Question
QUESTION 1 Concerning accounting for warranties, which of the following statements is true? The expense warranty accrual method is the only method accepted for federal
QUESTION 1
Concerning accounting for warranties, which of the following statements is true?
The expense warranty accrual method is the only method accepted for federal income tax purposes. | ||
The modified cash basis is the method used for for tax reporting. | ||
The sales warranty accrual method uses a percentage of completion approach to warranty revenue recognition. | ||
The modified cash basis recognizes warranty expense when cash is received on the sale. |
QUESTION 2
Which of the following is the most appropriate way to display liabilities on the balance sheet?
nearness to maturity | ||
relative likelihood of payment | ||
alphabetically by payee | ||
all of the above |
QUESTION 3
Which of the following would not be an acceptable method of presenting current liabilities on the balance sheet?
alphabetically | ||
in order of their average time to maturity | ||
in order of their liquidation preference | ||
in order of their amount (largest to smallest) |
QUESTION 4
Which of the following statements is not true?
Loss contingencies should be disclosed if there is just a reasonable possibility of a loss. | ||
Indirect guarantees should normally be disclosed by footnote, not by accrual. | ||
In the case of loss contingencies, accrual can be made even if the exact payee and payment date are not known. | ||
Losses may be accrued for unasserted claims and other potential unfiled lawsuits. |
QUESTION 5
The operating cycle is typically defined as the time it requires to convert
cash to inventory to receivables | ||
raw materials to finished goods | ||
finished goods to receivables to cash | ||
cash to inventory to receivables to cash |
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