Question 1

On January 1, 2014, Mars Inc.leased a building to Vulcan Corp.for a ten-year term at an annual rental of $160,000.At inception of the lease, Mars received $640,000, which covered the first two years rent of $320,000 and a security deposit of $320,000.This deposit will not be returned to Vulcan upon expiration of the lease, but will be applied to payment of rent for the last two years of the lease.What portion of the $640,000 should be shown as a current and long- term liability in Mars's December 31, 2014 statement of financial position?

Accepted Answer

The answer of On January 1, 2014, Mars Inc.leased a...

Question 2

Ratios that measure how effectively an entity is using is assets are called
A)liquidity ratios.
B)activity ratios.
C)solvency ratios.
D)profitability ratios.

Accepted Answer

Activity ratios measure how effectively an entity is using its assets to generate revenue. Liquidity ratios measure an entity's ability to meet short-term obligations, solvency ratios measure an entity's ability to meet long-term obligations, and profitability ratios measure an entity's ability to generate profits from its operations.

Question 3

Use the following information for questions Venus Corp.'s trial balance at December 31, 2014 is properly adjusted except for the income tax expense adjustment.  Other financial data for the year ended December 31, 2014: - Included in accounts receivable is $720,000 due from a customer and payable in quarterly instalments of $90,000.The last payment is due December 29, 2016. - The balance in the future income tax liability account relates to a temporary difference that arose in a prior year, of which $30,000 is classified as a current liability. - During the year, estimated tax payments of $465,000 were charged to income tax expense. The current and future tax rate on all types of income is 35 percent.
-In Venus's December 31, 2014 statement of financial position, the final retained earnings balance is
A)$5,551,000.
B)$6,132,000.
C)$5,135,000.
D)$6,016,000.

Accepted Answer

The final retained earnings balance is calculated by adding net income to the beginning retained earnings and subtracting any dividends paid. The correct balance is $6,132,000.

Question 4

When current debt is refinanced by the issue date of financial statements, it may generally be presented as NONCURRENT
A)if the company follows IFRS.
B)under either ASPE or IFRS.
C)if the company follows ASPE.
D)only if the company is a subsidiary.

Accepted Answer

The answer of When current debt is refinanced by the...

Question 5

Use the following information for questions Venus Corp.'s trial balance at December 31, 2014 is properly adjusted except for the income tax expense adjustment.  Other financial data for the year ended December 31, 2014: - Included in accounts receivable is $720,000 due from a customer and payable in quarterly instalments of $90,000.The last payment is due December 29, 2016. - The balance in the future income tax liability account relates to a temporary difference that arose in a prior year, of which $30,000 is classified as a current liability. - During the year, estimated tax payments of $465,000 were charged to income tax expense. The current and future tax rate on all types of income is 35 percent.
-In Venus's December 31, 2014 statement of financial position, the current assets total is
A)$5,955,000.
B)$5,595,000.
C)$3,060,000.
D)$4,495,000.

Accepted Answer

The answer of Use the following information for questions Venus...

Question 6

Which of the following items would require special disclosure under IFRS?
A)investment property only
B)biological assets and investment property only
C)provisions and biological assets
D)biological assets, investment property and provisions

Accepted Answer

Biological assets, investment property and provisions all require special disclosures under IFRS.

Question 7

Pluto Corp.'s trial balance included the following account balances at December 31, 2014:  In Pluto's December 31, 2014 statement of financial position, the current assets total is
A)$104,500.
B)$90,500.
C)$86,500.
D)$73,500.

Accepted Answer

The answer of Pluto Corp.'s trial balance included the following...

Question 8

A company that follows ASPE
A)must not disclose cash flow per share.
B)may disclose cash flow per share.
C)may disclose cash flow per share if it makes a special election to do so.
D)must disclose cash flow per share.

Accepted Answer

Companies that follow ASPE (Accounting Standards for Private Enterprises) may choose to disclose cash flow per share if they believe it will provide meaningful information to users of the financial statements. Disclosure of cash flow per share is not a requirement under ASPE, but it is allowed as an optional disclosure.

Question 9

Significant changes to the presentation of financial statements are currently being developed by the IASB and FASB.Which of the following best describes the focus of these changes?
A)to better highlight the company's assets, liabilities and equity.
B)to segregate the company's operating, financing and investing activities.
Financial Position and Cash Flows 5 - 15
C)to highlight the company's major business and financing activities.
D)to increase the number of notes to be attached to financial statements.

Accepted Answer

The focus of the changes is to highlight the company's major business and financing activities.

Question 10

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from
A)lending activities.
B)operating activities.
C)investing activities.
D)financing activities.

Accepted Answer

Proceeds from issuing equity instruments represent an inflow of cash to the entity and involve the issuance of ownership interests, which are part of financing activities.

Question 11

In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should be classified as cash inflows from
A)operating activities.
B)financing activities.
C)investing activities.
D)selling activities.

Accepted Answer

Receipts from sales of property, plant, and equipment and other productive assets represent the sale of long-term assets, which are classified as investing activities in the statement of cash flows.

Question 12

Use the following information for questions Venus Corp.'s trial balance at December 31, 2014 is properly adjusted except for the income tax expense adjustment.  Other financial data for the year ended December 31, 2014: - Included in accounts receivable is $720,000 due from a customer and payable in quarterly instalments of $90,000.The last payment is due December 29, 2016. - The balance in the future income tax liability account relates to a temporary difference that arose in a prior year, of which $30,000 is classified as a current liability. - During the year, estimated tax payments of $465,000 were charged to income tax expense. The current and future tax rate on all types of income is 35 percent.
-In Venus's December 31, 2014 statement of financial position, the current liabilities total is
A)$2,435,000.
B)$2,695,000.
C)$2,200,000.
D)$2,114,000.

Accepted Answer

The answer of Use the following information for questions Venus...

Question 13

Ratios that measure the degree of protection for long-term creditors and investors or the ability to meet long-term obligations are called
A)liquidity ratios.
B)activity ratios.
C)solvency ratios.
D)profitability ratios.

Accepted Answer

Solvency ratios specifically measure a company's ability to meet long-term obligations and provide protection for long-term creditors and investors. Liquidity ratios measure a company's ability to meet short-term obligations, activity ratios measure a company's efficiency in using its resources, and profitability ratios measure a company's ability to generate profit from its operations.

Question 14

Control of an asset normally coincides with
A)transfer of possession to the buyer.
B)transfer of legal title to the buyer.
C)transfer of both possession and legal title to the buyer.
D)the receipt of payment from the buyer.

Accepted Answer

Control of an asset normally coincides with transfer of both possession and legal title to the buyer. This means that the buyer has physical possession of the asset and legal ownership rights to it. The transfer of possession alone (option A) does not necessarily mean that the buyer has legal ownership rights, and the transfer of legal title alone (option B) does not necessarily mean that the buyer has physical possession of the asset. Receipt of payment (option D) is important, but it does not necessarily determine control of the asset.

Question 15

Net sales divided by average total assets is called
A)inventory turnover.
B)receivables turnover.
C)rate of return on assets.
D)asset turnover.

Accepted Answer

Net sales divided by average total assets is called asset turnover. This ratio indicates how efficiently a company uses its assets to generate revenue.

Question 16

Which of the following facts concerning depreciable assets should be included in the summary of significant accounting policies?  Financial Position and Cash Flows 5 - 19

Accepted Answer

The answer of Which of the following facts concerning depreciable...

Question 17

A company that follows IFRS
A)may disclose cash flow per share if it makes a special election to do so.
B)must not disclose cash flow per share.
C)is generally allowed to disclose cash flow per share.
D)only discloses cash flow per share if there are more than two shareholders.

Accepted Answer

A company that follows IFRS is generally allowed to disclose cash flow per share. However, it is not a requirement and the company may choose not to disclose it.

Question 18

The current cash debt coverage ratio is often used to assess
A)financial flexibility.
B)solvency.
C)liquidity.
D)profitability.

Accepted Answer

The current cash debt coverage ratio is a liquidity ratio that measures a company's ability to pay off its current liabilities with its cash flow from operations. This provides an indication of the company's short-term financial health and its ability to meet its short-term obligations.

Question 19

When dealing with sales agreements, "acquired" means
A)consideration or rights to consideration.
B)goods to be delivered in the future.
C)dealing at arm's length.
D)measurement of the transaction.

Accepted Answer

"Acquired" in the context of sales agreements typically refers to obtaining consideration or rights to consideration, which is the value exchanged in the agreement.

Question 20

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for
A)operating activities.
B)borrowing activities.
C)lending activities.
D)financing activities.

Accepted Answer

Interest payments to lenders and other creditors are classified as cash outflows for operating activities in a statement of cash flows. This is because they are considered part of the day-to-day operations that affect the net income of the company.

Quiz 1: Intermediate Accounting Volume 1

Ratios that measure how effectively an entity is using is assets are called

When current debt is refinanced by the issue date of financial statements, it may generally be presented as NONCURRENT

Which of the following items would require special disclosure under IFRS?

Pluto Corp.'s trial balance included the following account balances at December 31, 2014: In Pluto's December 31, 2014 statement of financial position, the current assets total is

A company that follows ASPE

Significant changes to the presentation of financial statements are currently being developed by the IASB and FASB.Which of the following best describes the focus of these changes?

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should be classified as cash inflows from

Ratios that measure the degree of protection for long-term creditors and investors or the ability to meet long-term obligations are called

Control of an asset normally coincides with

Net sales divided by average total assets is called

Which of the following facts concerning depreciable assets should be included in the summary of significant accounting policies? Financial Position and Cash Flows 5 - 19

A company that follows IFRS

The current cash debt coverage ratio is often used to assess

When dealing with sales agreements, "acquired" means

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for