Intermediate Gliem 4 || Questions and Answers.
Which of the following items is not classified as other comprehensive income (OCI)?
a) Prior service cost adjustment resulting from amendment of a defined benefit pension plan.
b) Foreign currency translation adjustments.
c) Infrequent in occurrence gains from extinguishment of debt.
d) Unrealized gains for the year on available-for-sale marketable debt securities. correct answers
Infrequent in occurrence gains from extinguishment of debt.
Accumulated other comprehensive income is reported in which of the following financial
statements?
a) The statement of comprehensive income.
b) The statement of financial position.
c) The income statement.
d) The statement of cash flows. correct answers The statement of financial position.
For a company to obtain a retail business license in a particular state, the company is required to
pay the state the equivalent of 3 months of sales taxes on its projected retail sales. This amount is
fully refundable after 5 years, provided the company has filed all required sales tax returns and
paid all sales taxes due. Initially the company should report the payment related to this licensing
requirement as
a) A current asset.
b) A noncurrent asset.
c) An expense.
d) A noncurrent liability. correct answers A noncurrent asset.
A company has outstanding accounts payable of $30,000 and a short-term construction loan in
the amount of $100,000 at year end. The loan was refinanced through issuance of long-term
bonds after year end but before issuance of financial statements. How should these liabilities be
recorded in the balance sheet?
, a) Current liabilities of $130,000.
b) Current liabilities of $130,000, with required footnote disclosure of the refinancing of the
loan.
c) Current liabilities of $30,000, noncurrent liabilities of $100,000.
d) Noncurrent liabilities of $130,000. correct answers Current liabilities of $30,000, noncurrent
liabilities of $100,000.
A company has the following liabilities at year end:
Mortgage note payable; $16,000 due within 12 months $355,000
Short-term debt that the company is refinancing with long-term debt 175,000
Deferred tax liability arising from depreciation 25,000
What amount should the company include in the current liability section of the balance sheet?
a) $191,000
b) $16,000
c) $0
d) $41,000 correct answers $16,000
On December 31, Year 3, Matricula Corp. reported $100,000 in current liabilities. Matricula
issued audited financial statements on March 31, Year 4. On February 15, Year 4, the company
issued $80,000 of common stock, the proceeds of which were intended to pay the current debt.
What amount of current liabilities should Matricula report in its December 31, Year 3, balance
sheet prepared under IFRS?
a) $0
b) $20,000
c) $80,000
d) $100,000 correct answers $100,000
In analyzing a company's financial statements, which financial statement will a potential investor
primarily use to assess the company's liquidity and financial flexibility?
Which of the following items is not classified as other comprehensive income (OCI)?
a) Prior service cost adjustment resulting from amendment of a defined benefit pension plan.
b) Foreign currency translation adjustments.
c) Infrequent in occurrence gains from extinguishment of debt.
d) Unrealized gains for the year on available-for-sale marketable debt securities. correct answers
Infrequent in occurrence gains from extinguishment of debt.
Accumulated other comprehensive income is reported in which of the following financial
statements?
a) The statement of comprehensive income.
b) The statement of financial position.
c) The income statement.
d) The statement of cash flows. correct answers The statement of financial position.
For a company to obtain a retail business license in a particular state, the company is required to
pay the state the equivalent of 3 months of sales taxes on its projected retail sales. This amount is
fully refundable after 5 years, provided the company has filed all required sales tax returns and
paid all sales taxes due. Initially the company should report the payment related to this licensing
requirement as
a) A current asset.
b) A noncurrent asset.
c) An expense.
d) A noncurrent liability. correct answers A noncurrent asset.
A company has outstanding accounts payable of $30,000 and a short-term construction loan in
the amount of $100,000 at year end. The loan was refinanced through issuance of long-term
bonds after year end but before issuance of financial statements. How should these liabilities be
recorded in the balance sheet?
, a) Current liabilities of $130,000.
b) Current liabilities of $130,000, with required footnote disclosure of the refinancing of the
loan.
c) Current liabilities of $30,000, noncurrent liabilities of $100,000.
d) Noncurrent liabilities of $130,000. correct answers Current liabilities of $30,000, noncurrent
liabilities of $100,000.
A company has the following liabilities at year end:
Mortgage note payable; $16,000 due within 12 months $355,000
Short-term debt that the company is refinancing with long-term debt 175,000
Deferred tax liability arising from depreciation 25,000
What amount should the company include in the current liability section of the balance sheet?
a) $191,000
b) $16,000
c) $0
d) $41,000 correct answers $16,000
On December 31, Year 3, Matricula Corp. reported $100,000 in current liabilities. Matricula
issued audited financial statements on March 31, Year 4. On February 15, Year 4, the company
issued $80,000 of common stock, the proceeds of which were intended to pay the current debt.
What amount of current liabilities should Matricula report in its December 31, Year 3, balance
sheet prepared under IFRS?
a) $0
b) $20,000
c) $80,000
d) $100,000 correct answers $100,000
In analyzing a company's financial statements, which financial statement will a potential investor
primarily use to assess the company's liquidity and financial flexibility?
