ACC 311 PRACTICE SOLUTION FOR THE
EXAMINATION TEST GUARANTEED TO PASS
IN 2026.
◍ Which of the following statements does not correctly describe an
adjustment to net income when determining cash flows from
operating activities using the indirect method?
A. An increase in accounts receivable will be subtracted from net
income.
B. Depreciation expense on a depreciable asset will be added to net
income.
C. An increase in accrued liabilities will be subtracted from net
income.
D. An increase in accounts payable will be added to net income. Ans:
An increase in accrued liabilities will be subtracted from net income
◍ The primary difference in accounting for available-for-sale
securities and accounting for trading securities is:. Ans: Determining
where the unrealized holding gain or loss on investments is reported
in the financial statements; in current net income or in comprehensive
income.
◍ Which of the following will not be found in the bond indenture?
A. The coupon rate of interest
, B. The face value of the bonds
C. The term of the bonds
D. The market rate of interest
E. Any covenants that govern the bond issue during its life.. Ans: The
market rate of interest
◍ Which of the following statements is correct?
A. Any unrealized holding gain or loss on investments in trading
securities is reported on the income statement.
B. Any unrealized holding gain or loss on investments in available-
for-sale securities is reported on the income statement.
C. All unrealized gains and losses are reported on the income
statement regardless of the method used to account for the investment.
D. All unrealized holding gain and losses are reported on the balance
sheet regardless of the method used to account for the investment..
Ans: Any unrealized holding gain or loss on investments in trading
securities is reported on the income statement.
◍ Which of the following statements is not correct?
A. The bond principal is the amount due at the maturity date of the
bond.
B. The stated interest rate is used to determine the cash interest
payments.
C. The bond principal is used to determine the cash interest payments.
EXAMINATION TEST GUARANTEED TO PASS
IN 2026.
◍ Which of the following statements does not correctly describe an
adjustment to net income when determining cash flows from
operating activities using the indirect method?
A. An increase in accounts receivable will be subtracted from net
income.
B. Depreciation expense on a depreciable asset will be added to net
income.
C. An increase in accrued liabilities will be subtracted from net
income.
D. An increase in accounts payable will be added to net income. Ans:
An increase in accrued liabilities will be subtracted from net income
◍ The primary difference in accounting for available-for-sale
securities and accounting for trading securities is:. Ans: Determining
where the unrealized holding gain or loss on investments is reported
in the financial statements; in current net income or in comprehensive
income.
◍ Which of the following will not be found in the bond indenture?
A. The coupon rate of interest
, B. The face value of the bonds
C. The term of the bonds
D. The market rate of interest
E. Any covenants that govern the bond issue during its life.. Ans: The
market rate of interest
◍ Which of the following statements is correct?
A. Any unrealized holding gain or loss on investments in trading
securities is reported on the income statement.
B. Any unrealized holding gain or loss on investments in available-
for-sale securities is reported on the income statement.
C. All unrealized gains and losses are reported on the income
statement regardless of the method used to account for the investment.
D. All unrealized holding gain and losses are reported on the balance
sheet regardless of the method used to account for the investment..
Ans: Any unrealized holding gain or loss on investments in trading
securities is reported on the income statement.
◍ Which of the following statements is not correct?
A. The bond principal is the amount due at the maturity date of the
bond.
B. The stated interest rate is used to determine the cash interest
payments.
C. The bond principal is used to determine the cash interest payments.
