Question 1 options:
| | $48,000. |
| | $30,000. |
| | $40,000. |
| | $58,000. |
Question 2 (2 points)
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The percentage-of-completion method of accounting for long-term construction-type contracts is preferable when
Question 2 options:
| | Estimates of costs to complete and extent of progress toward completion are reasonably dependable. |
| | The collectibility of progress billings from the customer is reasonably assured. |
| | A contractor is involved in numerous projects. |
| | The contracts are of a relatively short duration. |
Question 3 (2 points)
Why are the monthly costs of operating equipment NOT included in the capitalized amount of the asset? The operating expenses:
Question 3 options:
| | were not incurred prior to placing the asset in service. |
| | are a normal cost of operating a business. |
| | are related to operations and not investments. |
| | are recurring over the useful life of the asset. |
Question 4 (2 points)
What describes the conceptual framework for FASB to create a system of consistent financial reporting objectives and concepts?
Question 4 options:
| | The Statement of Financial Accounting Concepts (SFAC). |
| | Generally Accepted Accounting Principles (GAAP). |
| | This framework has not yet been developed. |
| | Securities and Exchange Commission (SEC). |
Question 5 (2 points)
Which of the following costs is included in research and development expense?
Question 5 options:
| | Design, construction, and testing of preproduction prototypes and models. |
| | Ongoing efforts to improve existing products. |
| | Troubleshooting in connection with breakdowns during commercial production. |
| | Periodic design changes to existing products. |
Question 6 (2 points)
When the equity method is used to account for investments in common stock, which of the following affect(s) the investor's reported investment income? A change in market value of investee's common stock Cash dividends from investee
Question 6 options:
| | No No |
| | No Yes |
| | Yes No |
| | Yes Yes |
Question 7 (2 points)
In calculating the numerator for diluted earnings per share, the interest on convertible debt is:
Question 7 options:
| | added to earnings available to common shareholders after an adjustment for taxes. |
| | added to earnings available to common shareholders. |
| | subtracted from earnings available to common shareholders. |
| | subtracted from earnings available to common shareholders after an adjustment for taxes. |
Question 8 (2 points)
The revenues control account of a governmental unit is debited when
Question 8 options:
| | The account is closed out at the end of the year. |
| | The budget is recorded at the beginning of the year. |
| | Property taxes are recorded. |
| | Property taxes are collected. |
Question 9 (2 points)
Black Co., organized on January 2, Year One, had pretax financial statement income of $500,000 and taxable income of $800,000 for the year ended December 31, Year One. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows: Year Two $100,000 Year Three $ 50,000 Year Four $ 50,000 Year Five $100,000 The enacted income tax rates are 25% for Year One, 30% for Year Two through Year Four, and 35% for Year Five. Black believes that future years' operations will produce profits. In its December 31, Year One, balance sheet, what amount should Black report as deferred tax asset?
Question 9 options:
| | $95,000. |
| | $50,000. |
| | $75,000. |
| | $90,000. |
Question 10 (2 points)
Which of the following is NOT a change in an accounting principle? A change:
Question 10 options:
| | in the estimated residual value and remaining service life of a class of long-term assets. |
| | from the percentage-of-completion to the completed contract method. |
| | from the cost method to the equity method. |
| | from first-in, first-out (FIFO) to weighted average cost method. |
