FAC 3701 Intermediate Accounting
Questions And Answers 100% Verified
What recognizes revenue when its earning and expenses when they are incurred? -
CORRECT ANSWER- the accrual basis of accounting
True or False?
Elements of financial statements & foundational principles are part of the conceptual
framework for financial reporting - CORRECT ANSWER- true
What is the statement of financial position useful in analyzing? - CORRECT
ANSWER- Liquidity, Solvency, Financial flexibility
True or False: The Statement of Financial Position is useful for analyzing profitability -
CORRECT ANSWER- False
Which does NOT belong?
- Accounts Payable
- Derivatives
- Cash
- Inventory - CORRECT ANSWER- Inventory
Level 1 Inputs... - CORRECT ANSWER- are more objective
Intangible assets that have a finite life are amortized over a period NOT to exceed... -
CORRECT ANSWER- its useful life
Which of the following is NOT a type of intangible asset? - CORRECT ANSWER-
Financial Instrument
Residual Value is... - CORRECT ANSWER- the estimate of an assets net realizable
value at the end of its useful life
Carla Vista Inc. exchanged merchandise that costs $20,400 and normally sold for
$28,200 for a new delivery truck with a list price of $32,200. The delivery truck should
be recorded on Carla Vista's books at... - CORRECT ANSWER- $28,200
Under ASPE, the costs for environmental clean-up at the end of an asset's useful life...
- CORRECT ANSWER- are recognized only if they represent a legal obligation
Which of the following costs would be included in the cost of a patent? - CORRECT
ANSWER- - cost of purchase from an inventor or owner
- fees associated with successful legal defence of a patent
- legal fees associated with securing a patent
Which of the following costs would NOT be included in the cost of a patent? -
CORRECT ANSWER- - research costs associated with investigation of new
technologies
If a company uses the units of production method for calculating depreciation on it's
factory machinery, the credit to accumulated depreciation from period to period during
the life of the firm will... - CORRECT ANSWER- vary with production
Cost of Goods Available for Sale is calculated as... - CORRECT ANSWER-
Beginning Inv.
, + Cost of Goods Acquired during the period
The 3 main characteristics of intangible assets are - CORRECT ANSWER- -
identifiability
- non-physical existence
- non-monetary nature
A manufacturing company typically maintains the following inventory accounts: -
CORRECT ANSWER- - raw materials
- work in process
- finished goods
True of False?
An overstatement of beginning inventory will result in an understatement of income -
CORRECT ANSWER- True
True or False?
An overstatement of ending inventory will result in an overstatement of income -
CORRECT ANSWER- True
True or False?
An understatement of beginning inventory will cause cost of goods sold to be
understated - CORRECT ANSWER- True
All else being equal, which of the following statements with respect to the impact of
inventory errors is NOT correct? - CORRECT ANSWER- - an overstatement of
ending inventory will result in an understatement of income
When it comes to measuring investments, which of the following statements is true? -
CORRECT ANSWER- - Both cost/ amortized cost and fair value are permitted in
appropriate circumstances
Which of the following would NOT be included in inventory? - CORRECT ANSWER-
- cost of a courtesy vehicle owned by a car dealership
Goods in transit that are shipped FOB shipping point should be included... -
CORRECT ANSWER- - in the inventory of the buyer
Which of the following best describes goodwill? - CORRECT ANSWER- - the
excess of fair value transferred to acquire a business over fair value amounts assigned
to identifiable assets
Which of the following is incorrect regarding depreciation? - CORRECT ANSWER- -
it is an attempt to reflect the fair market values of the related assets
Which of the following is NOT included as part of the IAS16 definition of PPE? -
CORRECT ANSWER- - PPE can be tangible or intangible
Required for supplemental disclosure for the Balance Sheet - CORRECT ANSWER-
Financial Forecasts
Depreciation commences or continues when... - CORRECT ANSWER- - the asset
is available for use
Correct statements regarding depreciation - CORRECT ANSWER- - it is a part of
the matching of revenues and expenses
- it is a means of cost allocation
- it is not a matter of valuation
Using the allowance method, when an account receivable is written off, the account is
debited is - CORRECT ANSWER- - allowance for expected credit losses
Questions And Answers 100% Verified
What recognizes revenue when its earning and expenses when they are incurred? -
CORRECT ANSWER- the accrual basis of accounting
True or False?
Elements of financial statements & foundational principles are part of the conceptual
framework for financial reporting - CORRECT ANSWER- true
What is the statement of financial position useful in analyzing? - CORRECT
ANSWER- Liquidity, Solvency, Financial flexibility
True or False: The Statement of Financial Position is useful for analyzing profitability -
CORRECT ANSWER- False
Which does NOT belong?
- Accounts Payable
- Derivatives
- Cash
- Inventory - CORRECT ANSWER- Inventory
Level 1 Inputs... - CORRECT ANSWER- are more objective
Intangible assets that have a finite life are amortized over a period NOT to exceed... -
CORRECT ANSWER- its useful life
Which of the following is NOT a type of intangible asset? - CORRECT ANSWER-
Financial Instrument
Residual Value is... - CORRECT ANSWER- the estimate of an assets net realizable
value at the end of its useful life
Carla Vista Inc. exchanged merchandise that costs $20,400 and normally sold for
$28,200 for a new delivery truck with a list price of $32,200. The delivery truck should
be recorded on Carla Vista's books at... - CORRECT ANSWER- $28,200
Under ASPE, the costs for environmental clean-up at the end of an asset's useful life...
- CORRECT ANSWER- are recognized only if they represent a legal obligation
Which of the following costs would be included in the cost of a patent? - CORRECT
ANSWER- - cost of purchase from an inventor or owner
- fees associated with successful legal defence of a patent
- legal fees associated with securing a patent
Which of the following costs would NOT be included in the cost of a patent? -
CORRECT ANSWER- - research costs associated with investigation of new
technologies
If a company uses the units of production method for calculating depreciation on it's
factory machinery, the credit to accumulated depreciation from period to period during
the life of the firm will... - CORRECT ANSWER- vary with production
Cost of Goods Available for Sale is calculated as... - CORRECT ANSWER-
Beginning Inv.
, + Cost of Goods Acquired during the period
The 3 main characteristics of intangible assets are - CORRECT ANSWER- -
identifiability
- non-physical existence
- non-monetary nature
A manufacturing company typically maintains the following inventory accounts: -
CORRECT ANSWER- - raw materials
- work in process
- finished goods
True of False?
An overstatement of beginning inventory will result in an understatement of income -
CORRECT ANSWER- True
True or False?
An overstatement of ending inventory will result in an overstatement of income -
CORRECT ANSWER- True
True or False?
An understatement of beginning inventory will cause cost of goods sold to be
understated - CORRECT ANSWER- True
All else being equal, which of the following statements with respect to the impact of
inventory errors is NOT correct? - CORRECT ANSWER- - an overstatement of
ending inventory will result in an understatement of income
When it comes to measuring investments, which of the following statements is true? -
CORRECT ANSWER- - Both cost/ amortized cost and fair value are permitted in
appropriate circumstances
Which of the following would NOT be included in inventory? - CORRECT ANSWER-
- cost of a courtesy vehicle owned by a car dealership
Goods in transit that are shipped FOB shipping point should be included... -
CORRECT ANSWER- - in the inventory of the buyer
Which of the following best describes goodwill? - CORRECT ANSWER- - the
excess of fair value transferred to acquire a business over fair value amounts assigned
to identifiable assets
Which of the following is incorrect regarding depreciation? - CORRECT ANSWER- -
it is an attempt to reflect the fair market values of the related assets
Which of the following is NOT included as part of the IAS16 definition of PPE? -
CORRECT ANSWER- - PPE can be tangible or intangible
Required for supplemental disclosure for the Balance Sheet - CORRECT ANSWER-
Financial Forecasts
Depreciation commences or continues when... - CORRECT ANSWER- - the asset
is available for use
Correct statements regarding depreciation - CORRECT ANSWER- - it is a part of
the matching of revenues and expenses
- it is a means of cost allocation
- it is not a matter of valuation
Using the allowance method, when an account receivable is written off, the account is
debited is - CORRECT ANSWER- - allowance for expected credit losses
