1. The Securities and Exchange Commission requires that Subscriptions Receivable be disclosed on the financial statements filed with it as a(n) (Points: 4) a. current asset as long as collection is to be made within one year or the normal operating cycle, whichever is longer b. other asset if collection is to be made beyond one year from the date of the financial statements c. contra-accounts receivable account d. contra-stockholders' equity account
2. Which of the following items would not be included in a basic earnings per share calculation? (Points: 4) a. undeclared dividends on noncumulative preferred stock b. declared dividends on noncumulative preferred stock c. undeclared dividends on cumulative preferred stock d. declared dividends on cumulative preferred stock
3. How will a company's total current liabilities and total stockholders' equity be affected by the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.) Total Current Liabilities Total Stockholders' Equity (Points: 4) a. increase decrease b. increase no effect c. no effect decrease d. no effect no effect
4. How may a corporation report its types of comprehensive income? (Points: 4) a. It may report the amount of accumulated other comprehensive income for each item as part of stockholders' equity. b. It may report the total amount of accumulated other comprehensive income for all the items as part of stockholders' equity. c. It may make footnote disclosures of totals only. d. It may report the amount of accumulated other comprehensive income for each item or in total as part of stockholders’ equity.
5. A Provision for Loss on Contract is reported in the financial statements as a(n) (Points: 4) a. contra-asset account b. other expense account c. operational expense account d. contra-liability account
6. All of the following involve a temporary difference for purposes of income tax allocation except (Points: 4) a. interest on municipal bonds b. gross profit on installment sales for tax purposes c. MACRS depreciation for tax purposes and straight-line for accounting purposes d. product warranty expenses
7. In 2010, its first year of operations, Wichita Falls Company reported pretax accounting income of $60,000. Included in the $60,000 was an expense for accrued, unpaid warranty costs of $8,000, which are not deductible until paid for income tax purposes. Wichita Falls’ income tax rate was 20%. The entry to record the income tax expense would include a (Points: 4) a. credit to Income Tax Expense for $12,000 b. credit to Income Taxes Payable for $12,000 c. credit to Deferred Tax Liability for $1,600 d. debit to Deferred Tax Asset for $1,600
8. Harlingen Company reported the following operating results during its first three years of operations: 2010 Pretax operating loss, $30,000 2011 Pretax operating loss, $200,000 2012 Pretax operating income, $300,000 No permanent or temporary differences occurred during these fiscal periods. Assuming an income tax rate of 30%, Harlingen should report a current income tax liability as of December 31, 2012, in the amount of (Points: 4) a. $0 b. $21,000 c. $69,000 d. $90,000
*assumed that pretax operating loss is adjustable in subsequent years otherwise it should be 90000
9. Income taxes for financial accounting purposes are apportioned to each of the following items except (Points: 4) a. extraordinary gains and losses b. discontinued operations c. other revenues and expenses d. prior period adjustments
10. Which is an advantage of leasing from a lessee's viewpoint? (Points: 4) a. The asset can be acquired without having to make a substantial down payment. b. The lease is a way of indirectly making a sale. c. "Off-balance-sheet financing" may be avoided. d. The risk of obsolescence may be increased.
11. When a lessee makes periodic cash payments for a capital lease, which of the following accounts is increased? (Points: 4) a. Lease Rental Expense b. Leased Equipment c. Capital Lease Obligation d. Interest Expense