Bus-A 312 - Intermediate Accounting Ii | Exam Questions And Correct Answers | Latest Version 2026/2027

BUS-A 312 - INTERMEDIATE ACCOUNTING II |
EXAM QUESTIONS AND CORRECT ANSWERS |
LATEST VERSION 2026/2027




BUS-A 312 Intermediate Accounting II




1. What is a current liability? A) Expected to be paid in 5 years B)
Expected to be paid within 1 year or operating cycle C) Never paid
D) Depends on management discretion. CORRECT ANSWER : B
2. Sales taxes collected by a retailer are recorded as: A) Revenue B)
Expense C) Liability D) Equity. CORRECT ANSWER : C
3. Unearned revenue is a(n): A) Asset B) Liability C) Equity D)
Expense. CORRECT ANSWER : B
4. When is a contingent loss recorded? A) When it is remote B) When
it is reasonably possible C) When it is probable and estimable D)
Never. CORRECT ANSWER : C
5. If a contingent loss is reasonably possible but not probable, it is: A)
Recorded B) Disclosed C) Ignored D) Accrued. CORRECT ANSWER :
B
6. A contingent gain is recorded if: A) Probable B) Reasonably possible
C) Realized D) Never. CORRECT ANSWER : D
7. Warranty expense is recorded in the period the: A) Product is
repaired B) Product is sold C) Cash is paid D) Customer complains.
CORRECT ANSWER : B

,8. Estimated warranty liability is a: A) Current liability B) Long-term
liability C) Both A and B D) Expense. CORRECT ANSWER : C
9. Gift card breakage (unredeemed gift cards) is recognized as: A)
Liability forever B) Revenue when likelihood of redemption is
remote C) Expense D) Loss. CORRECT ANSWER : B
10. FICA taxes withheld from employees are a: A) Liability to the
employer B) Expense to the employer C) Asset D) Liability until
remitted. CORRECT ANSWER : D
11. Employer payroll taxes (FICA matching, FUTA) are: A)
Liabilities B) Expenses C) Assets D) Deductions from employee pay.
CORRECT ANSWER : B
12. Short-term debt expected to be refinanced on a long-term
basis is classified as current if: A) Management intends to refinance
B) Actual refinancing has occurred by issuance date C) Board
approves D) Never current. CORRECT ANSWER : B
13. What makes a liability "current"? A) Due within a year B) Paid
within a year C) Uses current assets D) A and C. CORRECT ANSWER
:D
14. A loss contingency for a pending lawsuit should be accrued if:
A) The lawsuit is filed B) The outcome is probable and estimable C)
The outcome is possible D) The judge rules. CORRECT ANSWER : B
15. Premiums, coupons, and rebates are accounted for similarly
to: A) Accounts payable B) Warranties C) Notes payable D)
Unearned revenue. CORRECT ANSWER : B
16. Accrued liabilities arise from: A) Advance payments B)
Expenses recognized before cash is paid C) Expenses paid before
recognized D) Revenue recognized before cash. CORRECT ANSWER :
B
17. The current ratio is calculated as: A) Current Assets / Current
Liabilities B) Current Liabilities / Current Assets C) Total Assets /
Total Liabilities D) Quick Assets / Current Liabilities. CORRECT
ANSWER : A

, 18. An operating cycle is the time between purchasing inventory
and: A) Paying suppliers B) Collecting cash from sales C) Recording
revenue D) Ordering more inventory. CORRECT ANSWER : B
19. Commercial paper issued with a back-up credit line is
typically classified as: A) Long-term debt B) Current liability C)
Equity D) Contingent liability. CORRECT ANSWER : B
20. A liability for dividends exists when: A) Dividends are
declared B) Dividends are paid C) Dividends are accumulated D)
Board considers dividends. CORRECT ANSWER : A
21. Accounting for cost estimates for environmental cleanups
requires: A) No recognition B) Recognition only if government
demands C) Accrual over time as liability builds D) Accrual when
probable and estimable. CORRECT ANSWER : D
22. A commitment, such as a purchase order, is: A) A liability B)
An expense C) Disclosed in notes D) Ignored. CORRECT ANSWER : C
23. Self-insurance costs are: A) Accrued B) Expensed as paid C)
Recognized as a liability D) Not recognized until an event occurs.
CORRECT ANSWER : D
24. Refundable deposits are a(n): A) Asset to the payor B)
Liability to the recipient C) Both A and B D) Revenue. CORRECT
ANSWER : C
25. If a company fails to accrue a probable and estimable loss
contingency, net income is: A) Overstated B) Understated C)
Unchanged D) Correct. CORRECT ANSWER : A
26. The "measurement" of a loss contingency means: A)
Estimating the amount B) Determining probability C) Recording the
journal entry D) Filing the lawsuit. CORRECT ANSWER : A
27. If a range of estimates exists for a loss contingency and no
amount in the range is better, the accrual is: A) Zero B) The low end
C) The high end D) The midpoint. CORRECT ANSWER : B (Note:
Under IFRS, it's the midpoint. Under US GAAP, it's the low end.
Standard US A312 assumes low end).