Intermediate Accounting II
Study Guide Questions
Course Introduction
Intermediate Accounting II builds upon the foundational concepts covered in earlier accounting courses, focusing on more complex aspects of financial accounting and reporting. This course delves into topics such as liabilities, shareholders equity, revenue recognition, and the accounting for income taxes, pensions, leases, and cash flows. Students will develop a deeper understanding of the preparation and analysis of financial statements, applying Generally Accepted Accounting Principles (GAAP) and exploring relevant ethical and regulatory considerations. The course emphasizes problem-solving and analytical skills crucial for interpreting and communicating financial information in real-world business scenarios.
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) Which of the following pronouncements issued by the FASB provides the lowest level of authoritative support?
A) technical bulletins
B) interpretations
C) statements of financial accounting standards
D) staff positions
Answer: A
Q2) The Securities and Exchange Commission has the legal authority to prescribe accounting principles and reporting practices for
A) all companies issuing publicly traded securities
B) all companies issuing any type of securities
C) all companies
D) all corporations
Answer: A
Q3) The codification is set up as a system of levels starting with sections, topics, and subtopics.
A)True
B)False
Answer: False
Page 3
To view all questions and flashcards with answers, click on the resource link above.
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) How many phases of the FASB / IASB convergence project are there?
A) 6
B) 8
C) 3
D) over 10
Answer: B
Q2) The IASB and FASB joint boards have identified the primary user groups of financial information as all of the following except
A) equity investors
B) labor groups
C) lenders
D) other creditors (capital providers)
Answer: B
Q3) All of the following items are classified as accounting assumptions and conventions except for
A) going concern
B) timeliness
C) monetary unit
D) reporting entity
Answer: B
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) An example of a transposition is
A) presenting the cash account at $1,500 instead of $15,000
B) presenting prepaid insurance at $920 instead of $290
C) incorrectly posting a credit amount as a debit amount in the general ledger
D) not journalizing a sales transaction at all
Answer: B
Q2) When cash is debited for rents that are collected but are not yet earned, the amount credited should be
A) recognized as revenue when collected
B) presented as a liability until earned
C) recorded as an asset until earned
D) presented as a separate item in stockholders' equity
Answer: B
Q3) The last step in the accounting cycle is to prepare the financial statements.
A)True
B)False
Answer: False
Q4) ........
Answer: ........
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) Under IFRS "capital and reserves" includes capital stock, additional paid-in capital, and retained earnings.
A)True
B)False
Q2) Information about a company's operating capability may be helpful to external users in
A) assessing the uncertainty of its future cash flows
B) evaluating the timing of cash flows in the near future
C) evaluating the efficiency with which the company company uses its resources to generate revenue
D) assessing a return of investment as well as a return on investment
Q3) Trademarks or acquired brand names are not amortized but are reviewed annually for impairment.
A)True
B)False
Q4) Which is classified as a long-term investment?
A) bond premium
B) cash surrender value of life insurance
C) operating lease
D) three-year prepaid rental
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 numerator in the earnings per share calculation is A) only the amount available to common stockholders
B) net income attributable to common shareholders
C) net income minus declared preferred stock dividends
D) all of these
Q2) Describe the major differences that still exist between the income statement information presentation requirements under IFRS and GAAP.
Q3) Refer to Exhibit 5-2. Compute earnings-based interest coverage for Peace, Love, and Joy Company.
A) 5.08
B) 6.88
C) 6.80
D) 6.08
Q4) How should a material, infrequent event not meeting the criteria for an extraordinary item be disclosed in the income statement?
A) shown as a separate item in income from continuing operations
B) shown in income from continuing operations but not shown as a separate item
C) shown after income from continuing operations but before extraordinary items
D) shown after extraordinary items net of income tax but before net income
7
To view all questions and flashcards with answers, click on the resource link above.
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) The direct write off method is generally not allowed under GAAP because management selects the period of write off thus allowing earnings management. Where as an estimation of uncollectible accounts an entry is necessary each period to accurately match revenues and expenses.
A)True
B)False
Q2) What three conditions must be met for GAAP to consider the transfer of financial assets as a sale?
Q3) The two forms of financing agreements that companies use to obtain cash from accounts receivables are pledging and assigning.
A)True
B)False
Q4) The most theoretically sound method of accounting for cash discounts on credit sales is the
A) net price method
B) discounted price method
C) gross price method
D) net present value method
Q5) What two issues are related to the valuation of receivables?
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) Which one of the following statements is false?
A) FOB shipping point means the buyer has legal title to the goods while they are in transit.
B) FOB shipping point means the buyer has legal title to the goods when they are shipped.
C) FOB destination means the seller has legal title to the goods until they reach the buyer's place of business.
D) FOB shipping point means the buyer acquires legal title to the goods when they reach the buyer's place of business.
Q2) A manufacturing company typically has how many inventory accounts?
A) 1
B) 2
C) 3
D) 4
Q3) In a period of rising prices what are the differences between LIFO and FIFO?
Q4) What three difficulties does dollar-value LIFO overcome compared to applying simple LIFO?
Q5) What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?
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) The Alpha Company uses the retail inventory method for valuation of its inventory. If an item had a cost of $45, was originally marked to sell at $60, was later priced at $55, and finally was priced at $68, the final price change is a
A) net markup of $18
B) markdown of $5 and a markup of $8
C) net markdown of zero and an additional markup of $8
D) net markdown of $5 and a net markup of $18
Q2) Refer to Exhibit 8-2. The estimated inventory at January 31, 2014, is
A) $25,500
B) $21,500
C) $16,000
D) $12,000
Q3) Which application of the lower of cost or market rule will generally result in the highest valuation for the ending inventory?
A) to each item of the inventory
B) to each major category of inventory
C) to the total inventory
D) all of these applications result in the same valuation for inventory
Q4) ......
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) 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.
Q2) Which of the following contingencies is usually accrued?
A) risk of loss from fire
B) expected proceeds from insurance settlement
C) bad debts
D) discovery of possible mineral reserves on company property
Q3) A gain contingency that is reasonably possible and for which the amount can be reasonably estimated should be
A) accrued
B) disclosed but not accrued
C) neither accrued nor disclosed
D) classified as an appropriation of retained earnings
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) Costs can be added to an existing asset if future economic benefit extends the life of the asset improves productivity or increases the quality of the product.
A)True
B)False
Q2) Robertson Company exchanged a machine for some land. The machine had cost $17,000, was 70% depreciated, and could be sold for $4,500. Robertson paid $950 in addition to giving up the machine.
Required:
a.Compute the amount at which the land should be recorded.
b.Assume, instead, that Robertson exchanged the machine for a new, more efficient machine with a fair value of $4,700, while still paying $950 as before. Compute the gain or loss that would be recorded on the sale of the old machine by Roberto
Q3) Property acquired through donation is recorded at
A) its book value
B) its fair market value
C) its cost
D) zero
Q4) What is a nonmonetary exchange? How is it recorded on the books?
Page 12
To view all questions and flashcards with answers, click on the resource link above.
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) In 2014, Western Maryland Company paid $3,000,000 for a mining tract with reserves of 100,000 tons of ore, which the company planned to mine over a 20-year period. The company spent $500,000 developing the mine. Western plans to spend $200,000 for reclamation when mining has been completed, after which the land will have an estimated value of $600,000. In 2014, Western mined and sold 8,000 tons of ore. What depletion should Western record for the year?
A) $155,000
B) $248,000
C) $280,000
D) $296,000
Q2) Many companies that use the declining-balance method of depreciation switch to the straight-line method at what point in the life of a depreciable asset?
A) never, as one method must be applied consistently throughout the life of an asset
B) in the last quarter of the life of the asset
C) when the accelerated depreciation exceeds the straight-line depreciation
D) midpoint in the life of the asset
Q3) List the time based allocation methods of cost allocation, provide a brief explanation of each.
To view all questions and flashcards with answers, click on the resource link above. Page 13
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) If a research and development cost has alternative future uses, then the company
A) expenses the cost in the period incurred
B) follows normal accrual procedures
C) adds the cost to inventory
D) adds the cost to property, plant, and equipment
Q2) What factors should a company consider when estimating the useful life of an intangible asset?
Q3) D Company registered a patent on January 1, 2015. C Company purchased the patent from D Company for $450,000 on January 1, 2020, and began to amortize the patent over its remaining legal life. In early 2021, C Company determined that the patent's economic benefits would last only until the end of 2025. What amount should C Company record for patent amortization in 2021?
A) $90,000
B) $30,000
C) $70,000
D) $84,000
Q4) List 3 activities that can be included in R&D.
Q5) Provide two examples of internally developed goodwill and what distinguishes them from other identifiable intangible assets?
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) On January 6, 2014, Michael Company acquired 4,000 shares (or 10%) of George Corporation's common stock at $25 per share. The securities are classified as available-for-sale investments. On October 24, 2014, George declared and paid a cash dividend of $1 per share. On December 31, 2014, the market value of George's common stock was $35 per share. George also reported a net income of $250,000 for 2014. At what value should Michael report the investment in George's common stock on its December 31, 2014 balance sheet?
A) $100,000
B) $140,000
C) $144,000
D) $104,000
Q2) A note receivable is considered impaired when
A) the debtor misses an interest or principal payment
B) it is probable that the creditor will be unable to collect all amounts due C) the market value of the note is less than its book value
D) the market value of interest exceeds the original contract interest rate
Q3) What are the five components necessary to account for investments in available-for-sale securities?
Q4) What three steps are necessary to evaluate whether or not an investment is impaired?
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) Refer to Exhibit 14-10. Interest expense for the first year is
A) $ 700.20
B) $ 816.90
C) $ 798.06
D) $1,200.00
Q2) When fair value is chosen for the reporting of a debt instrument this determination can be made after the bonds have been issued but prior to the issuance of the financial statements.
A)True
B)False
Q3) Debenture Bonds are only issued to companies with an excellent credit rating.
A)True
B)False
Q4) Refer to Exhibit 14-9. The entry to record the conversion using the market value method would include a
A) debit to Additional Paid-in Capital from Bond Conversion for $105,000
B) debit to Retained Earnings for $105,000
C) debit to Loss from Conversion for $105,000
D) credit to Gain from Conversion for $105,000
Q5) Under what situations might a company call a bond?
Page 16
To view all questions and flashcards with answers, click on the resource link above.
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) The preference to dividends that preferred stockholders have is
A) the right to receive the appropriate dividend before common stockholders are paid any dividends when dividends are declared B) the right to accumulate dividends that have not been declared
C) the right to share dividends equally with common stockholders when dividends are declared
D) the right to be paid a minimum dividend each year
Q2) Current GAAP recommends that the fair value method be used to account for compensatory stock option plans. From a conceptual point of view, this method is an improvement over the intrinsic value method.
Required:
Explain how the fair value method is an improvement over the intrinsic value method.
Q3) Refer to Exhibit 15-8. What is the compensation expense related to the SARs for the year ending December 31, 2013?
A) $ 3,333
B) $10,000
C) $30,000
D) $33,333
To view all questions and flashcards with answers, click on the resource link above.
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) Refer to Exhibit 16-1. On January 2, 2015, the board of directors of Zeller declared a 5% stock dividend to be distributed on January 31, 2015. The market price per share of Zeller's common stock was $30 on January 2 and $32 on January 31. As a result of this stock dividend, the retained earnings account should be decreased by
A) zero; only a memorandum entry is required
B) $15,000
C) $45,000
D) $48,000
Q2) A board of directors may decide to restrict retained earnings to meet legal requirements or to meet a contractual restriction.
A)True
B)False
Q3) When a company is determining its dividend policy, the company must adhere to legal requirements. The legal requirements are determined by the
A) Financial Accounting Standards Board (FASB)
B) state in which the company was incorporated
C) Securities and Exchange Commission (SEC)
D) Federal Trade Commission (FTC)
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) When a down payment is received, the deposit from purchaser account used under the deferral method is reported on the balance sheet of the seller as a(n)
A) revenue
B) liability
C) asset
D) contra asset
Q2) GAAP requires the completed-contract method to be used when the A) company expects to perform its contractual obligations
B) buyer can be expected to satisfy its obligations under the contract
C) company can make reasonably dependable estimates of the extent of progress toward project completion
D) contract does not clearly specify the manner and terms of settlement
Q3) Which one of the following types of service costs are deferred and expensed only when the related service revenue is recognized?
A) initial indirect costs
B) direct costs
C) indirect costs
D) initial direct costs
Q4) What three factors decide when to recognize revenue?
To view all questions and flashcards with answers, click on the resource link above. Page 19
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) Deferred tax liabilities and deferred tax assets must be reported on the balance sheet.
Required:
Explain the process of classifying and reporting deferred tax liabilities and deferred tax assets.
Q2) Which one of the following transactions would result in the creation of a noncurrent deferred tax liability?
A) interest received on municipal bonds
B) a contingent liability expensed in the current period that is expected to require a cash payment in three years
C) royalties received in advance that are taxable when received, but that will be earned within the next three months
D) using an accelerated depreciation method for income tax purposes and the straight-line method for financial reporting purposes
Q3) Differences arising between financial accounting and tax accounting fall into three categories, what are the three categories?
Q4) What two issues does FASB have to consider in regards to operating loss carrybacks?
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) On December 31, 2014, Clemson Company determined that the 2014 service cost on its defined benefit pension plan was $245,000. At the beginning of 2014, Clemson had pension plan assets totaling $990,000 and a projected benefit obligation of $750,000. Its discount rate and expected long-term rate of return on plan assets for 2014 was 12%.
Required:
1) Compute the amount of Clemson's pension expense for 2014.
2) Record the journal entries for Clemson's 2014 pension expense if it funds the pension plan in the amount of (a) $225,000 and (b) $210,000.
Q2) In the computation of pension expense, interest cost is the
A) expected increase in the plan assets due to investing activities
B) increase in the projected benefit obligation due to the passage of time
C) actuarial present value of benefits
D) expected return on plan assets
Q3) Which of the following would not be a component of pension expense?
A) prior service cost amortization
B) interest cost
C) deferred compensation
D) return on assets
Q4) 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) When a lessee makes periodic cash payments for a capital lease, which of the following accounts is increased?
A) Lease Rental Expense
B) Leased Equipment
C) Capital Lease Obligation
D) Interest Expense
Q2) Because the risks and benefits of ownership transfer to the lessor with a capital lease, the executed costs incurred do not get included when determining the present value of the minimum lease payments.
A)True
B)False
Q3) In a sales-leaseback transaction
A) the sale and leaseback are treated for accounting purposes as separate transactions
B) any profit on the sale should, in general, be deferred and amortized by the seller-lessee
C) any loss up to the amount of the difference between undepreciated cost and fair value should be deferred and amortized by the seller-lessee
D) any lease of land alone must be classified as an operating lease
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
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/78474
Sample Questions
Q1) What is the primary purpose of a company's statement of cash flows?
A) to provide information about the company's operations
B) to provide information about the company's dividend policy
C) to provide information about the company's financing and investing activities
D) to provide information about the company's cash receipts and cash payments during the period
Q2) On the statement of cash flows prepared using the direct method, cash paid for income taxes would be income tax expense minus
A) an increase in income taxes payable
B) a decrease in income taxes payable
C) beginning income taxes payable
D) ending income taxes payable
Q3) Refer to Exhibit 21-3. Net cash provided (used) in the operating activities section of Travis's 2015 statement of cash flows was
A) $(40,000)
B) $ 50,000
C) $ 52,000
D) $ 56,000
Q4) Provide three examples of noncash investing and financing activities.
To view all questions and flashcards with answers, click on the resource link above. Page 23
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) A company accounts for a change in reporting entity as a prospective adjustment so that all the financial statements are presented for the same entity.
A)True
B)False
Q2) Which of the following is a counterbalancing error?
A) understated depletion expense
B) bond premium under-amortized
C) prepaid expense adjusted incorrectly
D) overstated depreciation expenses
Q3) The Catherine Company, effective January 1, 2016, made the following accounting change: Catherine changed its depreciation method from double-declining-balance to the straight-line method on equipment purchased on January 1, 2014, at a cost of $400,000. The equipment had an estimated useful life of five years and a $30,000 residual value.
Catherine is subject to an income tax rate of 30% and can justify the changes.
Required:
Calculate the following amounts:
a.2016 depreciation expense
b.the December 31, 2016, accumulated depreciation balance on the equipment
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) What is the formula for the present value of an ordinary annuity of 1?
A) \(\frac { ( 1 + i ) ^ { n - 1 } } { i }\)
B) \(\frac { 1 } { ( 1 + i ) ^ { n } }\)
C) (1 + i)<sup>n</sup>
D) \(\frac { 1 - \left[ 1 / ( 1 + i ) ^ { n } \right] } { i }\)
Q2) a. How much will be accumulated on January 1, 2018 if \(\$ 450,000\) is deposited on January 1, 2014, andinterest is compoumded annually at \(10 \%\) ?
b. How much vill be accumulated on December 31,2024 if \(\$ 80,000\) is deposited on December 31,2014, and the fumd pays \(9 \%\) interest compounded semiancaally?
c. What will he on deposit on January 1, 2019 if \(\$ 50,000\) is deposited on January 1, 2014, in a fund that earns I \(6 \%\) interest compounded quarterly?
Q3) The future value of $7,000 deposited today and compounded semiannually at an 9% annual interest rate for four years is
A) $9,955
B) $9,520
C) $8,100
D) $7,920
To view all questions and flashcards with answers, click on the resource link above. Page 25