Intermediate Accounting Question
Bank
Course Introduction
Intermediate Accounting delves deeper into accounting principles and standards, building upon foundational concepts introduced in introductory courses. This course focuses on the preparation, interpretation, and analysis of financial statements in accordance with generally accepted accounting principles (GAAP). Key topics include revenue recognition, measurement and reporting of assets and liabilities, stockholders equity, income determination, and the disclosure requirements of complex financial transactions. Students will develop problem-solving and critical-thinking skills through the application of accounting theory to real-world business scenarios, preparing them for advanced studies and professional practice in accounting.
Recommended Textbook
Intermediate Accounting IFRS 6th Edition by
J. David Spiceland
Available Study Resources on Quizplus
22 Chapters
2675 Verified Questions
2675 Flashcards
Source URL: https://quizplus.com/study-set/3969
Page 2
Chapter 1: Environment and Theoretical Structure of Financial Accounting
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/79616
Sample Questions
Q1) Which of the following groups is not among the external users for whom financial statements are prepared?
A)Customers
B)Suppliers
C)Employees
D)All of these are external users of financial statements. Answer: D
Q2) What is the SEC and how is it involved with accounting standard setting?
Answer: The Securities and Exchange Commission is a federal agency that has the authority to set accounting standards. However, the SEC has always delegated the task to a private sector body, such as the current FASB. The SEC's 10K & 10Q filing requirements call for more detailed disclosures than those required by GAAP.
Q3) The SEC issues accounting standards in the form of:
A)Accounting Research Bulletins.
B)Financial Reporting Releases.
C)Financial Accounting Standards.
D)Financial Technical Bulletins.
Answer: B
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
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/79615
Sample Questions
Q1) The statement of cash flows summarizes transactions that caused cash and cash equivalents to change during a reporting period.
A)True
B)False
Answer: True
Q2) Based on the information presented above, prepare the 12/31/09 Balance Sheet for Krafty Foods.
Answer: 11ea92df_7311_0975_9bd4_df7345ae20df_TB5911_00
Q3) Based on the information presented above, prepare the 2009 Income Statement for Krafty Foods.
Answer: 11ea92df_7310_e264_9bd4_d5b1c934b5f9_TB5911_00
Q4) After an unadjusted trial balance is prepared, the next step in the accounting processing cycle is the preparation of financial statements. A)True
B)False
Answer: False
Q5) Kline's 12/31/09 total current liabilities:
Answer: Kline's 12/31/09 total current liabilities = $148,000
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Balance Sheet and Financial Disclosures
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/79614
Sample Questions
Q1) Disclosure notes would not include:
A)Depreciation methods used and estimated useful life.
B)Definition of cash equivalents.
C)Details of pension plans.
D)Data to adjust the financial statements so that they are not misleading.
Answer: D
Q2) An example of fraud would be:
A)Issuing a purchase order without first securing bids.
B)Buying raw materials from an affiliated company.
C)Knowingly classifying a material non-current receivable as a current receivable.
D)Forgetting to accrue salaries and wages payable.
Answer: C
Q3) Compute the current ratio for Marjoram Company.
Answer: ($19,000 + 35,000 + 48,400 + 70,600) /$108,400 = 1.60 Current ratio
Q4) Operational assets include property, plant, equipment and inventories.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Income Statement and Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/79613
Sample Questions
Q1) On November 1, 2009, Jamison Inc. adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to SFAS No. 144. The disposal of the division was expected to be concluded by April 30, 2010. On December 31, 2009, the company's year-end, the following information relative to the discontinued division was accumulated: In its income statement for the year ended December 31, 2009, Jamison would report a before-tax loss on discontinued operations of:
A)$ 65 million.
B)$ 50 million.
C)$130 million.
D)$145 million.
Q2) Schneider Inc. had salaries payable of $60,000 and $90,000 at the end of 2008 and 2009, respectively. During 2009, Schneider recorded $620,000 in salaries expense in its income statement. Cash outflows for salaries in 2009 were:
A)$590,000.
B)$620,000.
C)$650,000.
D)$530,000.$620,000 $30,000 increase in salaries payable = $590,000.
Q3) Briefly define extraordinary items and explain how they are reported.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Income Measurement
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/79612
Sample Questions
Q1) Over the life of a particular account receivable, the same total amount of gross profit is recognized under the installment method and the cost recovery method.
A)True
B)False
Q2) Assume that McCombs uses the percentage-of-completion method for revenue recognition.
Required: Compute the amount of gross profit recognized during 2008 and 2009.
Q3) Explain briefly how a company that recognized revenue under the percentage-of-completion method (estimating percentage of completion using a cost-to-cost ratio) could manage earnings upward to meet a profit projection. What sort of ethical problems could result from that earnings management?
Q4) In 2009, JRE2 would report (rounded to the nearest thousand) gross profit (loss) of:
A)$ (223,000).
B)$ (150,000).
C)$ (206,000).
D)$0.2009: $2,200,000 ($250,000 + 1,600,000 + 500,000) = $(150,000) gross loss.
Q5) Required: Compute the profit margin on sales for 2008.
Q6) Required: Compute the asset turnover ratio for 2008.
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
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/79611
Sample Questions
Q1) Prepare a time diagram for the future value an annuity due with three payments of $400. Be sure to indicate the periods in which interest is added.
Q2) On February 1, 2009, Lynda Brown, proud mother of newborn daughter Goldie, purchased $600,000 in zero-coupon bonds that mature on February 1, 2029. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 12%.
Required: Calculate the price Lynda paid for the bonds.
Q3) At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?
A)$41,556.
B)$47,700.
C)$32,400.
D)$38,100.($8,000 x .97087) + ($12,000 x .94260) + ($10,000 x .91514) + ($15,000 x .88849) = $7,767 + 11,311 + 9,151 + 13,327 = $41,556
Q4) Briefly describe the differences between an ordinary annuity, an annuity due, and a deferred annuity.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Cash and Receivables
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/79610
Sample Questions
Q1) For each posted entry in the allowance account during 2007, prepare the journal entry.
Q2) Using the balance sheet approach, bad debt expense is an indirect result of estimating the net realizable value of accounts receivable.
A)True
B)False
Q3) Calistoga's adjusted allowance for uncollectible accounts at December 31, 2009, is:
A)$1,575.
B)$1,505.
C)$1,650.
D)$1,720.
Q4) Recognizing sales returns when they occur could result in an overstatement of income in the period of the related sale.
A)True
B)False
Q5) How might a company with receivables like HP be able to manage earnings in applying generally accepted accounting principles?
Q6) Define what it is meant by internal control.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Inventories: Measurement
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/79609
Sample Questions
Q1) Liquidated Corporation had a DVL inventory of $800,000 at the beginning of the current year when it adopted DVL. Its year-end inventory at year-end prices was $850,000. The index for the current year was 1.08.
Required:
Compute the DVL inventory to be reported at the end of the year.
Q2) What is Nueva's gross profit ratio if it elects FIFO?
A)30%.
B)32%.
C)10.7%.
D)60%.
Q3) On January 1, 2008, ECT Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $600 million. The 2008 and 2009 ending inventory valued at year-end costs were $702 million and $840 million, respectively. The appropriate cost indexes are 1.08 for 2008 and 1.20 for 2009.
Required:
Calculate the inventory balance that ECT Co. would report on its year-end balance sheets for 2008 and 2009, using the dollar-value LIFO method.
Q4) Briefly explain the advantages of dollar-value LIFO (DVL).
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
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/79608
Sample Questions
Q1) Current period cost-to-retail percentage is:
A)70.0%.
B)68.7%.
C)63.6%.
D)63.5%.
Q2) Retrospective treatment of prior years' financial statements is required when there is a change from:
A)Average cost to FIFO.
B)FIFO to average cost.
C)LIFO to average cost.
D)All of these.
Q3) In applying the LCM rule, the inventory of rehab equipment would be valued at:
A)$315.
B)$247.
C)$150.
D)$235.$235 designated market value is less than $250 cost.
Q4) Briefly explain the difference between the LIFO retail method and the dollar-value LIFO retail method.
Q5) Required: Determine the balance sheet inventory carrying value assuming the LCM rule is applied to individual trees.
11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Operational Assets: Acquisition and Disposition
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/79607
Sample Questions
Q1) On August 15, 2009, Willis Inc. purchased all of the outstanding common stock of Bork Inc. paying $7,400,000 cash. The book values and fair values of Willis' assets and liabilities are listed below:
Required:
Prepare the journal entry to record the acquisition by Willis Inc. \(\begin{array}{lrr}&\text { Book Value } & \text { Fair Value } \\
\text { Accounts receivable } & \$ 1,080,000 & \$ 975,000 \\
\text { Inventories } & 1,620,000 & 2,400,000 \\
\text { Property, plant, and equipment } & 5,400,000 & 6,975,000 \\
\text { Accounts payable } & 1,800,000 & 1,800,000 \\
\text { Bonds payable } & 2,700,000 & 2,475,000 \end{array}\)
Q2) How are donated assets recorded?
Q3) Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made.
A)True B)False
Q4) Why are software development costs treated differently than other types of R&D?
Q5) Briefly explain how R & D is reported in financial statements.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Operational Assets: Utilization and Impairment
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/79606
Sample Questions
Q1) Briefly discuss why straight-line is most common depreciation method used in practice.
Q2) Briefly explain the disclosures that are required relative to depreciable assets.
Q3) Assume the same facts as above, except that the fair value of Oxford (the reporting unit) is $225 million.
Required: Determine the amount, if any, of the goodwill impairment loss that Dooling must recognize on these assets.
Q4) A change in the estimated useful life and residual value of machinery in the current year is handled as:
A)A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.
B)A prospective change from the current year through the remainder of its useful life, using the new estimates.
C)A cumulative adjustment to income in the current year for the difference in depreciation under the new vs.old estimates.
D)None of these is correct.
Q5) Briefly differentiate between activity-based and time-based allocation methods.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Investments
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/79605
Sample Questions
Q1) Which of the following investment securities held by Zoogle Inc. are not reported at fair value in its balance sheet?
A)Common stock held as available for sale securities
B)Debt securities held to maturity
C)Preferred stock held as trading securities
D)All of these are reported at fair value.
Q2) Trading securities, by definition, are properly classified in the balance sheet as:
A)Shareholders' equity.
B)Intangibles.
C)Current assets.
D)Other assets.
Q3) On January 1, 2009, Wildcat Company purchased $93,000 of 10% bonds at face value. The bonds are to be held to maturity. The bonds pay interest semiannually on January 1, and July 1.
Required:
(1.) Prepare the appropriate journal entry to record the acquisition of the bonds. (2.) Record the first two interest payments (ignore year-end accruals).
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/180990
Sample Questions
Q1) Panther Co. had a warranty liability of $350,000 at the beginning of 2009, and $310,000 at end of 2009. Warranty expense is based on 4% of sales, which were $50 million for the year. What were the warranty expenditures for 2009?
A)$0.
B)$1,960,000.
C)$2,000,000.
D)$2,040,000.$350,000 + $2,000,000 $310,000 = $2,040,000
Q2) For a loss contingency to be accrued, the claim must have been made before the accounting period ended.
A)True
B)False
Q3) Large, highly rated firms sometimes sell commercial paper:
A)To borrow funds at a lower rate than through a bank.
B)To earn a profit on the paper.
C)To avoid paperwork.
D)Because the interest rate is locked in by the Federal Reserve Board.
Q4) What factors are important in determining whether a pending lawsuit should be accrued as a liability and reflected in the financial statements?
Q5) Define a loss contingency and give two examples that almost always are accrued.
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
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/79603
Sample Questions
Q1) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is 11%. These bonds will sell at a price that is:
A)Equal to $500,000.
B)More than $500,000.
C)Less than $500,000.
D)The answer cannot be determined from the information provided.When the market rate of interest is higher than the bonds' stated rate, the bonds will sell at a discount.
Q2) What is the interest expense on the bonds in 2010?
A)$700,700.
B)$600,000.
C)$351,337.
D)$100,700.Semiannual effective rate = $345,639 / $8,640,967 = 4% Interest expense = $349,363 + ($8,783,433 4%) = $700,700
Q3) How should bond issue costs be accounted for on the books of the issuing corporation?
Q4) A zero-coupon bond pays no interest. Explain.
Q5) Required: How much interest will Morton Sales Co. pay on these bonds in 2009?
Q6) How are bonds and notes the same? How do they differ?
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
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/79602
Sample Questions
Q1) Discuss the financial statement disclosure requirements for all leases entered into by the lessee.
Q2) One of the four criteria for a capital lease specifies that the present value of the minimum lease payments be equal to or greater than:
A)90% of the cost of the asset.
B)75% of the fair value of the asset.
C)90% of the fair value of the asset.
D)75% of the cost of the asset.
Q3) For the lessor to account for a lease as a capital lease, the lease must meet:
A)Any one of first four classification criteria and both of the last two additional conditions specified by SFAS No.13.
B)Any one of the six criteria specified by SFAS No.13.
C)All four of the criteria specified by SFAS No.13.
D)Any one of the four criteria specified by SFAS No.13.
Q4) What is meant by the term "minimum lease payments"?
Q5) What is a bargain purchase option and when do the parties to a lease know if it exists?
Q6) Discuss the interest rates used by the lessee and the lessor for determining the present value of a capital lease.
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/79601
Sample Questions
Q1) Under current tax law a net operating loss may be carried back:
A)2 years.
B)5 years.
C)15 years.
D)20 years.
Q2) Recognizing tax benefits in a loss year due to a net operating loss carryforward requires
A)creating a tax refund receivable.
B)footnote disclosure only.
C)creating a deferred tax asset.
D)creating a deferred tax liability.
Q3) What should Hobson International report as income from continuing operations?
A)$ 94 million.
B)$ 90 million.
C)$ 88 million.
D)$150 million.* [($150 25 + 10 + 5) 40%] + [($25 10) 40%] = $62
Q4) The tax benefit of a net operating loss carried back two years represents a current receivable for income tax to be refunded.
A)True
B)False
18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Pensions and Other Postretirement Benefits
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/79600
Sample Questions
Q1) Which of the following is not a requirement for a qualified pension plan?
A)It cannot discriminate in favor of highly paid employees.
B)It must cover at least 80% of the employees.
C)It must be funded in advance of retirement.
D)Benefits must vest after a specified period of service, commonly five years.
Q2) Differentiate between a defined contribution pension plan and a defined benefit pension plan.
Q3) Accounting for postretirement health care benefits is similar, in most respects, to accounting for:
A)Payroll taxes.
B)Health insurance costs for current employees.
C)Pension benefits.
D)Sick pay and vacation pay.
Q4) The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a liability?
A)A defined benefit plan only.
B)A defined contribution plan only.
C)Both a defined benefit and a defined contribution plan.
D)This is not the correct entry.
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
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/79599
Sample Questions
Q1) In January, 2009, Despot recorded a transaction with this journal entry: The transaction was for the:
A)Issue of 2 million shares of common stock at par value
B)Issue of common stock for $150 million in cash
C)Receipt of $20 per share for a new stock issue
D)All of these are correct.
Q2) Lucid Company declared a property dividend of 20,000 shares of $1 par Polk Company common stock. The Polk stock was purchased for $5 per share. Market value was $10 per share on the declaration date and $11 per share on the distribution date. What is the amount of the dividend?
A)$100,000.
B)$200,000.
C)$220,000.
D)$300,000.20,000 $10 = $200,000
Q3) Treasury stock transactions never increase retained earnings or net income.
A)True
B)False
Q4) What is comprehensive income and how does it differ from net income? Where is it reported in the balance sheet?
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
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/239556
Sample Questions
Q1) If a stock dividend were distributed, when calculating the current year's EPS, the shares distributed are treated as having been issued:
A)At the end of the year.
B)At the beginning of the year.
C)On the declaration date.
D)On the date of distribution.
Q2) How are outstanding stock options and awards taken into account in computing diluted EPS for V Co.?
Q3) Which of the following is a correct statement concerning earnings per share?
A)Earnings per share can never be a negative number.
B)Earnings per share must be reported for all corporations.
C)If a company has an extraordinary loss, at least two EPS amounts must be reported.
D)Reported earnings per share is the result of dividing weighted-average shares by net income.
Q4) What is meant by dilution of earnings per share?
Q5) What is the treasury stock method of accounting for stock options, warrants, and rights?
Page 21
Q6) Why are preferred dividends deducted from net income when calculating EPS?
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
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/79597
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.If beginning inventory is overstated, COGS is overstated and net income is understated: $100,000 (1 30%) = $70,000.
Q2) Which of the following would not be accounted for using the prospective approach?
A)A change to LIFO from FIFO for inventory costing.
B)A change in price indexes used under the LIFO method of inventory costing.
C)Amortization of the transition amount under SFAS 109.
D)A change from the cash basis to accrual accounting.
Q3) Which of the following is an example of a change in accounting principle?
A)A change in inventory costing methods.
B)A change in the estimated useful life of a depreciable asset.
C)A change in the actuarial life expectancies of employees under a pension plan.
D)Consolidating a new subsidiary.
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
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/79596
Sample Questions
Q1) Why is the statement of cash flows required as part of the set of external financial statements?
Q2) Ludwig Company's prepaid rent was $9,000 at December 31, 2008, and $13,000 at December 31, 2009. Ludwig reported rent expense of $19,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?
A)$15,000.
B)$19,000.
C)$23,000.
D)None of these is correct.
Q3) Payments to acquire bonds of other corporations should be classified on a statement of cash flows as:
A)A lending activity.
B)An operating activity.
C)A financing activity.
D)An investing activity.
Q4) Explain why Brothers Corporation subtracts equity income from its net income in its measurement of operating cash flows.
Q5) Is depreciation a source of cash? Explain.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Appendix a Derivatives
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/79617
Sample Questions
Q1) An interest rate swap to synthetically convert floating rate debt into fixed rate debt would:
A)Represent a cash flow hedge.
B)Represent a fair value hedge.
C)Represent a foreign currency hedge.
D)Not qualify as a hedge.
Q2) A forward contract differs from a futures contract in that:
A)A forward contract calls for delivery on a specific date, whereas a futures contract permits the seller to decide later which specific day within the specified month will be the delivery date (if it gets as far as actual delivery before it is closed out).
B)Unlike a futures contract, a forward contract usually is not traded on a market exchange.
C)Unlike a futures contract, a forward contract does not call for a daily cash settlement for price changes in the underlying contract.Gains and losses on forward contracts are paid only when they are closed out.
D)All of these are correct.
Q3) In an annual report to shareholders, Merck & Co., Inc. disclosed the following in regard to its financial instruments:
To view all questions and flashcards with answers, click on the resource link above.