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Study Resources (Accounting)

31) Which statement is correct? A) Accounting policy changes should reflect changes in economic circumstances. B) Accounting errors are corrected prospectively in the financial statements. C) Changes in accounting estimates are corrected retrospectively in the statements. D) Correction of accounting errors proves that management bias exists in reporting. 32) A correction of an accounting error.
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7) Discuss some of the conceptual framework concepts involved in determining whether to capitalize or expense an expenditure. 8) ABC Manufacturing has incurred $250,000 to defend itself against a patent infringement lawsuit from CCB Limited. CCB has won, but ABC is planning to appeal the decision and continue pursuing its case..
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41) Gamma Corp. is considering an investment opportunity with the following expected net cash inflows: Year 1, $250,000; Year 2, $350,000; Year 3, $395,000. The company uses a discount rate of 12%, and the initial investment is $750,000. The following table is available: Present Value of $1: 10% 12% 14% 15% 1 0.909 0.893 0.877 0.870 2 0.826 0.797 0.769 0.756 3 0.751 0.712 0.675 0.658 4 0.683 0.636 0.592 0.572 5 0.621 0.567 0.519 0.497 The IRR of the project will.
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Learning Objective APP. C-3 1) Cash purchases are recorded in the purchases journal. 2) The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account. 3) When recording in a purchases journal with a periodic inventory system, the Merchandise Inventory DR column.
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21) Which of the following transactions is recorded in the "Receive Payments" function of QuickBooks? A) electricity bill payments B) merchandise inventory sold on account to a customer C) products sold for cash to a customer D) coupon payments to the bondholders 22) Which of the following transactions is recorded in the "Enter Bills" function.
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31) The following details are provided by Doppler Systems: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of project $150,000 $180,000 $250,000 ($110,000) Calculate the profitability index for Project A. A) 0.98 B) 1.08 C) 1.36 D) 1.66 32) The following details are provided by Doppler Systems: Project A Project B Project C Project D Initial investment $420,000 $200,000 $550,000 $500,000 PV of cash inflows $570,000 $380,000 $800,000 $390,000 Payback period (years) 3.6 3.2 4.0 2.0 NPV of.
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11) What is meant by the phrase 'true and fair view' of financial reporting? A) The financial statements provide a true representation of the company's economic conditions and performance. B) The financial statements provide an unbiased representation of the company's economic conditions and performance. C) The financial statements provide a fair representation of.
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31) Which of the following is/are constraints in the financial reporting process? A) Relevance versus reliability. B) Historical cost versus fair value. C) Assets versus liabilities. D) Benefits versus costs. 32) Which is not an example of trade-offs made in financial reporting? A) Relevance versus reliability. B) Comparability versus consistency. C) Assets versus liabilities. D) Timeliness versus reliability. 33) In.
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3.1   Multiple Choice Questions 1) What is a 'cash' cycle? A) A cycle of transactions that converts cash inflows to cash outflows, or vice versa. B) A cycle where there is receipt of funding from investors, those funds are used to generate returns from investments and operations, and then the funds are returned.
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Learning Objective 26-4 1) Net present value is defined as the difference between the present value of the project's net cash inflows and the cost of investment. 2) Management's minimum desired rate of return on a capital investment is known as the return on investment. 3) The residual value is discounted as a.
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2.1   Multiple Choice Questions 1) Which of the following is not a purpose of a conceptual framework of accounting concepts and financial reporting objectives? A) To increase the user's ability to understand financial statements. B) To increase financial statement users' confidence in financial reporting. C) To provide a foundation for detailed accounting and reporting.
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1.1   Multiple Choice Questions 1) Which statement is not correct? A) Financial accounting is the process of providing information to external parties. B) Accounting is about the communication of financial information. C) Accounting is the production of information about an enterprise and the transmission of that information to those who need the information. D) Financial.
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11) One of the advantages of a computerized accounting information system, as compared to a manual one, is that it does not cost to ensure that the firm's data and information are secure. 12) In an accounting information system, outputs are the reports used for decision making, including the financial statements. 13).
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1.2   Problems 1) Why is financial information required? 2) Explain the meaning of financial accounting, managerial accounting and tax accounting. How are these accounting activities related to each other? 3) Discuss three reasons why it is important to understand accounting theory. 4) Explain the meaning of generally accepted accounting principles (GAAP). 5) Explain the process.
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21) Which qualitative characteristic allows a company's financial performance or financial position to be understated? A) Relevance. B) Neutrality. C) Prudence. D) Understandability. 22) Which statement best explains the qualitative characteristic of 'completeness'? A) Financial statements should represent the underlying transactions, assets and liabilities. B) Omission of financial information that would influence a user's economic decision. C) Financial.
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21) Which statement is correct? A) Lower amounts of excessive accruals results in higher earnings quality. B) Excessive accruals are directly observable in financial reporting. C) It is easy to determine the contractual incentives causing excessive accruals. D) Excessive accruals improve the comparability of financial reporting. 22) Which statement correctly explains the relationship between cash.
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51) The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2013. A machine was purchased on January 1, 2011 at a cost of $150,000. The machine has an estimated useful life of 10 years and a residual value of $9,000. What was booked.
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Learning Objective 26-2 1) The accounting rate of return method and the payback method are often used as preliminary screening measures but are insufficient to fully evaluate a capital investment. 2) All else being equal, investments with longer payback periods are preferable. 3) Net cash inflows from a capital investment arise from.
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21) Cheong Automobiles Company fabricates inexpensive automobiles for sale to third world countries. Each vehicle includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows: Volume 900 units per month Variable cost per unit $8 per unit Fixed costs $14,000 per month A factory in Indonesia has offered to supply Cheong with ready-made.
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41) In making product mix decisions under constraining factors, which of the following is the key to choosing the product type to be maximized? A) revenue per unit B) contribution margin per unit of product C) contribution margin per unit of the constraining factor D) gross profit per unit using traditional costing 42) Custom Furniture.
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2.2   Problems 1) Provide three reasons for the importance of the conceptual framework for financial reporting. 2) Identify the eight major components of the conceptual framework for accounting. Explain how these components interact with the demand for and supply of financial information. 3) Indicate the qualitative characteristic being described in each situation below: Qualitative.
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21) An accounting information system is said to be relevant, if it ________. A) works smoothly with the business's employees and organizational structure B) safeguards a business's assets and reduces the likelihood of fraud and errors C) provides information that will improve decision making and reduce uncertainty D) accommodates changes in the business over.
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21) The following details are provided by a manufacturing company: Product line Investment $1,000,000 Useful life 12 years Estimated annual net cash inflows for first year $400,000 Estimated annual net cash inflows for second year $350,000 Estimated annual net cash inflows for next ten years $300,000 Residual value $50,000 Depreciation method Straight-line Required rate of return 12% Calculate the payback period for the investment. A) 2.5 years B) 2.83 year C).
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Learning Objective 26-21 1) An operational asset used for a long period of time is known as a capital asset. 2) The acquisition or construction of a capital asset is known as a capital investment. 3) A post-audit in capital budgeting is a comparison of the actual results of capital investments with the.
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12) How does accounting information help alleviate adverse selection and moral hazard? 13) For the situations described below, explain whether managers would be motivated to manage earnings, assets, and equity upward and liabilities downward, or alternatively, managers may be motivated to manage earnings, assets, and equity downward and liabilities upward. Situation Management motivation.
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21) A company has four vendors and the accounts payable subsidiary ledger shows the following balances. Alpha $275,821 Beta 143,474 Gamma 78,943 Delta 34,187 Calculate the accounts payable balance in the general ledger. A) $419,295 B) $532,425 C) $275,821 D) $256,604 22) Which of the following is true of a sales journal? A) It is a special journal used to record all the cash sales. B).
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Learning Objective 25-4 1) Doro Fill Company fabricates inexpensive automobiles for sale to third world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows: Volume 800 units per month Variable cost per unit $7 per unit Fixed costs $15,000 per month A factory in Indonesia has offered to supply.
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Learning Objective 26-3 1) The fact that invested cash earns income over time is called the time value of money. 2) An annuity refers to a series of equal cash flows received or paid annually. 3) All else being equal, the shorter the investment period, the higher the total amount of interest earned. 4).
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21) Gamma Corporation is considering an investment of $500,000 in a land development project. It will yield cash flows of $200,000 for 5 years. The company uses a discount rate of 9%. What is the net present value of the investment? Present value of annuity of $1: 8% 9% 10% 1 0.926 0.917 0.909 2 1.783 1.759 1.736 3 2.577 2.531 2.487 4 3.312 3.24 3.17 5 3.993 3.89 3.791 A) $230,000 B) $278,000 C) $330,000 D) $200,000 22).
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4) Which financial statement element is being described? Element Situation A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of economic resources embodying economic benefits. A resource controlled by an entity as a result of past events and from.
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11) Which of the following is an example of hardware? A) monitor B) malware C) firewall D) operating system 12) Which of the following is an entry-level accounting software package? A) Microsoft Word B) QuickBooks C) Minitab D) Router 13) An enterprise resource planning (ERP) is a ________. A) hardware system that controls the access of employees to different levels of.
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11) Payback provides management with valuable information about the time period within which the cash invested will be recouped. 12) Net present value and internal rate of return consider the time value of money, so they are appropriate for longer-term capital investments 13) Which of the following best describes a post-audit in.
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11) When a company is evaluating an investment proposal with high risk, a low discount rate should be used, and vice versa. 12) Compound interest used in discounted cash flow calculations assumes that companies will reinvest future cash flows whenever they are received. 13) If an investment project's internal rate of return.
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11) The purchases journal is a special journal used to record ________. A) cash receipts, interest rate payments, and purchases B) credit sales of assets that occur infrequently such as buildings, property, and equipment C) credit sales of inventory D) merchandise inventory, office supplies, and other assets purchased on account 12) Which of the following.
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Learning Objective APP. C-4 1) Hardware is electronic equipment that includes computers, monitors, printers, and the network that connects them. 2) Enterprise resource planning (ERP) systems are software systems that can integrate all of a company's functions, departments, and data into a single system. 3) One of the main disadvantages of a typical.
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7) Explain the meaning of information and information asymmetry. Give an example of each 8) Explain the meaning of adverse selection and moral hazard. Give an example of each. 9) Explain the difference between moral hazard and adverse selection. 10) Discuss two ways in which a bank can mitigate the problem of moral.
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41) Changes in accounting estimates are A) accounted for in the same manner as accounting policy changes. B) accounted for on a prospective basis. C) applied to current and past reporting periods. D) accounted for in the same manner as error corrections. 42) Changes in accounting estimates are based on A) new information that has now.
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11) Which financial statement is not needed under the IFRS Framework? A) Balance sheet. B) Statement of retained earnings. C) Income statement. D) Statement of cash flows. 12) What information does the balance sheet provide to users of financial information under the IFRS Framework? A) Information about changes in liabilities over a period of time. B) Information.
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Learning Objective APP. C-2 1) A general ledger is an accounting journal designed to record one specific type of transaction. 2) Sales on account are recorded in a cash receipts journal. 3) A subsidiary ledger is a record of accounts that provides supporting details on individual balances, the total of which appears in.
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11) Which of the following most accurately describes the annuity? A) an investment which produces increasing cash flows overtime B) an installment loan with amortizing principal payments C) a stream of equal installments of cash flows made at equal time intervals D) a term life insurance policy 12) Lora Corp. is going to receive $10,000.
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Learning Objective APP. C-1 1) An accounting information system (AIS) collects, records, stores, and processes accounting data to produce information that is useful for decision makers. 2) The collection of time records is an accounting information system activity that is classified as a business transaction that involves the sale of merchandise inventory. 3).
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41) Which statement best describes a publicly accountable enterprise? A) An entity that has not issued debt instruments that are outstanding and traded in a public market. B) An entity that holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. C) An entity that.
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