Multiple Choice Accounting Questions

1)Under the earnings approach in accounting for a long-term construction-type contract using the percentage-of-completion method, the revenue recognized during the first year would be the estimated total contract revenue, multiplied by the costs incurred to date divided by the

a. total costs incurred to date.

b. total estimated cost of the project.

c. unbilled portion of the contract price.

d. total contract price.

2) Accounting information is considered to be relevant when it:

a. can be depended on to represent the economic conditions and events that it is intended to represent.

b. is capable of making a difference in a decision.

c. is understandable by reasonably informed users of accounting information.

d. is verifiable and neutral.

3) The single-step income statement emphasizes

a. the gross profit figure.

b. total revenues and total expenses.

c. extraordinary items and accounting changes more than these are emphasized in the multiple-step income statement.

d. the various components of income from continuing operations.

4)Under the traditional discounted cash flow approach:

a. the model is best used when cash flows are uncertain.

b. the stream of contracted cash flows is discounted.

c. the risk-free discount rate is used.

d. the method is best used when cash flows are variable.