Accounting and Financial Reporting Test Preparation
Course Introduction
This course provides a comprehensive introduction to the fundamental principles of accounting and the process of financial reporting. Students will explore the conceptual framework underpinning accounting practices, learn how to prepare, analyze, and interpret key financial statements including the balance sheet, income statement, and cash flow statement and understand how these reports inform organizational decision-making. The course also covers essential topics such as revenue recognition, asset valuation, and the ethical considerations in financial reporting, equipping students with the skills needed to critically assess the financial health and performance of businesses.
Recommended Textbook
Intermediate Accounting Reporting and Analysis 1st Edition by James M. Wahlen
Available Study Resources on Quizplus
23 Chapters
2888 Verified Questions
2888 Flashcards
Source URL: https://quizplus.com/study-set/3936
Page 2
Chapter 1: The Demand for and Supply of Financial
Accounting Information
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/78487
Sample Questions
Q1) The Management Discussion and Analysis section of the financial statements discusses what important topics?
A) Business risk factors associated with the company.
B) Management provides insight into key decisions implemented during that time period and future developments.
C) Management utilizes this area as a forum to discuss strategic motives.
D) All of these choices
Answer: D
Q2) As a potential equity investor, what would you least be interested in a company prior to making and investment decision?
A) What differentiates them from their competition?
B) Whether they are generating a profit?
C) Whether they have positive cash flows?
D) What are the employee benefits and compensation packages?
Answer: D
Q3) A problem arising from equal information is called information asymmetry. A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Financial Reporting: Its Conceptual Framework
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/78476
Sample Questions
Q1) Which of the following are considered enhancing characteristics of accounting information?
A) verifiability and confirmatory value
B) predictive value and timeliness
C) comparability and consistency
D) representational faithfulness and neutrality
Answer: C
Q2) A list of statements follows:
a._______are applications of______ and_____ to differing types of transactions.
b._________are specific implementation procedures.
c._________and______are broad and definitional
d.The ac counting projects for the conceptual framework project for financial accounting and reporting define the accounting______ how they should be______ and______ Required:
Fill in the words necessary to complete the statements.
Answer: a.Standards, concepts, principles
b.Rules
c.Concept statements, principles
d.elements, recognized, measured
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Review of a Companys Accounting System
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/78472
Sample Questions
Q1) Which of the following is NOT a component of an accounting system?
A) the input source documents
B) the framework for operation of the system
C) the output reports
D) all of the above are components of an accounting system
Answer: D
Q2) The adjustment necessary to convert payments for other operating costs, cash-basis, to operating expenses, accrual-basis, is to add ending prepaid expenses to the beginning prepaid expenses subtract the beginning accrued expenses and add the ending accrued expenses.
A)True
B)False
Answer: False
Q3) The worksheet has a debit and credit column for all of the following except the A) trial balance
B) adjusted trial balance
C) statement of cash flows
D) retained earnings statement
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: The Balance Sheet and the Statement of
Shareholders Equity
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/78471
Sample Questions
Q1) State law may require that capital stock have which of the following values?
A) stated value
B) market value
C) no-par value
D) present value
Q2) The ease with which an asset can be converted into cash is termed
A) financial flexibility
B) liquidity
C) operating capability
D) capital maintenance
Q3) Justification for having both intangible assets and other assets listed on a balance sheet include that
A) intangible assets have no physical existence and other assets are deferred charges
B) having more items listed on the balance sheet improves the users' understanding of the company
C) the intangible assets are more important than the tangible assets
D) the other asset classification is important because goodwill cannot be amortized, so it needs to be recorded on the balance sheet
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Income Statement and the Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/78470
Sample Questions
Q1) The income statement is an important financial statement for all of the following reasons, except
A) the income statement helps shareholders evaluate management's operating effectiveness
B) past income statements can be useful indicators in predicting current and future cash dividend payments as well as future stock prices
C) the income statement provides useful information concerning the corporation's ability to generate sufficient cash flows from operations for use in payment of its operating obligations
D) the income statement reports the amount of net cash inflows resulting from operating, financing, and investing activities to users
Q2) Comprehensive income is an important concept in accounting because it represents
A) all changes in equity
B) changes in equity from nonowner sources
C) changes in liabilities minus assets
D) the impact on equity of all transactions
Q3) List five items that the FASB specifically states cannot be considered extraordinary.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Cash and Receivables
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/78469
Sample Questions
Q1) Which of the following would be reported as a liability?
A) demand deposits
B) bank overdrafts
C) certificates of deposit
D) travel advances
Q2) The discount rate is
A) the interest rate charged by the bank
B) the same rate charged to the customer
C) always the same as the market rate
D) the effective interest rate
Q3) Stacie, Inc. sold goods for $76,000 with terms of 2/10, n/30 on May 1.
Required:
Prepare journal entries for the following:
a.The sale, assuming the gross price method is used.
b.The sale, assuming the net price method is used.
c.Receipt of payment, assuming collection is made on May 31 and the net price method is used.
d.Receipt of payment, assuming collection is made on May 9 and the gross price is used.
Q4) What is a bank reconciliation and what is its importance?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Inventories: Cost Measurement and Flow
Assumptions
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/78468
Sample Questions
Q1) Because the specific identification method seems simple and matches actual costs against revenues, it may appear to be the ideal cost flow assumption to be used in any situation.
Required:
Indicate whether a periodic or perpetual inventory system is more appropriate for this cost flow assumption, indicate when its use is practical, and discuss the practical and theoretical objections to its use.
Q2) Refer to Exhibit 7-3. Assuming Davis uses a periodic LIFO cost flow assumption, ending inventory at April 30 would be
A) $880
B) $920
C) $1,090
D) $1,890
Q3) A perpetual inventory system provides management with valuable tools in which to plan and control inventory levels because the amount of inventory is known at any point in time.
A)True
B)False
Q4) What is the LIFO Valuation Allowance, also known as LIFO reserve?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Inventories: Special Valuation Issues
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/78467
Sample Questions
Q1) When applying the lower of cost or market rule to the valuation of inventory, the allowance method is considered preferable to the direct method because
A) the allowance method reports smaller losses than the direct method
B) the allowance method reports a higher inventory net valuation for balance sheet purposes than the direct method
C) the allowance method reports the inventory loss or loss recovery in a separate income statement account
D) the allowance method discloses the inventory loss in a separate account in the stockholders' equity section of the balance sheet
Q2) Relevance of the gross profit margin depends upon
A) the accuracy of the gross profit percentage
B) the net sales
C) applying the overall profit margin to each individual department
D) averaging prior periods' net sales and total sales to verify which is best to use
Q3) Describe the lower of cost or market rule.
Q4) What is dollar value LIFO retail method?
Q5) ......
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/78466
Sample Questions
Q1) How are current liabilities classified? Provide an example of each.
Q2) Refer to Exhibit 9-3. What amount should John record as premium expense for 2014?
A) $121,250
B) $450,000
C) $375,000
D) $500,000
Q3) Which of the following statements regarding the gross and net methods for recording trade accounts payable is true?
A) The net method overstates accounts payable at the end of the accounting period.
B) The net method is more widely used in practice than is the gross method.
C) The gross method more accurately measures liquidity.
D) The net method highlights management inefficiency because purchase discounts lost are recorded whenever an invoice is paid after the cash discount period has expired.
Q4) IFRS accounting for contingencies differs from U.S. GAAP in several details. Briefly describe three of those differences.
Q5) List 5 liabilities whose amounts are determined by operating activities.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Property, Plant, and Equipment: Acquisition and
Subsequent Investments
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/78486
Sample Questions
Q1) Mary Co. exchanged a piece of equipment that had cost $40,000 (now 75% depreciated) for a truck with a current appraised value of $18,000. Mary Co. gave the other company the piece of equipment and $10,000. Mary Co. should record
A) a $8,000 loss
B) the truck at $18,000
C) a gain of $10,000
D) the truck at $21,000
Q2) List 5 acquisition costs that can be included in the cost of land.
Q3) Kelly Company exchanged inventory items that cost $47,000 and normally sold for $75,000 for a new delivery truck with a list price of $77,000. The delivery truck should be recorded on Kelly's books at
A) $47,000
B) $75,000
C) $77,000
D) $82,000
Q4) What three characteristics must an asset have in order for it to be classified as property, plant and equipment?
Q5) What is a nonmonetary exchange? How is it recorded on the books?
Q6) What is the successful-efforts method of capitalization?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Depreciation, Depletion, Impairment, and Disposal
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/78485
Sample Questions
Q1) Refer to Exhibit 11-2. Depreciation expense for 2015 should be
A) $ 600
B) $ 667
C) $ 750
D) $1,500
Q2) What determines residual value?
A) company policy
B) GAAP for each class of asset
C) IFRS
D) FASB
Q3) GAAP does not require companies to disclose the balances of depreciable assets by nature or function but by major classes.
A)True
B)False
Q4) In what three respects does the computation for depreciation for federal income tax purposes and financial reporting purposes differ for assets purchased after 1987?
Q5) As part of the normal activities of company's assets are sold or disposed. What steps are necessary in order to complete an asset disposal?
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Intangibles
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/78484
Sample Questions
Q1) In March of 2014, Marian Corp. applied for a trade name. Legal costs associated with the application were $25,000. At the time of filing the application, the company projected extra annual income to be generated through having the trade name to be $100,000. On Feb. 5, 2016, the company incurred $20,000 in an unsuccessful defense of the trade name.
Required:
a.What is the amount of income or expense associated with the trade name for the year 2014? For the year 2015? For the year 2016?
b.What is the accounting rationale for the amounts recorded in each year?
Q2) The amortization period for a patent is
A) indefinite; patents should be reviewed for impairment annually
B) 20 years
C) 20 years or the expected useful life of the patent, whichever is longer
D) 20 years or the expected useful life of the patent, whichever is shorter
Q3) What are the five basic categories that identifiable intangible assets can be classified?
Q4) For intangible assets that are amortized what does a company need to disclose on its balance sheet regarding those assets?
Q5) List 3 activities that can be included in R&D.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Investments and Long-Term Receivables
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/78483
Sample Questions
Q1) Which type of investment in securities must always be classified as a current asset?
A) held-to-maturity debt securities
B) available-for-sale securities
C) trading securities
D) none of the these, they may all be classified as current or long-term assets
Q2) When an available-for-sale security is sold any unrealized gains or losses need to be reclassified from the Allowance for Change in Fair Value of Investments account in order to not double count any gains or losses recorded in comprehensive income.
A)True
B)False
Q3) On January 1, 2015, Brewster's, Inc. bought $50,000 of 10% ten-year bonds of Chocolate Co. for $56,795 to yield 8% annually. The bonds pay interest semiannually and are classified as held-to-maturity. Interest is paid on June 30 and December 31.
Required:
Using the effective interest method, journalize the receipt of the interest and amortization at December 31, 2015.
Q4) List 3 investments in debt securities and 3 investments in equity securities.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Financing Liabilities: Bonds and Notes Payable
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/78482
Sample Questions
Q1) Orange Mfg. Co. issued a four-year non-interest-bearing note with a face value of $500,000. Orange received $329,365, resulting in an effective 11% interest rate.
Required:
Prepare journal entries to:
a.Issue the note
b.Record interest at the end of the first year
c.Record interest at the end of the second year
(Note: round all answers to the nearest dollar.)
Q2) On January 1, 2014, Farmer issued $80,000 of serial bonds that paid 7% interest annually. Each December 31, $16,000 of the bonds comes due. The bonds were issued for $75,200.
Required:
a.Using the bonds outstanding method, compute the total amount of interest expense for 2017.
b.Assume that on January 1, 2016, the issue coming due on December 31, 2018, was redeemed at 101. Compute the gain or loss that should be recognized on the bond redemption.
Q3) List the different characteristics of bonds.
Q4) How can a company restructure their debt in the event of financial difficulties?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Contributed Capital
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/78481
Sample Questions
Q1) U.S. GAAP and IFRS utilize similar accounting for shareholders' equity but there are some differences.
Required:
Explain the differences between U.S. GAAP and IFRS in their accounting for shareholders' equity.
Q2) Miscellaneous fees arising from the issuance of stock are charged to the organization expense account only if this is not the company's first issuance of stock.
A)True
B)False
Q3) All of the following would appear in the contributed capital section of stockholders' equity on the balance sheet except
A) additional paid-in capital from stock conversions
B) bonds payable
C) share rights and options
D) preferred stock
Q4) What are share based compensation plans?
Q5) What kind of characteristics may be specified in the contract for preferred stock?
Q6) List four transactions that comprise a corporation's contributed capital.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Retained Earnings and Earnings Per Share
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/78480
Sample Questions
Q1) Describe the two types of corporate capital structures.
Q2) Johnson Company has retained earnings balance of $550,000 at the end of 2014. During 2014 Johnson issued $200,000 of 10 year, 10% bonds. As part of the bond issue the each year $20,000 of retained earnings will be unavailable to pay dividends.
Required:
Show the proper reportinng requirements for Johnsons retained earnings restriction.
Q3) When a property dividend is declared, fair value is determined on the ex-dividend date.
A)True
B)False
Q4) Reporting diluted earnings per share is required for which type of corporate capital structure?
A) simple
B) complex
C) diluted
D) complicated
Q5) What are the steps necessary to compute diluted earnings per share?
Q6) What three items rarely affect retained earnings?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Advanced Issues in Revenue Recognition
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/78479
Sample Questions
Q1) IFRS provide guidance that differs from GAAP regarding the procedures to use in construction contracts' future costs estimates. Discuss how the treatments differ.
Q2) For long-term construction contracts, when there is not assurance that the buyer can be expected to satisfy its obligations under a contract, which of the following revenue recognition methods is preferable?
A) percentage-of-completion method
B) installment method
C) deferral method
D) completed-contract method
Q3) Inventory is reported at cost plus gross profit recognized to date under which of the following revenue recognition methods?
A) completed contract method
B) installment method
C) cost recovery method
D) percentage of completion method
Q4) What conditions must be met for the selling company of retail land recognizes revenue and related expenses in the period of the sale on the accrual basis?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/78478
Sample Questions
Q1) Which one of the following requires interperiod tax allocation?
A) premium paid on key executives' life insurance
B) warranty expenses related to a three-year warranty period
C) interest received on municipal obligations
D) percentage depletion in excess of cost depletion
Q2) What two issues does FASB have to consider in regards to operating loss carrybacks?
Q3) Differences arising between financial accounting and tax accounting fall into three categories, what are the three categories?
Q4) In order to implement FASB's objectives what four principles must a corporation apply to account for its income taxes?
Q5) GAAP requires intraperiod income tax allocation to income or loss as they relate to discontinued operations and extraordinary items but not to retrospective adjustments or prior period adjustments.
A)True
B)False
Q6) What is intraperiod tax allocation?
Q7) What two objectives did FASB identify for accounting for income taxes?
Q8) Discuss both interperiod and intraperiod tax allocation methods.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Accounting for Postretirement Benefits
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/78477
Sample Questions
Q1) The accumulated benefit obligation is equal to the
A) actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using current salary levels in the pension plan formula
B) actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using anticipated future salary levels in the pension plan formula
C) difference between the annual pension expense and the amount actually funded during the year
D) actuarial present value of benefits attributed by the pension plan formula to services rendered by employees during the current year
Q2) One type of post-retirement benefit other than pensions is healthcare benefits. Required:
Discuss the major differences between postretirement healthcare benefits and pensions.
Q3) What disclosures are required by GAAP about a company's defined benefit pension plan?
Q4) What five components comprise pension expense?
Q5) What estimates are necessary to account for a defined benefit pension plan?
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Accounting for Leases
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/78475
Sample Questions
Q1) What are the disclosure requirements for lessee's of operating leases and what two disclosures are required for all leases?
Q2) What is included in the calculation of the minimum lease payment?
Q3) What are the four capitalization criteria in which to determine whether to record a lease as operating or capital lease?
Q4) Refer to Exhibit 20-4. What is the amount of interest revenue that Average should recognize on the lease for the year ended December 31, 2014? (Round the answer to the nearest dollar.)
A) $37,017
B) $28,017
C) $36,336
D) $27,336
Q5) How is the present value of the minimum lease payment computed?
Q6) The existence and term of renewal or purchase options and escalation clauses are disclosed for capital leases only
A)True
B)False
Q7) What four conditions can a lease be cancelable?
Q8) What are the five capitalization criteria under IFRS?
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/78474
Sample Questions
Q1) In order to prepare the statement of cash flows under the direct method a company will need the adjusted trial balance from the previous period.
A)True
B)False
Q2) Which statement best defines a company's operating cash inflows?
A) collections from customers and stockholders
B) collections from customers and stockholders and earnings from investments
C) collections from customers and earnings from investments
D) collections from customers
Q3) The adjusted trial balance is used in the preparation of the statement of cash flows because it contains the balance sheet, income statement, and retained earnings statements for the current period.
A)True
B)False
Q4) How should the sale of depreciable asset be presented on the statement of cash flows?
Q5) Provide three examples of noncash investing and financing activities.
Q6) What are the four steps necessary to complete the statement of cash flows using the visual inspection method?
23
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Accounting for Changes and Errors
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/78473
Sample Questions
Q1) When a change in method is inseparable from a change in estimate, the change is accounted for
A) prospectively
B) by the retrospective adjustment or restatement
C) by a retrospective application of a new accounting principle
D) by constructive application of a new accounting principle
Q2) Refer to Exhibit 22-3. If the revised estimated useful life of the truck is a total of seven years, and assuming an income tax rate of 35%, Katrina should report in its 2015 income statement an effect on prior years of changing the useful life of the truck of
A) $ 0
B) $16,800
C) $ 5,600
D) $58,800
Q3) Change in an accounting principle is accounted for
A) prospectively
B) by a prior period adjustment
C) by a retrospective application of a new accounting principle
D) by constructive application of a new accounting principle
Q4) What is the GAAP requirement of accounting for a change in estimates?
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Time Value of Money Module
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/78465
Sample Questions
Q1) Using the table approach, the future amount of an annuity due may be calculated by finding the table factor for the future amount of an ordinary annuity of
A) n + 1 and then subtract 1
B) n + 1 and then add 1
C) n - 1 and then add 1
D) n - 1 and then subtract 1
Q2) Marcus Jones wants to invest $10,000 on January 1, 2014, so that he may withdraw 10 annual payments of equal amounts beginning January 1, 2029. If the fund earn 10% annual interest over its life, what will be the amount of each of the withdrawals?
A) $1,470
B) $10,000
C) $14,709
D) none of these
Q3) Simple interest on a $25,000, 8%, 18-month note is
A) $22,000
B) $23,000
C) $3,000
D) $2,000
To view all questions and flashcards with answers, click on the resource link above.