SOLUTION MANUAL FOR Intermediate Accounting IFRS 4th Edition by Donald E

SOLUTION MANUAL FOR Intermediate Accounting
IFRS 4th Edition by Donald E. Kieso, Jerry J.
Weygandt, Terry D. Warfield

31. Which of the following is a limitation of the statement of financial position?
a. Many items that are of financial value are omitted.
b. Judgments and estimates are used.
c. Current fair value is not reported.
d. All of these - ANSWER d

32. The statement of financial position is useful for analyzing all of the following
except
a. liquidity.
b. solvency.
c. profitability.
d. financial flexibility. - ANSWER c

33. Statement of financial position information is useful for all of the following except
to
a. compute rates of return
b. analyze cash inflows and outflows for the period
c. evaluate capital structure
d. assess future cash flows - ANSWER b

34. Statement of financial position information is useful for all of the following except
a. assessing a company's risk
b. evaluating a company's liquidity
c. evaluating a company's financial flexibility
d. determining free cash flows. - ANSWER d

35. A limitation of the balance sheet that is not also a limitation of the income
statement is
a. the use of judgments and estimates
b. omitted items
c. the numbers are affected by the accounting methods employed
d. valuation of items at historical cost - ANSWER d

S36. The statement of financial position contributes to financial reporting by
providing a basis for all of the following except
a. computing rates of return.
b. evaluating the capital structure of the enterprise.
c. determining the increase in cash due to operations.
d. assessing the liquidity and financial flexibility of the enterprise. - ANSWER c

S37. One criticism not normally aimed at a statement of financial position prepared
using current accounting and reporting standards is

,a. failure to reflect current value information.
b. the extensive use of separate classifications.
c. an extensive use of estimates.
d. failure to include items of financial value that cannot be recorded objectively. -
ANSWER b

P38. The amount of time that is expected to elapse until an asset is realized or
otherwise converted into cash is referred to as
a. solvency.
b. financial flexibility.
c. liquidity.
d. exchangeability. - ANSWER c

39. The statement of financial position
a. Omits many items that are of financial value.
b. Makes very limited use of judgments and estimates.
c. Uses fair value for most assets and liabilities.
d. All of the choices are correct regarding the statement of financial position. -
ANSWER a

40. The statement of financial position can help assess all of the following except
a. Solvency.
b. Financial flexibility.
c. Profitability.
d. Liquidity. - ANSWER c

41. The net assets of a business are equal to
a. current assets minus current liabilities.
b. total assets plus total liabilities.
c. total assets minus total shareholders' equity.
d. none of these. - ANSWER d

42. The correct order to present current assets is
a. cash, accounts receivable, prepaid items, inventories.
b. inventories, receivables, prepaid items, cash.
c. cash, inventories, accounts receivable, prepaid items.
d. inventories, prepaid items, accounts receivable, cash. - ANSWER b

43. The basis for classifying assets as current or noncurrent is conversion to cash
within
a. the accounting cycle or one year, whichever is shorter.
b. the operating cycle or one year, whichever is longer.
c. the accounting cycle or one year, whichever is longer.
d. the operating cycle or one year, whichever is shorter. - ANSWER b

44. The basis for classifying assets as current or noncurrent is the period of time
normally required by the accounting entity to convert cash invested in
a. inventory back into cash, or 12 months, whichever is shorter.
b. receivables back into cash, or 12 months, whichever is longer.
c. tangible fixed assets back into cash, or 12 months, whichever is longer.

, d. inventory back into cash, or 12 months, whichever is longer. - ANSWER d

45. The current assets section of the statement of financial position should include
a. machinery.
b. patents.
c. goodwill.
d. inventory. - ANSWER d

46. Which of the following is a current asset?
a. Cash surrender value of a life insurance policy of which the company is the bene-
ficiary.
b. Investment in equity securities for the purpose of controlling the issuing company.
c. Cash designated for the purchase of tangible fixed assets.
d. Trade installment receivables normally collectible in 18 months. - ANSWER d

47. Equity or debt securities held to finance future construction of additional plants
should be classified on a balance sheet as
a. current assets.
b. property, plant, and equipment.
c. intangible assets.
d. long-term investments. - ANSWER d

48. When a portion of inventories has been pledged as security on a loan,
a. the value of the portion pledged should be subtracted from the debt.
b. an equal amount of retained earnings should be appropriated.
c. the fact should be disclosed but the amount of current assets should not be
affected.
d. the cost of the pledged inventories should be transferred from current assets to
noncurrent assets. - ANSWER c

49. Which of the following is not a long-term investment?
a. Cash surrender value of life insurance
b. Franchise
c. Land held for speculation
d. A sinking fund - ANSWER b

50. A generally accepted method of valuation is
1. trading securities at market value.
2. accounts receivable at net realizable value.
3. inventories at current cost.
a. 1
b. 2
c. 3
d. 1 and 2 - ANSWER d

51. Which item below is not a current liability?
a. Unearned revenue
b. Stock dividends distributable
c. The currently maturing portion of long-term debt
d. Trade accounts payable - ANSWER b