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1. Which of the following does U.S. GAAP not consider to be an objective of segment reporting? a. It helps users better understand the enterprise's performance. b. It helps users better assess the enterprise's prospects for future cash flows. C. It helps users make more informed judgments about the enterprise as a whole. d. It helps users make comparisons between a segment of one enterprise and a similar segment of another enterprise. 4. In determining whether a particular operating segment is of significant size to warrant disclosure, which of the following is true? a. Three tests are applied, and all three must be met. b. Four tests are applied, and only one must be met. C. Three tests are applied, and only one must be met. d. Four tests are applied, and all four must be met. 5. Which of the following statements is not true under U.S. GAAP? a. Operating segments can be determined by looking at a company's organization chart. b. Companies must combine individual foreign countries into geographic areas to comply with the geographic area disclosure requirements. 1. c. Companies that define their operating segments by product lines must provide revenue and asset information for the domestic country, for all foreign countries in total, and for each material foreign country. d. Companies must disclose total assets, investment in equity method affiliates, and total expendi- tures for long-lived assets by operating segment. 6. Which of the following is not necessarily true for an operating segment? a. An operating segment earns revenues and incurs expenses. b. The chief operating decision maker regularly reviews an operating segment to assess perfor- mance and make resource allocation decisions. c. Discrete financial information generated by the internal accounting system is available for an operating segment. d. An operating segment regularly generates a profit from its normal ongoing operations. 7. Which of the following is a criterion for determining whether an operating segment is separately reportable? a. Segment liabilities are 10 percent or more of consolidated liabilities. b. Segment profit or loss is 10 percent or more of consolidated net income. c. Segment assets are 10 percent or more of combined segment assets. d. Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales. 8. Which of the following statements concerning U.S. GAAP is true? a. Does not require segment information to be reported in accordance with generally accepted accounting principles. b. Does not require a reconciliation of segment assets to consolidated assets. c. Requires geographic area information to be disclosed in interim financial statements. d. Requires disclosure of a major customer's identity. 11. For a U.S.-based company, which of the following would be an acceptable presentation of countries for providing information by geographic area? a. United States, Mexico, Japan, Spain, All Other Countries. b. United States, Canada and Mexico, Germany, Italy. c. Europe, Asia, Africa. d. Canada, Germany, France, All Other Countries. 11. For a U.S.-based company, which of the following would be an acceptable presentation of countries for providing information by geographic area? a. United States, Mexico, Japan, Spain, All Other Countries. b. United States, Canada and Mexico, Germany, Italy. c. Europe, Asia, Africa. d. Canada, Germany, France, All Other Countries. 12. What information about revenues by geographic area should a company present? a. Disclose separately the amount of sales to unaffiliated customers and the amount of intra-entity sales between geographic areas. b. Disclose as a combined amount sales to unaffiliated customers and intra-entity sales between geographic areas. c. Disclose separately the amount of sales to unaffiliated customers but not the amount of intra- entity sales between geographic areas. d. No disclosure of revenues from foreign operations need be reported. 13. Which of the following information items with regard to a major customer must be disclosed? a. The identity of the major customer. b. The percentage of total sales derived from the major customer. c. The operating segment making sales to the major customer. d. The geographic area in which sales to the major customer are made. 14. Which of the following statements is true for a company that has managers responsible for prod- uct and service lines of business and managers responsible for geographic areas (matrix form of organization)? a. Under U.S. GAAP, the company must base operating segments on geographic areas. b. Under IFRS, the company must base operating segments on product and service lines of business. c. Under U.S. GAAP, the company may choose to define operating segments on the basis of either products and services or geographic areas. d. Under IFRS, the company must refer to the core principle of IFRS 8 to determine operating segments. 15. In considering interim financial reporting, how does current U.S. GAAP require that such reporting be viewed? a. As a special type of reporting that need not follow generally accepted accounting principles. b. As useful only if activity is evenly spread throughout the year making estimates unnecessary. c. As reporting for a basic accounting period. d. As reporting for an integral part of an annual period. 16. How should material seasonal variations in revenue be reflected in interim financial statements ? a. The seasonal nature should be disclosed, and the interim report should be supplemented with a report on the 12-month period ended at the interim date for both the current and preceding years. b. The seasonal nature should be disclosed, but no attempt should be made to reflect the effect of past seasonality on financial statements. c. The seasonal nature should be reflected by providing pro forma financial statements for the cur- rent interim period. d. No attempt should be made to reflect seasonality in interim financial statements. 17. For interim financial reporting, a gain from the sale of land occurring in the second quarter should be a. Recognized ratably over the last three quarters. b. Recognized ratably over all four quarters, with the first quarter being restated. c. Recognized in the second quarter. 21. Livro Company has three operating segments with the following information: Sales to outsiders......... Intersegment transfers...... Books $12,000 1,000 Calendars $9,000 500 Bags $8,000 1,500 In addition, corporate headquarters generates revenues of $2,000. What is the minimum amount of revenue that each of these segments must generate to be considered separately reportable? a. $2.900 b. $3,200 c. $3.300 d. $3,400 22. Nottage Company has four separate operating segments: Sales to outsiders ........ Intersegment transfers.... East $188,000 16,000 West $126,000 6,000 North $65,000 13,000 South $43,000 8,000 What revenue amount must one customer generate before it must be identified as a major customer? a. $39,600 b. $42,200 c. $46,500 d. $49,200 23. Howard Corporation has six different operating segments reporting the following operating profit and loss figures: $80,000 profit 140,000 loss 100,000 profit $440,000 loss 50,000 profit 170,000 profit With respect to the profit or loss test, which of the following statements is not true? a. A is a reportable segment based on this one test. b. Cis not a reportable segment based on this one test. C. E is not a reportable segment based on this one test. d. Fis a reportable segment based on this one test. 24. Hyams Corp. engages solely in manufacturing operations. The following data pertain to the operat- ing segments for the current year: Operating Segment >>XXN Total Revenues $13,000,000 9,500,000 5,500,000 3,000,000 2,000,000 2,000,000 $35,000,000 Profit (Loss) $2,000,000 1,200,000 (1,000,000) 600,000 400,000 300,000 $3,500,000 Assets at 12/31 $15,000,000 11,000,000 3,000,000 7,500,000 4,500,000 2,000,000 $43,000,000 Total ......... In its segment information for the current year, how many reportable segments does Hyams have? a. Three b. Four c. Five d. Six 25. What is the minimum number of operating segments that must be separately reported? a. Ten. b. Segments with at least 75 percent of revenues as measured by the revenue test. c. At least 75 percent of the segments must be separately reported. d. Segments with at least 75 percent of the revenues generated from outside parties. 26. Chambers Company has seven operating segments but only four (One, Two, Three, and Four) are of significant size to warrant separate disclosure. As a whole, the segments generated revenues of $1,010,000 ($780,000 + $230,000) from sales to outside customers. In addition, the segments had $300,000 in intersegment sales ($250,000 + $50,000). One ...... Two ... Three...... Four...... . I O U I . . . . . . . . . . . . . . . . . Outside Sales $270,000 200,000 160,000 150,000 $780,000 $100,000 80,000 50,000 $230,000 Intersegment Sales $110,000 70,000 40,000 30,000 $250,000 $ 20,000 10,000 20,000 $ 50,000 Totals. ...... Five ....... Six ........ Seven ....... Totals ..... TOlais . . . . . . . . . . . . . . . . Which of the following statements is true? a. A sufficient number of segments is being reported because those segments have $1,030,000 in total sales of a total of $1,310,000 for the company as a whole. b. Not enough segments are being reported because those segments have $780,000 in outside sales of a total of $1,010,000 for the company as a whole. c. Not enough segments are being reported because those segments have $1,030,000 in total rev- enues of a total of $1,310,000 for the company as a whole. d. A sufficient number of segments is being reported because those segments have $780,000 in outside sales of a total of $1,010,000 for the company as a whole. 27. Baton Company estimates that the amounts for total depreciation expense for the year ending December 31 will be $120,000 and for year-end bonuses to employees will be $200,000. What total amount of expense relating to these two items should Baton report in its quarterly income statement for the three months ended March 31? a. $0 b. $30,000 c. $50,000 d. $80,000 28. Rouge Company's $250,000 net income for the quarter ended September 30 included the following after-tax items: A $20,000 cumulative effect loss resulting from a change in inventory valuation method made on September 1. $0 of the $60,000 annual property taxes paid on February 1. For the quarter ended September 30, the amount of net income that Rouge should report is a. $235,000 b. $250,000 $255,000 d. $270,000 29. In March of the current year, Mooney Company estimated its year-end executive bonuses to be $800,000. The executive bonus paid in the previous year was $950,000. What amount of bonus expense, if any, should Mooney recognize in determining net income for the first quarter of the current calendar year? a. -0 b. $200,000 $237,500 d. $800,000 Use the following information for Problems 30 and 31. On March 15, Calloway, Inc., paid property taxes of $480,000 for the calendar year. 30. How much of this expense should Calloway's income statement reflect for the quarter ending March 31? a. -0 b. $40,000 c. $120,000 d. $480,000 31. The journal entry at March 15 to record the payment of property taxes would include which of the following? a. A debit to Property Tax Expense of $480,000. b. A credit to Cash of $120,000. c. A debit to Prepaid Property Taxes of $360,000. d. A credit to Prepaid Property Taxes of $40,000. Use the following information for Problems 32 and 33. Tristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began the current year with 2,000 units of inventory carried at LIFO cost of $20 per unit. During the first quarter, it purchased 8,000 units at an average cost of $40 per unit and sold 9,500 units at $60 per unit. 32. Assume the company does not expect to replace the units of beginning inventory sold; it plans to reduce inventory by year-end to 500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31? a. $335,000 b. $350,000 C. $380,000 d. $387,500 33. Assume the company expects to replace the units of beginning inventory sold in April at a cost of $45 per unit and expects inventory at year-end to be between 2,100 and 2,500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31? a. $335,000 b. $350,000 C. $380,000 d. $387,500