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Exam 1: Intermediate Accounting Volume 1

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Question 91

Multiple Choice

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To record a "basket purchase" or to allocate a joint product cost, which method is the most rational?

A) average cost
B) relative sales value
C) fair value
D) amortized cost

E) B) and D)
F) B) and C)

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Question 92

Multiple Choice

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In no case can "net realizable value" (in the lower of cost and net realizable value rule) be more than

A) estimated selling price in the ordinary course of business.
B) estimated selling price in the ordinary course of business less reasonably predictable
Costs of completion and disposal.
C) estimated selling price in the ordinary course of business less reasonably predictable
Costs of completion and disposal and an allowance for a normal profit margin.
D) estimated selling price in the ordinary course of business less reasonably predictable
Costs of completion and disposal, an allowance for a normal profit margin, and an
Adequate reserve for possible future losses.

E) All of the above
F) C) and D)

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Question 93

Multiple Choice

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When an asset is held for sale

Where there is a significant uncertainty with respect to the measurement of an item,

Fudge Ltd.receives a four-year, $100,000 zero-interest bearing note.The present value of this note is $65,873.10.Assuming the note was issued on January 1, 2013, and the effective interest method is used, the interest income to be recognized for calendar 2013 will be

Use the following information for questions Oskar Corp.reports operating expenses in two categories: (1) selling and (2) general and administrative.The adjusted trial balance at December 31, 2014, included the following expense accounts: One-half of the rented premises is occupied by the sales department. -How much of the expenses listed above should be included in Oskar's selling expenses for 2014?

Which of the following is correct?

Use the following information for questions For Pear Limited, events and transactions during 2015 included the following.The tax rate for all items is 30%. 1) Depreciation for 2014 was found to be understated by $30,000. 2) A strike by the employees of a supplier resulted in a loss of $20,000. 3) The inventory at December 31, 2013 was overstated by $40,000. 4) A flood destroyed a building that had a book value of $400,000.Floods are very uncommon in that area. -The effect of these events and transactions on 2015 income from continuing operations net of tax would be

In the United States, the body that has the final authority over accounting standards is the

A hardware retailer typically maintains the following inventory account(s) :

For last month, Perma Corp.'s cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Perma had neither purchases nor returns during the month, what was the cost of its beginning inventory?

The economic entity assumption

On December 1, 2013, Pink Inc.lent $52,000 to Zinc Inc.in return for a three-month, 4.5% interest-bearing note.What adjusting entry should Pink Inc.make on December 31, 2013, in connection with this note?

The process of transferring the essential facts and figures from the book of original entry to the ledger accounts is called

The matching principle is best demonstrated by

Which of the following statements best describes a liability?

Sale of receivables without recourse Sparwood Manufacturing factored $250,000 of their accounts receivable to General Factor Corp., on a without recourse basis.The receivables are transferred to General Factor, who takes over the full responsibility of collection.General Factor charged a finance charge of 4% of the dollar value of the receivables, and withheld 5% of the receivable value. Instructions a)Prepare the general journal entry to reflect this transaction on Sparwood's books. b)Prepare the general journal entry to reflect this transaction on General Factor's books.

An accrued revenue can best be described as an amount

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Calculation of net income from the change in shareholders' equity Presented below is selected information pertaining to Pullman Enterprises Ltd.for last year: Instructions Calculate the net income for last year.