When using the Fair Value Method for equity investments in effect before 2019, at the end of the year the Parent firm would recognize an increase in the fair value of the Subsidiary

• A. as part of Net Income no matter how the Subsidiary was classified.
• B. as part of Other Comprehensive Income no matter how the Subsidiary was classified.
• C. as part of Net Income if the Subsidiary was classified as Available for Sale, but in Other Comprehensive Income if the Subsidiary was classified as Trading.
• D. as part of Net Income if the Subsidiary was classified as Trading, but in Other Comprehensive Income if the Subsidiary was classified as Available for Sale.

A firm uses the percentage of sales approach in estimating its bad debt expense. The number calculated by multiplying the percentage expected to be uncollectible times the sales revenue for the period will be equal to

• A. the value of bad debt write-offs during the year.
• B. the ending Credit balance in the Allowance account.
• C. the amount of bad debt expense.
• D. None of the other answers are correct.
• E. the difference between the beginning and the ending accounts receivable balance

In the Adjusting step of the Accounting Cycle, deferral means

• A.
• B. None of the other answers are correct.
• C. the economic activity happens after the corresponding cash flow.
• D. the financial statements will not be compiled until a later date.

In the Conceptual Framework, the idea of Going Concern means that

• A. the firm is expected to continue to operate for the foreseeable future.
• B. managers have a responsibility to manage the company effectively.
• C. None of the other answers are correct.
• D. the FASB and SEC exercise care in their oversight of firms.

From the mid-1930s to the late 1950s, the SEC delegated the establishment of GAAP to

• A. The Committee on Accounting Procedures (CAP), which issued Accounting Research Bulletins.
• B. The American Kennel Club (AKC), which issued Poodle Standards. (This is NOT the correct answer.)
• C. The Accounting Principles Board (APB), which issued Statements of Financial Accounting Principles.
• D. the Financial Accounting Committee (FAC), which issued Opinions.