, TEST BANK
Intermediate
Financial Accounting
Part 1A
ZEUS VERNON B. MILLAN
1
,TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING ......................................................... 3
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER............................................... 3
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 22
CHAPTER 2
THE ACCOUNTING PROCESS ........................................................ 24
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 24
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER............................................ 26
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 36
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 36
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 36
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER............................................ 37
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS ...... 54
CHAPTER 4
CASH & CASH EQUIVALENTS ..................................................... 54
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 54
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER............................................ 57
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 65
CHAPTER 5
RECEIVABLES (PART 1) ............................................................... 66
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 66
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER............................................ 69
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 75
CHAPTER 6
RECEIVABLES (PART 2) ............................................................... 75
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 75
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER............................................ 78
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 82
CHAPTER 7
RECEIVABLES (PART 3) ............................................................... 82
CHAPTER 7: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 82
CHAPTER 7: THEORY OF ACCOUNTS REVIEWER............................................ 85
CHAPTER 7 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 92
CHAPTER 8
INVENTORIES ............................................................................... 92
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 92
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER............................................ 97
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 109
CHAPTER 9
INVESTMENTS (PART 1) ............................................................ 109
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 109
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER..........................................112
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 122
CHAPTER 10
INVESTMENTS (PART 2) ............................................................ 122
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 122
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER.......................................127
2
, CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 134
CHAPTER 11
INVESTMENTS (PART 3) ............................................................ 135
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 135
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER.......................................135
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 137
Chapter 1
Overview of Accounting
Chapter 1: Theory of Accounts Reviewer
Definition of Accounting
1. Accounting!!has!!been!!given!!various!!definitions,!!which!!of!!the!!following!!is!!not!!one!!of!!those!!definitions
a. Accounting!!is!!a!!service!!activity.!!Its!!function!!is!!to!!provide!!quantitative!!information,!!primarily!!financial!!in!!
nature,!!about!!economic!!entities!!that!!is!!intended!!to!!be!!useful!!in!!making!!economic!!decisions.
b. Accounting!!is!!the!!art!!of!!recording,!!classifying,!!and!!summarizing!!in!!a!!significant!!manner!!and!!in!!terms!!of!!
money,!!transactions!!and!!events!!which!!are,!!in!!part!!of!!at!!least,!!of!!a!!financial!!character!!and!!interpreting!!th
e!!results!!thereof.
c. Accounting!!is!!a!!systematic!!process!!of!!objectively!!obtaining!!and!!evaluating!!evidence!!regarding!!assertions!
!about!!economic!! actions!!and!!events!!to!!ascertain!!the!!degree!!of!! correspondence!!between!!these!!assertions!
! and!!established!!criteria!!and!!communicating!!the!!results!!to!!interested!!users.
d. Accounting!!is!!the!!process!!of!!identifying,!!measuring,!!and!!communicating!!economic!!information!!to!!permit!
!informed!!judgment!!and!!decisions!!by!!users!!of!!information.
2. It! ! is! ! the! ! first! ! process! ! used! ! in! ! accounting.! ! It! ! refers! ! to! ! the! ! identification! ! of! ! events! ! as! ! to! ! whether
! ! they ! ! are!!recognized!!or!!not!!in!!the!!financial!!statements.
a.!!Identifying b.!!Measuring! ! c.!!Communicating d.!!Auditing
3. The!!following!!statements!!correctly!!refer!!to!!the!!accounting!!process.
I. Measuring!!is!!the!!accounting!!process!!of!!analyzing!!business!!activities!!as!!to!!whether!!or!!not!!they!!will!!be!!re
cognized!!in!!the!!books.
II. Recognition!!refers!!to!!the!!process!!of!!including!!the!!effects!!of!!an!!event!!in!!the!!totals!!of!!the!!statement!!of!!fin
ancial!!position!!or!!the!!statement!!of!!profit!!or!!loss!!and!!other!!comprehensive!!income!!through!!memo! ! entri
es.
III. Disclosure!!of!!events!!in!!the!!notes!!to!!financial!!statement!!without!!including!!in!!the!!totals!!of!!the!!statement!!
of!!financial!!position!!or!!statement!!of!!profit!!or!!loss!!and!!other!!comprehensive!!income!!is!!not!!an!!application!!
of!!the!!recognition!!principle.
IV. An!!accountable!!event!!is!!an!!event!!that!!has!!an!!effect !!on!!the!!assets,!!liabilities!!or!!equity!!of!!an!!entity!!and!!its!
!effect!!can!!be!!measured!!reliably.
V. Sociological!!and!!psychological!!matters!!are!!within!!the!!scope!!of!!accounting.
a.!!I,!!II,!!III,!!IV,!!V b.!!I,!!II,!!III,!!IV c.!!IV d.!!III,!!IV
Types!!of!!Events
4. These!!events!!involve!!changes!!in!!the!!economic!!resources!!or!!obligations!!of!!entities!!involving!!other!!entities!!b
ut!!do!!not!!involve!!transfers!!of!!resources!!or!!obligations
a. External!!events c.!!External!!events!!other!!than!!transfers
b. Non-reciprocal!!transfers d.!!Internal!!events
3
Intermediate
Financial Accounting
Part 1A
ZEUS VERNON B. MILLAN
1
,TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING ......................................................... 3
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER............................................... 3
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 22
CHAPTER 2
THE ACCOUNTING PROCESS ........................................................ 24
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 24
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER............................................ 26
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 36
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 36
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 36
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER............................................ 37
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS ...... 54
CHAPTER 4
CASH & CASH EQUIVALENTS ..................................................... 54
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 54
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER............................................ 57
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 65
CHAPTER 5
RECEIVABLES (PART 1) ............................................................... 66
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 66
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER............................................ 69
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 75
CHAPTER 6
RECEIVABLES (PART 2) ............................................................... 75
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 75
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER............................................ 78
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 82
CHAPTER 7
RECEIVABLES (PART 3) ............................................................... 82
CHAPTER 7: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 82
CHAPTER 7: THEORY OF ACCOUNTS REVIEWER............................................ 85
CHAPTER 7 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 92
CHAPTER 8
INVENTORIES ............................................................................... 92
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 92
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER............................................ 97
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 109
CHAPTER 9
INVESTMENTS (PART 1) ............................................................ 109
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 109
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER..........................................112
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 122
CHAPTER 10
INVESTMENTS (PART 2) ............................................................ 122
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 122
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER.......................................127
2
, CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 134
CHAPTER 11
INVESTMENTS (PART 3) ............................................................ 135
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 135
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER.......................................135
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 137
Chapter 1
Overview of Accounting
Chapter 1: Theory of Accounts Reviewer
Definition of Accounting
1. Accounting!!has!!been!!given!!various!!definitions,!!which!!of!!the!!following!!is!!not!!one!!of!!those!!definitions
a. Accounting!!is!!a!!service!!activity.!!Its!!function!!is!!to!!provide!!quantitative!!information,!!primarily!!financial!!in!!
nature,!!about!!economic!!entities!!that!!is!!intended!!to!!be!!useful!!in!!making!!economic!!decisions.
b. Accounting!!is!!the!!art!!of!!recording,!!classifying,!!and!!summarizing!!in!!a!!significant!!manner!!and!!in!!terms!!of!!
money,!!transactions!!and!!events!!which!!are,!!in!!part!!of!!at!!least,!!of!!a!!financial!!character!!and!!interpreting!!th
e!!results!!thereof.
c. Accounting!!is!!a!!systematic!!process!!of!!objectively!!obtaining!!and!!evaluating!!evidence!!regarding!!assertions!
!about!!economic!! actions!!and!!events!!to!!ascertain!!the!!degree!!of!! correspondence!!between!!these!!assertions!
! and!!established!!criteria!!and!!communicating!!the!!results!!to!!interested!!users.
d. Accounting!!is!!the!!process!!of!!identifying,!!measuring,!!and!!communicating!!economic!!information!!to!!permit!
!informed!!judgment!!and!!decisions!!by!!users!!of!!information.
2. It! ! is! ! the! ! first! ! process! ! used! ! in! ! accounting.! ! It! ! refers! ! to! ! the! ! identification! ! of! ! events! ! as! ! to! ! whether
! ! they ! ! are!!recognized!!or!!not!!in!!the!!financial!!statements.
a.!!Identifying b.!!Measuring! ! c.!!Communicating d.!!Auditing
3. The!!following!!statements!!correctly!!refer!!to!!the!!accounting!!process.
I. Measuring!!is!!the!!accounting!!process!!of!!analyzing!!business!!activities!!as!!to!!whether!!or!!not!!they!!will!!be!!re
cognized!!in!!the!!books.
II. Recognition!!refers!!to!!the!!process!!of!!including!!the!!effects!!of!!an!!event!!in!!the!!totals!!of!!the!!statement!!of!!fin
ancial!!position!!or!!the!!statement!!of!!profit!!or!!loss!!and!!other!!comprehensive!!income!!through!!memo! ! entri
es.
III. Disclosure!!of!!events!!in!!the!!notes!!to!!financial!!statement!!without!!including!!in!!the!!totals!!of!!the!!statement!!
of!!financial!!position!!or!!statement!!of!!profit!!or!!loss!!and!!other!!comprehensive!!income!!is!!not!!an!!application!!
of!!the!!recognition!!principle.
IV. An!!accountable!!event!!is!!an!!event!!that!!has!!an!!effect !!on!!the!!assets,!!liabilities!!or!!equity!!of!!an!!entity!!and!!its!
!effect!!can!!be!!measured!!reliably.
V. Sociological!!and!!psychological!!matters!!are!!within!!the!!scope!!of!!accounting.
a.!!I,!!II,!!III,!!IV,!!V b.!!I,!!II,!!III,!!IV c.!!IV d.!!III,!!IV
Types!!of!!Events
4. These!!events!!involve!!changes!!in!!the!!economic!!resources!!or!!obligations!!of!!entities!!involving!!other!!entities!!b
ut!!do!!not!!involve!!transfers!!of!!resources!!or!!obligations
a. External!!events c.!!External!!events!!other!!than!!transfers
b. Non-reciprocal!!transfers d.!!Internal!!events
3
