ACCT 301 EXAM 4 QUESTIONS WITH VERIFIED
ANSWERS
Step 1 of Rev Rec - Answers - Identifying contract with customers
Step 2 of rev rec - Answers - Separate performance obligations
step 3 of rev rec - Answers - determining transaction price
step 4 of rev rec - Answers - allocate the transaction price to the separate performance
obligations
step 5 of rev rec - Answers - recognize revenue when each performance obligation is
satisfied
Which of the following is accounted for as a change in accounting principle?
a. a change in the estimated life of plant assets
b. change from the cash basis to accrual basis of accounting
c. a change from expensing immaterial expenditures to deferring and amortizing them
as they become material.
d. a change in inventory valuation from average cost to FIFO - Answers - D
What type of accounting change should always be accounted for in current and future
periods?
a. change in accounting principle
b. change in reporting entity
c. change in accounting estimate
d. correction of an error - Answers - C
When a company decides to switch from the double declining balance method to the
straight line method, this change should be handled as a:
a. change in accounting principle
b. change in accounting estimate
c. prior period adjustment
d. correction of an error - Answers - B
For variable consideration, a company has a 60% chance of recieving $100, and a 40%
chance of recieving $0. What is the expected value and most likely amount? - Answers -
Expected value: 100*.6+0*.4 = $60
most likely amount: $100
changes in accounting estimate should be reported:
ANSWERS
Step 1 of Rev Rec - Answers - Identifying contract with customers
Step 2 of rev rec - Answers - Separate performance obligations
step 3 of rev rec - Answers - determining transaction price
step 4 of rev rec - Answers - allocate the transaction price to the separate performance
obligations
step 5 of rev rec - Answers - recognize revenue when each performance obligation is
satisfied
Which of the following is accounted for as a change in accounting principle?
a. a change in the estimated life of plant assets
b. change from the cash basis to accrual basis of accounting
c. a change from expensing immaterial expenditures to deferring and amortizing them
as they become material.
d. a change in inventory valuation from average cost to FIFO - Answers - D
What type of accounting change should always be accounted for in current and future
periods?
a. change in accounting principle
b. change in reporting entity
c. change in accounting estimate
d. correction of an error - Answers - C
When a company decides to switch from the double declining balance method to the
straight line method, this change should be handled as a:
a. change in accounting principle
b. change in accounting estimate
c. prior period adjustment
d. correction of an error - Answers - B
For variable consideration, a company has a 60% chance of recieving $100, and a 40%
chance of recieving $0. What is the expected value and most likely amount? - Answers -
Expected value: 100*.6+0*.4 = $60
most likely amount: $100
changes in accounting estimate should be reported:
