. The calculation of the number of times interest is earned involves dividing

    B. net income plus income taxes and interest expense by annual interest expense
Card Set
acct 253 ch 24
acct 253 ch 24