Intermediate Accounting I Exam Solutions
Course Introduction
Intermediate Accounting I builds upon foundational accounting principles to provide a deeper understanding of the conceptual framework and application of generally accepted accounting principles (GAAP). The course focuses on the preparation and analysis of financial statements, including income statements, balance sheets, and statements of cash flows. Students explore critical topics such as revenue recognition, time value of money, accounting for assets, and proper measurement and disclosure of liabilities and equity. Through case studies and practical exercises, students enhance their analytical, problem-solving, and ethical decision-making skills essential for accounting professionals.
Recommended Textbook
Intermediate Accounting 8th Edition by
J. David Spiceland
Available Study Resources on Quizplus
21 Chapters
3157 Verified Questions
3157 Flashcards
Source URL: https://quizplus.com/study-set/3919
Page 2
Chapter 1: Environment and Theoretical Structure of Financial Accounting
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/78168
Sample Questions
Q1) Of the following,the most important objective for financial reporting is to provide information useful for:
A)Making decisions.
B)Determining taxable income.
C)Providing accountability.
D)Increasing future profits.
Answer: A
Q2) When a registrant company submits its annual filing to the SEC,it uses:
A)Form 10-A.
B)Form 10-K.
C)Form 10-Q.
D)Form S-1.
Answer: B
Q3) In IFRS,the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply.
A)True
B)False
Answer: True
Q4) Compute net income for the first year for Tri Fecta.
Answer: 11ea906f_5651_c386_a7a0_1fc292a03eb4_TB2444_00
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Review of the Accounting Process
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/78167
Sample Questions
Q1) The balance sheet can be considered a change or flow statement.
A)True
B)False
Answer: False
Q2) Cost of goods sold
Answer: 11ea906f_564b_cfd7_a7a0_89e25dd6d609_TB2444_00
Q3) On December 31,2015,Coolwear,Inc.had a balance in its prepaid insurance account of $48,400.During 2016,$86,000 was paid for insurance.At the end of 2016,after adjusting entries were recorded,the balance in the prepaid insurance account was 42,000.Insurance expense for 2016 would be:
A)$ 6,400.
B)$134,400.
C)$ 86,000.
D)$ 92,400.
Answer: D
Q4) Kline's 2016 net income (or loss):
Answer: Kline's 2016 net income (or loss)= $76,000
Computation:770,000 - 480,000 - 60,000 - 4,000 - 30,000 - 120,000
Q5) Accrued the interest earned but not collected on notes receivable.
Answer: 11ea906f_564c_e158_a7a0_d789dac82913_TB2444_00
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: The Balance Sheet and Financial Disclosures
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/78166
Sample Questions
Q1) What would Symphony report as total assets?
A)$2,338.
B)$2,323.
C)$2,318.
D)$2,303.
Answer: D
Q2) Compute the acid-test ratio for Marjoram Company.Round your answer to two decimal places.
Answer: ($19,000 + 35,000 + 48,400)/$108,400 = .94 Acid-test ratio
Q3) The current ratio is calculated as:
A)Current assets divided by noncurrent assets.
B)Current assets divided by total assets.
C)Current assets divided by current liabilities.
D)Current assets divided by total liabilities.
Answer: C
Q4) Shareholders' equity
Answer: Total debt + Total equity = Total assets = $1,400,000 Debt/Equity = 1.5;therefore,Total debt = 1.5 Equity
1.5 Equity + 1 Equity = $1,400,000
2.5 Equity = $1,400,000;Shareholders' equity = $ 560,000
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter
and the Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/78165
Sample Questions
Q1) Suppose that the Footwear Division's assets had not been sold by December 31,2016,but were considered held for sale.Assume that the fair value of these assets at December 31 was $40 million.In the 2016 income statement for Foxtrot Co. ,it would report a loss from discontinued operations of:
A)$ 3 million loss.
B)$ 10 million loss.
C)$10.8 million loss.
D)$ 18 million loss.
Q2) The direct and indirect methods of reporting the statement of cash flows present different information for investing and financing activities.
A)True
B)False
Q3) Cash flows from financing activities include:
A)Interest received.
B)Interest paid.
C)Dividends received.
D)Dividends paid.
Q4) Required: Prepare a single-step income statement with earnings per share disclosure.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Income Measurement
Available Study Resources on Quizplus for this Chatper
347 Verified Questions
347 Flashcards
Source URL: https://quizplus.com/quiz/78164
Sample Questions
Q1) Imagine that the Ace Construction Company (ACC)concludes that it must switch from recognizing revenue on long-term contracts over time according to percentage of completion to recognizing revenue upon completion of each contract.Assume that none of their construction projects are going to produce a loss.Is it possible that,in a particular year,ACC will show higher gross profit under the new approach (recognizing revenue upon contract completion)than they did under the old approach (recognizing revenue over time according to percentage of completion)? Explain.
Q2) In its December 31,2015,balance sheet,SDH would report:
A)The asset,cost and profits in excess of billings,of $500,000.
B)The liability,billings in excess of cost,of $300,000.
C)The asset,contract amount in excess of billings,of $1,500,000.
D)The asset,deferred profit,of $400,000.
Q3) What were the construction billings by CCC during 2016?
A)$142.5 million.
B)$67.5 million.
C)$37.5 million.
D)Cannot be determined from the given information.
Q4) Its return on stockholders' equity for 2016.Round your answer to one decimal place,e.g. ,.1234 as 12.3%.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Time Value of Money Concepts
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/78163
Sample Questions
Q1) On October 1,2016,Justine Company purchased equipment from Napa Inc.in exchange for a noninterest-bearing note payable in five equal annual payments of $500,000,beginning Oct 1,2017.Similar borrowings have carried an 11% interest rate.The equipment would be recorded at:
A)$2,500,000.
B)$2,225,000.
C)$1,847,950.
D)$2,115,270.
Q2) Chancellor Ltd.sells an asset with a $1 million fair value to Sophie Inc.Sophie agrees to make six equal payments,one year apart,commencing on the date of sale.The payments include principal and 6% annual interest.Compute the annual payments.
A)$166,651.
B)$135,252.
C)$203,351.
D)$191,852.
Q3) Briefly describe the difference between simple interest and compound interest.
Q4) Provide two examples of the use of present value techniques in accounting.
Q5) The total cash interest payments in 2016 for these notes.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Cash and Receivables
Available Study Resources on Quizplus for this Chatper
160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/78162
Sample Questions
Q1) Which of the following does not reduce the balance in accounts receivable?
A)Returns on credit sales.
B)Collections from customers.
C)Recognizing bad debts expense.
D)Write-offs.
Q2) Which of the following is true about accounting for a troubled debt restructuring?
A)If a receivable becomes impaired,it is remeasured at the discounted present value of the cash flows that were originally expected to be collected,but at a revised discount rate.
B)Receivables are not remeasured;instead,fair values are obtained from reliable factors.
C)If a receivable is continued,but with modified terms,a loss is typically recorded.
D)Receivables are never settled outright at the time of a restructuring.
Q3) Securitization of receivables is a type of secured borrowing.
A)True
B)False
Q4) Using a T-account for the allowance for doubtful accounts,identify the changes in the account during fiscal year 2013.
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Inventories: Measurement
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/78161
Sample Questions
Q1) During periods when costs are rising and inventory quantities are stable,cost of goods sold will be:
A)Higher under FIFO than LIFO.
B)Higher under FIFO than average cost.
C)Lower under average cost than LIFO.
D)Lower under LIFO than FIFO.
Q2) A company that prepares its financial statements according to International Financial Reporting Standards can use all of the same inventory valuation methods as a company that prepares its statements under U.S.GAAP.
A)True
B)False
Q3) LIFO liquidation profits occur when inventory quantity declines and costs are rising.
A)True
B)False
Q4) Net purchases are reduced for discounts taken whether the net method is used or the gross method is used.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Inventories: Additional Issues
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/78160
Sample Questions
Q1) Briefly explain the difference between the LIFO retail method and the dollar-value LIFO retail method.
Q2) In applying the lower of cost and net realizable value rule,the inventory of skis would be valued at:
A)$162,000.
B)$128,000.
C)$120,000.
D)$180,000.
Q3) International Financial Reporting Standards allow the reversal of an inventory write-down.
A)True
B)False
Q4) In applying the lower of cost and net realizable value rule,the inventory of surgical supplies would be valued at:
A)$100.
B)$90.
C)$85.
D)$75.
Q5) Determine the inventory book value for Products A,B,and C.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Property, plant, and Equipment and Intangible
Assets: Acquisition and Disposition
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/78159
Sample Questions
Q1) An exclusive 20-year right to manufacture a product or use a process is a:
A)Patent.
B)Copyright.
C)Trademark.
D)Franchise.
Q2) Walker Corporation exchanged land and $4,500 cash for material handling equipment.The land had a book value of $45,000 and a fair value of $58,000.Assume the exchange has commercial substance.
Required:
Prepare the journal entry to record the exchange.
Q3) During 2016,the Longhorn Oil Company incurred $5,000,000 in exploration costs for each of 20 oil wells drilled in 2016 in west Texas.Of the 20 wells drilled,14 were dry holes.Longhorn uses the successful efforts method of accounting.Assuming that none of the oil found is depleted in 2016,what oil exploration expense would Longhorn charge for this activity in its 2016 income statement?
A)$0.
B)$ 30 million.
C)$ 70 million.
D)$100 million.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Property, plant, and Equipment and Intangible
Assets: Utilization and Impairment
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/78158
Sample Questions
Q1) In the first year of an asset's life,which of the following methods has the smallest depreciation?
A)Straight-line.
B)Declining balance.
C)Sum-of-the-years' digits.
D)Composite or group.
Q2) Depreciation for 2017,using double-declining balance,would be:
A)$32,000.
B)$34,000.
C)$38,000.
D)$40,000.
Q3) According to International Financial Reporting Standards (IFRS),the impairment loss for an indefinite-life intangible asset other than goodwill is the difference between book value and the recoverable amount.
A)True
B)False
Q4) Required:
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31,2016 and 2017,assuming the sum-of-the-years'-digits method is used.
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Investments
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/78157
Sample Questions
Q1) An OTT impairment for an equity investment is recognized in net income if fair value declines below the investment's cost and:
A)The company has incurred noncredit losses.
B)The company does not have the intent and ability to hold the investment until fair value recovers.
C)The company lacks intent to hold the investment until fair value recovers.
D)The company has incurred credit losses.
Q2) In which investment category are fair values and subsequent growth of an investee not relevant for reporting?
A)Securities reported under the equity method.
B)Trading securities.
C)Held-to-maturity securities.
D)Securities available for sale.
Q3) Holding gains and losses on trading securities are included in earnings because:
A)They measure the success or failure of taking advantage of short-term price changes.
B)The IRS mandates the inclusion.
C)The SEC mandates the inclusion.
D)They measure the book value of the securities in the balance sheet date.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/78156
Sample Questions
Q1) What is the rebate promotion liability that Holyoak should report in its December 31,2016,balance sheet?
A)$20,000.
B)$28,000.
C)$18,000.
D)$19,000.
Q2) At the beginning of 2016,Angel Corporation began offering a two-year warranty on its products.The warranty program was expected to cost Angel 4% of net sales.Net sales made under warranty in 2016 were $180 million.Fifteen percent of the units sold were returned in 2016 and repaired or replaced at a cost of $5.3 million.The amount of warranty expense on Angel's 2016 income statement is:
A)$ 5.3 million.
B)$ 7.2 million.
C)$10.6 million.
D)$27.0 million.
Q3) An asset for a gain contingency should not be accrued unless it is probable that the gain contingency will be realized.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Bonds and Long-Term Notes
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/78155
Sample Questions
Q1) TMC issued $50 million of its 12% bonds on April 1,2016,at 98 plus accrued interest.The bonds are dated January 1,2016,and mature on December 31,2035.Interest is payable semiannually on June 30 and December 31.What amount did TMC receive from the bond issuance?
A)$50.5 million.
B)$51.5 million.
C)$49.0 million.
D)$49.5 million.
Q2) Griggs Co.failed to amortize the premium on an outstanding five-year bond issue.What is the resulting effect on interest expense and the bond book value,respectively?
A)Understated,understated.
B)Understated,overstated.
C)Overstated,understated.
D)Overstated,overstated.
Q3) If a company chooses the option to report its bonds at fair value,then it reports changes in fair value in its income statement unless the changes are attributable to changes in credit risk.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Leases
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/78154
Sample Questions
Q1) The lessee normally measures the lease liability to be recorded as the:
A)Future value of the minimum lease payments.
B)Sum of the cash payments over the term of the lease.
C)Present value of the minimum lease payments.
D)Fair market value of the leased asset.
Q2) Under both U.S.GAAP and IFRS,a lease is a capital lease (called a finance lease under IFRS)if substantially all risks and rewards of ownership are transferred.In making this determination,more judgment,and less specificity,is applied using:
A)U.S.GAAP.
B)IFRS.
C)Both U.S.GAAP and IFRS.
D)Neither U.S.GAAP nor IFRS.
Q3) The lessee's option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably assured is called a:
A)Bargain purchase option.
B)Lessee buy-out option.
C)Lessor sell-out option.
D)Guaranteed purchase option.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/181039
Sample Questions
Q1) Using straight-line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset's life creates a:
A)Future deductible amount.
B)Permanent difference not requiring inter-period tax allocation.
C)Deferred tax asset.
D)Deferred tax liability.
Q2) Pocus,Inc. ,reports warranty expense when related products are sold.For tax purposes,the warranty costs are deductible as incurred.At the end of the current year,Pocus has a warranty liability of $200,000 and taxable income of $20,000,000.At the end of the previous year,Pocus reported a deferred tax asset of $80,000 related to the difference in reporting warranty expense,its only temporary difference.The enacted tax rate is 30% each year.
Required:
Prepare the appropriate journal entry for Pocus to record the income tax provision for the current year.Show well-labeled supporting computations.
Q3) Rent collected in advance results in deferred tax assets.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Pensions and Other Postretirement Benefits
Available Study Resources on Quizplus for this Chatper
196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/78152
Sample Questions
Q1) Carpenter Gems began the year with a net pension liability of $84 million (underfunded pension plan).Pension expense for the year included the following ($ in millions): service cost,$30;interest cost,$18;expected return on assets,$12;amortization of net loss,$6.
Required: Prepare the appropriate general journal entry to record Carpenter's pension expense.
Q2) Mars Inc.has a defined benefit pension plan.On December 31 (the end of the fiscal year),the company received the PBO report from the actuary.The following information was included in the report: ending PBO,$110,000;benefits paid to retirees,$10,000;interest cost,$7,200.The discount rate applied by the actuary was 8%.What was the beginning PBO?
A)$ 90,000.
B)$100,000.
C)$107,200.
D)$112,000.
Q3) A net pension asset is the excess of the projected benefit obligation over the plan assets.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Shareholders Equity
Available Study Resources on Quizplus for this Chatper
158 Verified Questions
158 Flashcards
Source URL: https://quizplus.com/quiz/78151
Sample Questions
Q1) Two of the three primary account classifications within shareholders' equity are:
A)Preferred stock and retained earnings.
B)The par value of common stock and retained earnings.
C)Paid-in capital and retained earnings.
D)Preferred and common stock.
Q2) During its first year of operations,Criswell Inc.completed the following transactions relating to shareholders' equity.
January 5: Issued 300,000 of its common shares for $8 per share and 3,000 preferred shares at $110.
February 12: Issued 50,000 shares of common stock in exchange for equipment with a known cash price of $310,000.
The articles of incorporation authorize 5,000,000 shares with a par value of $1 per share of common and 1,000,000 preferred shares with a par value of $100 per share. Required:
Record the above transactions in general journal form.
Q3) Identify the three common forms of business organization and the primary difference in the way we account for them.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Share-Based Compensation and Earnings Per Share
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/78150
Sample Questions
Q1) When computing earnings per share,noncumulative preferred dividends not declared should be:
A)Ignored.
B)Deducted from earnings for the year.
C)Added to earnings for the year.
D)Deducted,net of tax effect,from earnings for the year.
Q2) A simple capital structure might include:
A)Stock rights.
B)Convertible bonds.
C)Nonconvertible preferred stock.
D)Stock purchase warrants.
Q3) Capital Consulting Company had 400,000 shares of common stock outstanding on December 31,2016.On that date,there were also 5,000 shares of $100 par,6% noncumulative preferred stock outstanding.On March 1,2016,the company's common stock split 3-for-1.On December 15,2016,a preferred dividend was declared and paid in the amount of $25,000.Net income for 2016 was $3,000,000.
Required:
Compute basic earnings per share (rounded to 2 decimal places)for the year ended December 31,2016.
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Accounting Changes
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/78149
Sample Questions
Q1) After issuing its financial statements,a company discovered that its beginning inventory was overstated by $100,000.Its tax rate is 30%.As a result of this error,net income was:
A)Understated by $70,000.
B)Overstated by $70,000.
C)Understated by $30,000.
D)Overstated by $30,000.
Q2) What is the effect of the error on Berkshire's 2016 income statement?
A)Net income is understated by $420,000.
B)Cost of goods sold is understated by $420,000.
C)There are no errors in the 2016 income statement.
D)None of these answer choices is correct.
Q3) Companies should report the cumulative effect of an accounting change in the income statement:
A)In the quarter in which the change is made.
B)In the annual financial statements only.
C)In the first quarter of the fiscal year in which the change is made.
D)Never.
Q4) What is the difference between U.S.GAAP and IFRS with regard to the correction of accounting errors?
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/78148
Sample Questions
Q1) Cash equivalents generally would not include short-term investments in:
A)Commercial paper.
B)Certificates of deposit.
C)Held-to-maturity securities.
D)Money market funds.
Q2) In its 2016 income statement,WME reported a $40,000 loss on the sale of equipment.In its reconciliation schedule,WME should:
A)Report a $40,000 cash outflow for the direct method.
B)Show a $40,000 positive adjustment to net income under the indirect method.
C)Show a $40,000 negative adjustment to net income under the indirect method.
D)None of these answer choices is correct.
Q3) Charlene Company sold a printer with a cost of $68,000 and accumulated depreciation of $23,000 for $20,000 cash.This transaction would be reported as:
A)An operating activity.
B)An investing activity.
C)A financing activity.
D)None of these answer choices is correct.
Q4) What was most responsible for the negative cash flow from financing activities during 2014? What amount was paid?
To view all questions and flashcards with answers, click on the resource link above. Page 23