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1. On June 4, White Corporation issued $400 millio...

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1. On June 4, White Corporation issued $400 million of bonds for $414 million. During the same year, $1 million of the bond premium was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report: (Points : 4) A financing activity of $400 million. An addition to net income of $1 million. An investing activity of $414 million. A deduction from net income of $1 million. 2. When preparing a statement of cash flows using the direct method, accrual of payroll expense is: (Points : 4) Reported as an operating activity. Reported as an investing activity. Reported as a financing activity. None of these is correct. 3. During the year, cash increased by $400 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows? (Points : 4) Inflow of $300 million. Outflow of $100 million. Outflow of $300 million. Inflow of $600 million. 4. Retrospective restatement usually is appropriate for a change in: (Points : 4) accounting estimate: yes; accounting principle: yes accounting estimate: yes; accounting principle: no accounting estimate: no; accounting principle: yes accounting estimate: no; accounting principle: no 5. Disclosure notes related to a change in accounting principle under the retrospective approach should include: (Points : 4) The effect of the change on executive compensation. The auditor's approval of the change. The SEC's permission to change. Justification for the change. 6. Which of the following describes defined benefit pension plans? (Points : 4) The investment risk is borne by the employee. The plans are simple and easy to construct. The investment risk is borne by the employer. Retirement benefits depend on the individual's account balance. 7. Which of the following is reported as an operating activity in the statement of cash flows? (Points : 4) The purchase of operating assets. The acquisition of treasury stock. The retirement of bonds. The payment of prepaid insurance. 8. An example of an error would be: (Points : 4) Purchasing inventory from a related party. Counting an inventory item twice when taking a physical inventory. Holding back invoices so that accounts payable are understated. Receiving kickbacks in exchange for issuing a purchase order to a vender. 9. When the retrospective approach is used for a change to the FIFO method, which of the following accounts is usually not adjusted? (Points : 4) Deferred Income Taxes Inventory Retained Earnings All of these usually are adjusted 10. Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2005, when it was acquired at a cost of $36 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of 6 years rather than the 9-year life being used to amortize its cost. The decision was made at the end of 2009 (before adjusting and closing entries). What is the appropriate patent amortization expense in 2009? (Points : 4) $ 4 million. $ 5 million. $10 million. $20 million. 11. Mars Inc. has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $110,000; benefits paid to retirees, $10,000; interest cost, $8,000. The discount rate applied by the actuary was 8%. What was the beginning PBO? (Points : 4) $ 90,000. $100,000. $107,200. $112,000. 12. Assume that at the beginning of the current year, a company has a net gain-AOCI of $60,000,000. At the same time, assume the PBO and the plan assets are $300,000,000 and $250,000,000, respectively. The average remaining service period for the employees expected to receive benefits is 10 years. What is the amount of amortization to pension expense for the year using the "corridor" approach? (Points : 4) $6,000,000. $15,000,000. $1,500,000. $3,000,000. 13. Gore Inc. recorded a liability in 2009 for probable litigation losses of $2 million. Ultimately, $5 million in legitimate warranty claims were filed by Gore's customers. (Points : 4) Gore has made a change in accounting principle, requiring retrospective adjustment. Gore needs to correct an accounting error. Gore is required to adjust a change in accounting estimate prospectively. Gore is not required to make any accounting adjustments. 14. On January 2, 2009, Tobias Company began using straight-line depreciation for a certain class of assets. In the past, the company had used double-declining-balance depreciation for these assets. As of January 2, 2009, the amount of the change in accumulated depreciation is $40,000. The appropriate tax rate is 40%. The separately reported change in 2009 earnings is: (Points : 4) An increase of $40,000. A decrease of $40,000. An increase of $24,000. None of these 15. Which of the following is not a characteristic that defines a reportable operating segment according to U.S. GAAP? (Points : 4) Operating results are regularly reviewed by the enterprise's chief operating officer. Discrete financial information is available. Engages in business activities from which it may earn revenues and incur expenses. Represents more than 20% of total company revenues, assets, or net income. 16. Sneed Corporation reported balances in the following accounts for the current year: (Points : 4) $280 $220 $210 $190 17. Payment of retirement benefits: (Points : 4) Increases the PBO. Increases the ABO. Reduces the GBO. Reduces the PBO. 18. Lite Travel Company's accounting records include the following information: (Points : 4) $ 50,000. $ 73,000. $ 94,000. $129,000. 19. A subsequent event for an entity with a December 31, 2009, year-end would not include: (Points : 4) A change in the estimated useful lives of equipment in January 2010. An issuance of bonds in January 2010. An acquisition of another company in January 2010. A major uncertainty at December 31, resolved in January 2010. 20. Mobic Inc. acquired some manufacturing equipment in January 2006 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2009, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2012. As a result, Mobic will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2009, Mobic should: (Points : 4) Charge $280,000 in depreciation expense. Report the book value of the equipment on its12/31/09 balance sheet at $210,000. Make an adjustment to retained earnings for the error in measuring depreciation during 2006-2008. None of these is correct. 21. Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities? (Points : 4) Cash dividends paid. A change in accounts receivable. Depreciation. A change in a prepaid expense. 22. Interest cost is calculated by multiplying the: (Points : 4) ABO by the expected return on the plan assets. ABO by the discount rate. PBO by the expected return on plan assets. PBO by the discount rate. 23. When a change in accounting principle is reported, what is sometimes sacrificed? (Points : 4) Relevance. Consistency. Conservatism. Reliability. 24. The following information pertains to Havana Corporation's defined benefit pension plan: What is the 2009 service cost for Havana's plan? (Points : 4) $276 thousand $528 thousand $648 thousand Cannot be determined from the given information 25. Disclosure notes would not include: (Points : 4) Depreciation methods used and estimated useful life. Definition of cash equivalents. Details of pension plans. Data to adjust the financial statements so that they are not misleading. 26. Interest cost will: (Points : 4) Increase the PBO and increase pension expense. Increase pension expense and reduce plan assets. Increase the PBO and reduce plan assets. Increase pension expense and reduce the return on plan assets. 27. Ludwig Company's prepaid rent was $13,000 at December 31, 2008, and $9,000 at December 31, 2009. Ludwig reported rent expense of $19,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method? (Points : 4) $15,000. $19,000. $23,000. None of these is correct. 28. Pension expense is decreased by: (Points : 4) Amortization of prior service cost. Amortization of net gain. Benefits paid to retired employees. Prior service cost. 29. To help assess the uncertainties that surround a defined benefit pension plan, corporations frequently hire a(n): (Points : 4) CPA. Attorney. Investment analyst. Actuary. 30. Which one of the following financial statements does not report amounts primarily on an accrual basis? (Points : 4) Income statement. Balance sheet. Statement of cash flows. Statement of shareholders' equity. 31. Which of the following changes should be accounted for using the retrospective approach? (Points : 4) A change in the estimated life of a depreciable asset. A change from straight-line to declining balance depreciation. A change to the LIFO method of costing inventories. A change from the completed-contract method of accounting for long-term construction contracts. 32. An overfunded pension plan means that the: (Points : 4) PBO is less than plan assets. PBO exceeds plan assets. ABO is less than plan assets. ABO exceeds plan assets. 33. Which of the following never requires an outflow of cash? (Points : 4) Early extinguishment of debt. Retirement of common stock. Payment of dividends. Amortization of patent. 34. Which of the following is not a required segment reporting disclosure according to U.S. GAAP? (Points : 4) Segment profit or loss. Segment assets. Segment liabilities. General information about the operating segment. 35. Which of the following is an example of a change in accounting principle? (Points : 4) A change in inventory costing methods. A change in the estimated useful life of a depreciable asset. A change in the actuarial life expectancies of employees under a pension plan. Consolidating a new subsidiary. 36. B Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in 2009. The change affects machinery purchased at the beginning of 2007 at a cost of $72,000 with no residual value and an estimated life of five years. In 2009 it is estimated that there is a residual value of $3,600. What is B's 2009 depreciation expense? (Points : 4) $ 8,400 $13,680 $15,840 $19,200 37. The amortization of a net gain has what effect on pension expense? (Points : 4) Decreases it. Has no effect on it. Increases it (but only by the amount over 10% of the PBO). Increases it (regardless of the amount). 38. Interest payments to creditors are reported in a statement of cash flows as: (Points : 4) An investing activity. A borrowing activity. A financing activity. An operating activity. 39. Which of the following is reported as an operating activity in the statement of cash flows? (Points : 4) The payment of dividends. The sale of office equipment. The payment of interest on long-term notes. The issuance of a stock dividend. 40. Louie Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $110,000; benefits paid to retirees, $12,000; interest cost, $8,000. The discount rate applied by the actuary was 8%. What was the service cost for the year? (Points : 4) $ 14,000. $12,000. $18,000. $92,000.,I need these questions answered in two hours please.,No unfortunately I need them in 1 hour and 45 minutes. Any help would be appreciated.,Hi, I need the answers within a couple of minutes or I cannot accept them unfortunately.,The deadline has passed. I'm sorry this did not work out in either of our favors. Perhaps next time.

 

Paper#4746 | Written in 18-Jul-2015

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