Intermediate Financial Reporting 1 Practice Exam

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• How is performance obligation identification defined?
• What is the gross profit formula?
• What is the accrual-basis net income formula?
• Which option best defines earnings per share (EPS)?
• What is the effect of the entry 'Debit Cash 35,000; Credit Sales Revenue 35,000'?
• Post-closing entries leave which accounts with balances?
• What communicates the impact of an accounting error on prior periods' net income?
• A good or service is a performance obligation if it is distinct from other items in the contract. True or false?
• Under accrual accounting, when revenue is earned but not yet received, which entry is typical for the adjusting step?
• What does the Summary of Significant Accounting Policies disclose?
• Retained Earnings is defined as which?
• What is recorded as the initial revenue recognition entry on delivery?
• Which type of income consists of both temporary and permanent earnings?
• Restructuring costs include costs associated with management's plans to materially change the scope of business operations.
• Which statement about the Adjusted Trial Balance is true?
• Which statement best describes operating activities?
• Purchase on account affects which accounts?
• Noteworthy Events and Transactions would include which of the following?
• Allocate the transaction price when there are multiple performance obligations: how is allocation determined?
• Which of the following is an example of a restructuring cost?
• For a 6,000 payment for 1 year prepaid rent, what is the rent expense recognized per month?
• How much of the transaction price is allocated to the Tri-Box module?
• How many accounts does each page of a general ledger contain?
• Which is true about liabilities?
• Under held-for-sale classification, impairment loss is recognized only when the disposal is completed.
• In double-entry accounting, a debit entry must be paired with a corresponding?
• Which description correctly characterizes the Indirect Method?
• In the Basic EPS calculation, which item is subtracted from net income to determine the numerator?
• Notes payable are defined as which of the following?
• Which statement describes comprehensive income?
• Accounts receivable is defined as:
• If the effect of a change in accounting estimate is material, a disclosure note is needed to describe the change and its effect on both income and earnings per share.
• When we credit an account, we also need to?
• What does the annual report include?
• Notes payable differ from accounts payable in that notes payable typically require
• Net Income or Profit Formula?
• Which type of account increases with a credit?
• A prepaid account is best described as which?
• Which description correctly defines investing activities?
• What is the amount of revenue recognized for the Tri-Box module at delivery?
• Which of the following is an OCI item?
• When do we use an accounts payable?
• Which statement best describes the single-step income statement?
• Which of the following are examples of intangible assets?
• Non operating income is mainly temporary.
• Retained Earnings Formula: which of the following represents Retained Earnings?
• Current Maturities of Long Term Debt is classified as which type of account?
• Temporary earnings result from which type of transactions?
• Example of OCI: Unrealized gains and losses for sale investments are not included in net income but reported as OCI.
• In segment reporting, which item is included in disclosures for each operating segment?
• Under accrual accounting, when is revenue recognized?
• If a contract has multiple performance obligations, which steps are used in revenue recognition?
• Which statement shows the financial position at a point in time?
• In the Dupont Equation, ROE equals Net Profit Margin times Asset Turnover times which factor?
• Which item is a current asset commonly used to estimate cash flow timing from customer sales?
• Paying off accounts payable
• Under the Indirect Method, how is net cash flow from operating activities determined?
• What is the monthly journal entry to recognize revenue related to the Tri-Net subscription?
• What does cash refer to?
• Depreciation Expense requires an estimate of
• At the end of each of the 12 months following the sale, TrueTech would record an entry to recognize Tri-Net subscription revenue. What is the correct entry for one month?
• When are adjusting entries recorded?
• When the discontinued component is sold before the end of the period, which income effects are included?
• What does grouping in the balance sheet allow?
• Which of the following is listed as a component of current liabilities?
• If a firm has credit sales of 10,000, causing revenue and net income to decrease by 10,000 but cash flows do not change, what adjustment yields the correct cash flows?
• Nonoperating Items are defined as which of the following?
• What does the Equity Multiplier represent in the Dupont framework?
• Which of the following is a financing activity?
• Which statement is true?
• Which item would be reported in investing activities?
• What is true about post-closing entries?
• Revenues are defined as which of the following?
• Accrued revenue affects which accounts?
• The fundamental rule of double-entry bookkeeping is that?
• Which account is debited in the monthly Tri-Net revenue recognition entry?
• Which of the following is NOT listed as a way to pay off US debt?
• Which step in the five-step revenue recognition model is Determine the transaction price?
• Stockholders' Equity is?
• General Ledger
• Which classification is commonly used for short term investments?
• Recognize revenue when (or as) each performance obligation is satisfied: For a single performance obligation, revenue is recognized:
• Which statement best describes the multi-step income statement?
• Which statement about a reportable operating segment is true?
• Permanent earnings result from?
• Deferred Revenue represents which of the following?
• When do we use a notes payable?
• Where do accountants obtain information from?
• Comprehensive Income includes which items?
• Which group uses the term 'Statement of Financial Position' instead of 'Balance Sheet'?
• What entry records the movement from Accounts Receivable to Cash when payment is collected?
• Which transaction would typically be classified as an investing activity?
• What is the balance of Deferred Revenue immediately after the initial delivery entry?
• What does the balance sheet organize?
• What is the primary feature of the accrual accounting model?
• Expense recognition effect on equity
• Which statement about asset turnover is true?
• Depreciation is treated in the cash flow statement as what?
• Which entry represents accrued revenue?
• Diluted EPS would decrease when potential common shares are outstanding because:
• The operating cycle is defined as:
• Which statement best describes when a gain or loss is recognized on the sale of assets?
• What is the effect of recording 'Debit COGS 20,000; Credit Inventory 20,000'?
• Which of the following is typically a permanent shareholders' equity account?
• Profit Margin on Sales is defined as which of the following?
• What does comprehensive income provide?
• Which of the following is NOT typically included in OCI items?
• Net cash flow from operating activities is defined as?
• Deferred Revenue is a liability until
• Which statement about land depreciation is accurate?
• Which of the following is not a category of cash transactions?
• Which statement best describes profitability ratios?
• What is the per-system price used in this contract?
• Which of the following best describes investing activities?
• Which statement best describes when revenue is recognized under revenue recognition rules?
• On December 20, 2017, CompStores placed an order for 1,000 Tri-Boxes at $240 each, with payment to be made within 30 days after delivery. What journal entry should TrueTech record on December 20, 2017?
• Accruals include which items?
• When rent is received in advance and recorded as Deferred Rent Revenue, which adjusting entry recognizes the revenue for the period?
• Under US GAAP, revenues from external customers are disclosed by geographic area into which categories?
• Profit Margin is defined as Net Income divided by which of the following?
• Transaction Analysis
• Which accounts increase with a debit?
• After post-closing entries, which accounts still have balances?
• What is the current version of a capital lease called?
• Average collection period shows the approximate number of days the accounts receivable balance is outstanding. Which formula computes it?
• The statement "Unrealized gains and losses for sale investments are not included in net income but reported as other comprehensive income" is:
• What is the basic accounting equation?
• What is the effect of accruals on the financial statements when an expense is incurred but not yet paid?
• Which condition triggers discontinued operations reporting?
• Net income increases retained earnings.
• If depreciation expense of 10,000 reduces net income but cash flows do not change, what adjustment yields correct cash flows?
• Long term solvency is defined as
• Comprehensive Income Formula?
• Beginning supplies were 3,600; purchases 8,100; ending supplies 4,050. What is the adjusting entry to reflect supplies used?
• For a discontinued component that is held for sale and has not been disposed by the end of the reporting period, which income effects are recognized?
• Which of the following is NOT listed as a difference between GAAP and IFRS?
• In segment reporting, who regularly reviews a segment's operating results?
• Which financial statement primarily aggregates net income from operations and other items over a period?
• Current Assets are contrasted with which category for the purpose of the balance sheet?
• Prepaid Account is described as which?
• Auditor's Report Expresses the auditor's opinion as to the fairness of the presentation of the financial statements in conformity with generally accepted accounting principles.
• Discontinued operations include which of the following?
• Which formula expresses the receivables turnover ratio?
• What is the adjusting entry to recognize revenue from a deferred revenue when the service is provided?
• Asset impairments apply to which types of assets?
• Which closing entry transfers the net income (or net loss) from Income Summary to Retained Earnings?
• Which securities, if converted, would dilute EPS?
• Which item would typically be settled within one year or the operating cycle?
• The Dupont Framework breaks ROE into three components: which are they?
• A higher activity ratio implies fewer assets are required to support a given revenue level.
• The Statement of Cash Flows provides information about what?
• Which statement best defines earnings quality?
• Current Assets are assets expected to be converted to cash within the coming year or within the normal operating cycle.
• In accrual accounting, revenue is recognized when what occurs?
• Which step follows Adjusting Entries in the accounting cycle?
• What is the purpose of indicators used for recognizing revenue?
• A contract does not exist if which condition is true?
• Why do managers want to report liabilities as long term?
• Does the Income Statement include Other Comprehensive Income items?
• Non GAAP earnings typically exclude which item?
• Assets include
• Which is the correct formula for inventory turnover ratio?
• Single-step income statement is characterized by?
• What is the correct formula for asset turnover ratio?
• Which statement about temporary earnings is true?
• OCI items include which of the following?
• What is the main purpose of classifying cash flows into operating, investing, and financing activities?
• Which are the three types of adjusting entries?
• Financial Flexibility is defined as
• Temporary earnings may be included in which part of income?
• What are the two main types of lease obligations?
• Changes in accounting estimates are accounted for retrospectively.
• Gains and losses are defined as?
• What is the Unadjusted Trial Balance?
• What is the purpose of closing entries?
• Which term is also known as the income statement?
• Which statement best describes the relationship between cash receipts and cash disbursements in cash flows?
• Which of the following is a nonoperating item?
• Noteworthy Events and Transactions refer to transactions or events potentially important to evaluating a company's financial statements, such as
• Management Discussion and Analysis provides what type of perspective?
• Which of the following is NOT a financial statement?
• Which statement best describes a prepaid expense?
• What does the balance sheet report?
• Deferred Revenue
• Discrete financial information in segment reporting is used for what purpose?
• When revenue is accrued, which journal entry is recorded?
• Operating Income Formula?
• Do managers want to report liabilities as long-term or current?
• What does the multi-step income statement report?
• Assets increase with a?
• Which pairs of income statement types exist?
• Reporting Segment Information facilitates the financial statement analysis of diversified companies.
• A change in depreciation, amortization, or depletion method is treated as a change in accounting principle and is accounted for prospectively.
• Asset Turnover is defined as which ratio?
• What is the transaction price for the contract?
• Which of the following is a type of accounting change?
• Which are the three categories of transactions affecting cash?
• What happens to temporary accounts after closing entries?
• Liabilities + Stockholders' Equity is known as?
• Which adjusting entry would typically be used to recognize rent expense after a period of prepaid rent?
• What are accrued liabilities?
• What does land not lose value due to?
• Current Liabilities are defined as liabilities that are expected to be satisfied within
• Who determines which expenses are excluded in non-GAAP earnings?
• What is the operating cycle?
• Accumulated OCI is reported how?
• Liabilities increase with which type of account entry?
• Which of the following statements about financing activities is correct?
• Expenses are defined as which of the following?
• TrueTech sells 1,000 subscriptions for $60 each on January 1, 2018. What is the journal entry to record the sale?
• How much of the transaction price is allocated to the Tri-Net subscription?
• Income before income taxes formula?
• What is the nature of a contract in revenue recognition?
• In the context of cash definitions, cash refers to which of the following?
• Which of the following is an alternate name for the income statement?
• Accounts receivable is also known as:
• Sum of debits must?
• How is income from discontinued operations presented in the income statement?
• Which items are liabilities?
• Notes receivable is best described as:
• Which statement best describes the purpose of the cash flow statement?
• Which statement about the multi-step income statement is true?
• Additional Disclosures include items relating to which topics?
• According to the material, long-term leases are typically classified as which type of lease?
• What amounts are reported by an operating segment?
• Which statement is true about accumulated OCI relative to retained earnings?
• Which of the following is a nonoperating item?
• Which statement best describes a reportable operating segment?
• Change in accounting principle refers to a change from one acceptable accounting method to another.
• Which statement primarily discloses changes in permanent equity accounts?
• Which of the following expresses the correct formula for inventory turnover?
• Accounts payable typically has what payment period?
• Which closing entry is used to close a net loss to Retained Earnings?
• Current maturities of long-term debt are defined as which of the following?
• In this contract, which performance obligations are identified?
• Which of the following formulas correctly estimates the average collection period?
• In discontinued operations reporting, the amount is usually of what nature?
• Return on Assets is defined as which of the following?
• Which accounts are closed to Income Summary at year-end?
• Which is the first step of the accounting cycle?
• January 1, 2018: TrueTech delivers 1,000 Tri-Boxes to CompStores and title transfers. What journal entry should TrueTech record on that date?
• In the note payable example of $1,000,000 with $100,000 in principal payments each year for 10 years, how much is current liability and how much is long-term liability?
• Which statement is true about lease classification when the lease term exceeds the asset's life by 75% or more?
• Which contract is given as an example of failing the 'separately identifiable' criterion?
• Shareholders' Equity Includes
• Which statement correctly describes the purpose of prior period adjustments in published statements?
• Which scenario is a typical example of asset impairment?
• Unearned Revenue
• What are indicators used for in recognizing revenue?
• Assets are?
• Which statement correctly describes when revenue for a one-year Tri-Net subscription is recognized?
• Which statement best describes financing activities?
• Deferred revenue liability decreases when the service is performed because revenue is recognized. What is the effect described?
• Which statement best describes the multi-step income statement?
• A long-term contract using revenue recognition based on progress should recognize revenue in proportion to progress. Which statement is true?
• Liabilities include
• Notes payable require which of the following?
• What must public companies do at the end of each fiscal year?
• The phrase 'Reports a company's profit during a particular reporting period' most closely describes which financial concept?
• What is Prepaid Expenses?
• Voluntary changes in accounting principles are accounted for retrospectively.
• Which action increases stockholders' equity by increasing common stock?
• Which statement best describes the usefulness of the multiple-step income statement?
• Liabilities represent which of the following?
• Should a financially healthy firm have positive or negative investing cash flow?
• To record accrued interest on a note receivable for the period, which entry is appropriate?
• Short term investments are defined as investments in stock and debt securities of other corporations intended to be sold within the next:
• Which of the following describes a change in the reporting entity?
• Income from Continuing Operations reports what?
• Which statement about nonoperating items is true?
• Which expression is the Dupont Equation for ROE?
• The term 'Weighted Average Number of Shares Outstanding' in the Basic EPS formula refers to the number of shares used in calculating EPS over what period?
• During the adjusting entry for a prepaid expense, which account is debited?
• What is the adjusting entry for an accrued expense?
• Under IFRS, which type of balance sheet items is often presented first?
• Determine the transaction price: which statement best defines the transaction price?
• Which of the following is NOT a characteristic of the multi-step income statement?
• Which category includes cash flows related to the acquisition and disposal of long-term assets and investments?
• To be distinct, a good or service must be able to be distinct and be separately identifiable from other items in the contract. Which option best describes this?
• Which two formats can be used to report operating activities?
• What does printing money lead to?
• What is the purpose of the Unadjusted Trial Balance?
• Change in Depreciation, Amortization, or Depletion Method: Considered to be a change in accounting principle, accounted prospectively.
• What does the term net of tax mean for discontinued operations?
• What type of lease is typically short term?
• Which of the following is a valid order of subtotals on the multi-step income statement?
• Which statement best describes the Direct Method?
• In the indirect method, the cash flow from operating activities is derived by adjusting net income for accruals. Which adjustment best matches this approach?
• What does the general ledger contain?
• What is the journal entry to record paying $24,000 in advance for one year's rent?
• January 25, 2018: TrueTech receives $240,000 from CompStores. Which journal entry should TrueTech record?
• Change in accounting estimate: Changes due to modification of estimate as new information comes to light.
• Voluntary changes in accounting principles: Accounted for retrospectively by revising prior years' financial statements.
• Which activity is not listed as part of the accounting cycle steps?
• Which of the following best defines comprehensive income?
• The 'Other long term assets' category represents which of the following?
• Average Days in Inventory measures what?
• What is the formula for Asset Turnover?
• Diluted EPS incorporates which of the following?
• When are restructuring costs recognized?
• What is the special type of temporary item?
• Which topics are included under the special topics in revenue recognition?
• Under a contract with multiple performance obligations, revenue is recognized:
• Where are cash and cash equivalents typically reported?
• What account type is a deferred revenue?
• Deferred Revenue represents a liability; which statement is correct?
• Examples of restructuring costs
• Which statement is true about accrued liabilities?
• Gains or losses on sale of investments are examples of what?
• Which item is NOT part of the typical components of current assets?
• Common Stock is defined as which of the following?
• Grouping on the balance sheet enables analysis of which characteristic?
• Which item is included in comprehensive income but not in net income?
• Identify the performance obligation in revenue recognition pertains to a promise to transfer what?
• Which of the following statements is true about the Income Statement?
• When we debit an account, we also need to?
• What percentage of the transaction price is recognized as revenue at the time of delivery?
• A customer is more likely to control a good or service if the customer has which indicator?
• Which item is described as 'inflows of resources resulting from providing goods or services to customers'?
• Which of the following are examples of estimates in financial reporting?
• How are average total assets typically calculated for asset turnover?
• Net income formula?
• In accounting for asset sales, a difference between sale proceeds and carrying amount results in what?
• Shareholders' equity is commonly referred to as what?
• Which statement best defines Subsequnt Events?
• What is the primary purpose of the general ledger?
• Shareholders' Equity increases with a ... entry?
• If an error is corrected in the same year, which step is performed?
• Which of the following statements describes expenses?
• Liabilities are?
• Management Discussion and Analysis provides a biased but informed perspective of a company's operations, liquidity, and capital resources.
• When are statements of cash flows required?
• If an accounting error is discovered in a year after the year of occurrence, what is recorded?
• What is the correct expression for Basic EPS according to the standard formula?
• What is the IFRS-compliant title for the balance sheet?
• What are the stand-alone selling prices used to allocate the transaction price between the Tri-Box module and the Tri-Net subscription?
• Discontinued operations are reported when which conditions are met?
• What is an Adjusted Trial Balance?
• Bad Debt Expense requires estimate of
• Which steps are involved in the two-step revenue recognition process for contracts with multiple performance obligations?
• Which statement about current assets is false?
• Which is the correct journal entry to record the sale of merchandise for cash totaling $35,000?
• Mandated changes in accounting principles: Implementation approaches.
• Which statement describes the purpose of the Statement of Shareholders' Equity?
• Which journal entry correctly records the cost of goods sold for a sale of merchandise costing $20,000?
• Return on Shareholders' Equity is defined as which of the following?
• Stockholders' Equity is calculated as which of the following?
• In the Basic EPS formula, the subtraction of preferred dividends is done to determine earnings available to which shareholders?
• Balance sheet categories include assets, liabilities, and shareholders' equity.
• How are changes in accounting estimates accounted?
• Which of the following is a current liability commonly recognized in financial statements?
• Return on assets is defined as net income divided by which metric?
• Which statement best describes how a prior period adjustment affects retained earnings?
• What makes a lease a capital lease rather than an operating lease?
• $500 of supplies were used
• Where are basic earnings per share (EPS) and diluted EPS reported?
• How are assets grouped?
• Equity Multiplier is defined as which ratio?
• Which statement about Other Comprehensive Income (OCI) items is correct?
• Prepaid expenses are best described as:
• Stock performance is included in which section?
• Long-term liabilities are best defined as obligations that will not be satisfied in the next year or operating cycle, whichever is longer. Which statement best defines this concept?
• What does the cash flow statement provide information about?
• For a prior period adjustment, the journal entry should do what with balance sheet accounts?
• For a material change in accounting principle, which treatment is typically required?
• What type of lease is typically considered long term?
• Which of the following is an example of an intangible asset?
• Which service is recognized over time in this contract?
• What do investors and creditors like to know about?
• Which account is debited when rent is paid in advance?
• What is the standard entry to record annual depreciation on office equipment?
• Which type of item would require a prior period adjustment?
• Why are non GAAP earnings controversial?
• Cash equivalents are investments with a maturity date of:
• Liquidity is defined as the ability of a company to
• Under what condition are prior period adjustments required?
• How is earned vacation pay that has not yet been paid recorded?
• Temporary accounts include which of the following?
• Under scenarios where revenue is recognized over time, how should the amount of revenue be recognized relative to the performance obligations that have been satisfied?
• What determines the transaction price?
• Short term investments are typically intended to be sold within the next 12 months or the operating cycle. True or false?
• Which of the following is a current liability?
• When is an operating lease put on the balance sheet according to the material?
• What are the three categories of transactions affecting cash?
• How is accumulated OCI reported?
• Which item would be reported in financing activities?
• Auditors' reports must comply with which body?
• Which statement best describes stockholders' equity according to the source material?
• Which of the following is NOT one of the three components of the Dupont framework?
• Assets are known as what?
• Prepayments include which items?
• Activity ratios are best described as measures of how effectively a company uses its assets.
• What do expenses represent?
• If rent is paid in advance and recorded as Prepaid Rent, which adjusting entry recognizes rent expense for the current period?
• In what order are current assets listed on the balance sheet?
• Comprehensive income includes net income plus what?
• Identify the contract in revenue recognition means that a contract establishes the legal rights and obligations of the seller and customer with respect to one or more performance obligations. Which option is correct?
• How are gains or losses related to discontinued operations reported?
• What is the objective of recording adjusting entries?
• Which of the following is a long-term liability?
• Profitability ratios are used to measure what?
• Which of the following are assets?
• Which term corresponds to the same financial statement as a balance sheet in IFRS?
• The income effects of a prior period error are recorded by adjusting which account?
• Common Stock increases with a ... entry?