Term
The 2016 annual report of Leahy Enterprises included the following disclosure:
During fiscal 2016, the U.S. dollar strengthened relative to the other principal currencies in which we transact business with the exception of the Indian rupee.
What effect did these currency fluctuations have on Leahy Enterprises’ 2016 consolidated income statement?
A. Net profit of the Indian subsidiary will be higher
B. Net profit of the Indian subsidiary will be lower
C. Net assets of the subsidiaries that report in the other principal currencies will be higher
D. Net assets of the subsidiaries that report in the other principal currencies will be lower
E. Both A and D |
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Definition
| A.Net profit of the Indian subsidiary will be highe |
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Term
McKinnon Enterprises owns a professional ice hockey team, the Rockford Penguins. The company sells season tickets for its upcoming season and receives $960,000 cash. The season starts January 1, 2018, with five home games occurring monthly over the next six months.
What is the balance in the company’s deferred revenue account at the end of April 2018? (Assume the deferred revenue account had a zero balance on January 1, 2018.)
A. $480,000
B. $640,000
C. $960,000
D. $320,000
E. None of the above |
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Definition
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Term
A seller, acting as an agent for another company by selling the company’s goods on consignment, recognizes the gross amount of the sale as revenue.
True
False |
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Definition
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Term
According to GAAP revenue recognition criteria, in order for revenue to be recognized on the income statement, it must be earned and realized (realizable).
True
False |
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Definition
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Term
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Definition
Provision for income taxes
Equity in income of unconsolidated affiliates
Selling, administrative and general expenses |
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Term
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Definition
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Term
Employee severance costs, as part of board-approved restructuring plans, are reported in the income statement even if the actual payment for these costs occurs in subsequent periods.
True
False |
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Definition
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Term
LIFO inventory costing yields more accurate reporting of the inventory balance on the balance sheet.
True
False |
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Definition
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Term
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Definition
| = COGS / Average inventory |
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Term
Dow Chemical Corporation plans to build a laboratory dedicated to a special project. The company will not use the laboratory after the project is finished. Under GAAP, this laboratory should be:
Select one:
A. Capitalized and depreciated
B. Expensed in the current year
C. Depreciated and expensed
D. Capitalized only
E. None of the above |
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Definition
| B. Expensed in the current year |
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Term
Contingent liabilities that are 'probable' and can be reasonably estimated are recorded on the balance sheet as a liability and as an expense in the income statement.
True
False |
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Definition
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Term
Unearned revenue, an operating liability, arises when a company receives cash before any goods are delivered or services are rendered.
True
False |
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Definition
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Term
Butler, Inc. paid $75,000 to retire a note with a face value of $83,000. The note was issued with an 8% coupon rate paid semiannually. The note was three years from maturity and had a net book value of $68,200.
What is the net gain or loss on the redemption of the note?
A. $6,800 loss
B. $8,000 gain
C. $8,000 loss
D. $6,800 gain
E. None of the above |
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Definition
A. $6,800 loss
Rationale: $75,000 paid – $68,200 book value = $6,800 net loss on redemption
The correct answer is: $6,800 loss |
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Term
Which one of the following is not correct?
. For debt issued at par: interest expense reported on the income statement equals the cash paid for interest.
B. For bond repurchases: Gain (loss) on bond repurchase = Net book value of bonds – Cash paid to repurchase bonds.
C. For debt issued at a discount: interest expense reported on the income statement equals cash interest payment less amortization of the discount.
D. For debt issued at a premium, interest expense reported on the income statement equals cash interest payment less amortization of the premium.
E. None of the above |
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Definition
| C. For debt issued at a discount: interest expense reported on the income statement equals cash interest payment less amortization of the discount. |
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Term
During the fiscal year ended January 28, 2017, Abercrombie & Fitch reported the exercise of 2,000 shares at a weighted-average exercise price of $22.87.
If Abercrombie’s stock was trading at $11.36 on January 27, 2017 and $12.00 on December 30, 2016, which of the following details an impact of this transaction on Abercrombie’s accounts?
A. A decrease of $24,000 to additional paid-in capital
B. An increase of $45,740 to cash
C. A decrease of $42,300 to additional paid-in capital
D. An increase of $22,720 to cash
E. None of the above |
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Definition
| B. An increase of $45,740 to cash |
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Term
ll of the following are potentially dilutive in computing diluted EPS except:
. Employee stock options
B. Convertible preferred stock
C. Convertible bonds
D. Warrants
E. All of the above are dilutive securities |
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Definition
| E. All of the above are dilutive securities |
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Term
Because diluted EPS include dilutive securities such as convertible securities and employee stock options, it must always be less than or equal to basic EPS.
Select one:
True
False |
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Definition
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Term
Net income is generally viewed as a more inclusive measure of performance than comprehensive income.
Select one:
True
False |
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Definition
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Term
Frankfort Corporation purchases an investment in Bradley, Inc. at a purchase price of $9.8 million cash, representing 40% (at book value) of Bradley. During the year, Bradley reports net income of $1,680,000 and pays $413,000 of cash dividends. At the end of the year, the market value of Frankfort’s investment is $11.9 million.
What amount of equity earnings would be reported by Frankfort Corporation?
Select one:
A. $165,000
B. $672,000
C. $507,000
D. $1,267,000
E. None of the above |
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Definition
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Term
On July 1, 2017, Ashtabula Corp. purchases 100% of Blasdell Company for $3.575 million. At the time of acquisition, the fair market value of Blasdell’s tangible net assets (excluding goodwill) is $2.99 million. Ashtabula ascribes the excess of $585,000 to goodwill. During the first half of the year, the fair value of Blasdell declines to $3.185 million and the fair value of Blasdell’s tangible net assets is estimated at $2.795 million as of December 31, 2017. This decline is deemed permanent.
What impairment charge, if any, should Ashtabula report at December 31, 2017?
Select one:
A. $195,000
B. $390,000
C. $585,000
D. $-0-
E. None of the above |
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Definition
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Term
The investor company cannot be considered to have control over the investee company if it owns less than 50% of the outstanding voting stock of the investee company.
Select one:
True
False |
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Definition
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Term
When debt securities are classified as held-to-maturity, fair-value changes are recognized in the balance sheet as unrealized gains or losses that affect owners’ equity.
Select one:
True
False |
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Definition
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Term
|
Definition
| Selling, General & Administrative |
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Term
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Definition
| Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project. |
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Term
| Capital Investment Analysis |
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Definition
| a budgeting procedure that companies and government agencies use to assess the potential profitability of a long-term investment. |
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Term
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Definition
| a tool that managerial accountants use to evaluate different capital projects and decide which ones to invest in and which ones to avoid. The method estimates how long a project will take to cover its original investment. |
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Term
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Definition
| takes net income, subtracts preferred dividends, and then divides by the weighted average number of shares of common stock outstanding during the period in question |
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Term
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Definition
| can be calculated by adding net income, convertible preferred dividend, and debt interest and then dividing the sum by outstanding shares plus all convertible securities of the company. |
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Term
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Definition
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Term
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Definition
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Term
| Name 4 capital investment methods |
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Definition
| (1) Cash Payback Method (a non-present value method), (2) Accounting Rate of Return (a non-present value method), (3) Net Present Value Method (a present value method), and (4) Internal Rate of Return Method (a present value method) |
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Term
| 3. Name a non-present value capital investment method |
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Definition
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Term
| Name a present value capital investment method |
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Definition
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Term
| Capital investment analysis (or capital budgeting) |
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Definition
| process to plan for, evaluate, and control investments in fixed assets; management decisions with long term impacts for long term assets (long-term commitments). Purchase machinery, building, information systems, or other expensive items. |
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Term
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Definition
Cash Payback Method
Accounting Rate of Return |
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Term
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Definition
Net Present Value Method
Internal Rate of Return Method |
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