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1. Bondsare issuedonJune1thathaveinterestpaymentdatesofApril1andOctober1.BondinterestexpensefortheyearendedDecember31,2009,isfora period of: 0A)Sevenmonths.0B)Threemonths.0C)Sixmonths.0D)Fourmonths. 2. Ofthefourcriteriaforacapitallease,theonethatmostoftenisthedecisivecriteriais: 0A)The90%offairvaluetest.0B)Thebargainpurchaseoption.0C)The75%ofeconomiclifetest.0D)Thetransferoftitle. 3. Whichofthefollowingdoesnotrepresentacashflowrelatingtooperatingactvities? 0A)Cashpaidforsalaries 0B)Cashreceivedfromcustomers 0C)CashdividendspaidIQstQckhQlders 0D) Interestpaid tobondholders 4. Foratypical manufacturingcompany,themostcommoncritical pointforrecognizingrevenueisthedate: 0A)Theproductisdelivered. 0B)Anorderisreceived.0C)Paymentisreceived.0D)Productioniscompleted 5. Theinterestexpenseisforthetimethebondswere outstandingduringthe reportingperiod-7monthsinthiscase. Assessment: 01:14:25 A$500,000bondissuesoldfor98.Therefore,thebonds: 0A)Soldatadiscountbecausethe effectiveinterestratewaslowerthantheface rate.0B)Soldat apremiumbecause th:e statedrateofinterest washigherthan theyieldrate.OqSoldforthe$500,000 faceamountless$10,000ofaccruedinterest. 0D) Soldatadiscountbecausethestated rate ofinterestwaslowerthantheeffective rate. 6. Whichofthefollowingstatementscharacterizesaleveragedlease? 0A)Thelessortreats theleaseas anoperatinglease. 0B)Thelessor’sinterestrateisalwayshigherbecausetheleaseisleveraged. 0C)Thelesseemakesleasepaymentstothelessor’slender. 0D) Thelessorborrowspartof theacquisitionprice oftheleasedassetfromathirdpartylender. 7. Straight-line amortization ofbonddiscountorpremium: 0A)Providesthesameamountofinterestexpenseeachperiodas doestheeffectiveinterestmethod. 0B)Providesthesametotalamountofinterestexpenseoverthelifeofthebondissueasdoestheeffectiveinterest method. 0C)Isapproprate fordeepdiscou.nt bonds. 0D) Canbe usedforamortization

1. Bondsare issuedonJune1thathaveinterestpaymentdatesofApril1andOctober1.BondinterestexpensefortheyearendedDecember31,2009,isfora period of:0A)Sevenmonths.0B)Threemonths.0C)Sixmonths.0D)Fourmonths.

2. Ofthefourcriteriaforacapitallease,theonethatmostoftenisthedecisivecriteriais:

0A)The90%offairvaluetest.0B)Thebargainpurchaseoption.0C)The75%ofeconomiclifetest.0D)Thetransferoftitle.

3. Whichofthefollowingdoesnotrepresentacashflowrelatingtooperatingactvities?

0A)Cashpaidforsalaries

0B)Cashreceivedfromcustomers

0C)CashdividendspaidIQstQckhQlders

0D) Interestpaid tobondholders

4. Foratypical manufacturingcompany,themostcommoncritical pointforrecognizingrevenueisthedate:

0A)Theproductisdelivered.

0B)Anorderisreceived.0C)Paymentisreceived.0D)Productioniscompleted

5. Theinterestexpenseisforthetimethebondswere outstandingduringthe reportingperiod-7monthsinthiscase.

 

Assessment: 01:14:25

 

A$500,000bondissuesoldfor98.Therefore,thebonds:

0A)Soldatadiscountbecausethe effectiveinterestratewaslowerthantheface rate.0B)Soldat apremiumbecause th:e statedrateofinterest washigherthan theyieldrate.OqSoldforthe$500,000 faceamountless$10,000ofaccruedinterest.

0D) Soldatadiscountbecausethestated rate ofinterestwaslowerthantheeffective rate.

6. Whichofthefollowingstatementscharacterizesaleveragedlease?

0A)Thelessortreats theleaseas anoperatinglease.

0B)Thelessor’sinterestrateisalwayshigherbecausetheleaseisleveraged.

0C)Thelesseemakesleasepaymentstothelessor’slender.

0D) Thelessorborrowspartof theacquisitionprice oftheleasedassetfromathirdpartylender.

7. Straight-line amortization ofbonddiscountorpremium:

0A)Providesthesameamountofinterestexpenseeachperiodas doestheeffectiveinterestmethod.

0B)Providesthesametotalamountofinterestexpenseoverthelifeofthebondissueasdoestheeffectiveinterest method.

0C)Isapproprate fordeepdiscou.nt bonds.

0D) Canbe usedforamortization <ifdiscountorpremiuminallcasesandcircumstances.

8. WisonInc.developedabusinessstrategythatusesstockoptionsasamajorcompensationincentiveforts top executives.OnJanuary1,2009,20millionoptionswere granted,each givingtheexecutiveowningthemtherighttoacquirefive$1parcommon shares. Theexercisepriceisthemarketpriceonthegrantdate-$10pershare.OptionsvestonJanuary1,2013. Theycannotbe exercisedbeforethatdate andwillexpireonDecember31,2015. Thefairvalueofthe20mill onoptions,estmatedbyanappropriateoptonpricingmode,is$40peroption.

On March1,2013,whenthemarketpriceof Wilson’sstockwas$14 pershare,3millionoftheoptionswereexercised.The journalentry torecordthiswouldrnclude:

0A)Acrediltopaid-incapital-excess ofparfor$255million

0B) Acredittocommonstock for$75million

0C)Allofthesearecorrect.

0D) Adebittopaid-incapital- stockoptionsfor $42 million.

 

9. Whichofthefollowingisnotamong thecriteriaforclassifyingaleaseasacapitallease?

0A)Theagreementcontainsabargainpurchaseoption.

0B)Thepresentvalueoftheminimumleasepaymentsisequaltoorgreaterthan90%ofthefairvalueoftheasset

0C)Theagreementspecifiesthatownershipoftheassettransferstothelessee.

0D)Thenoncancelableleasetermisequalto90%ormoreoftheexpectedeconomiclifeoftheasset.

10. Anoptionscontracttohedgepossiblefuturepricechangesofaninventory•Ofsupplypartswould:

0A)Representafairvaluehedge.

0B)Representaforeigncurrencyhedge.

0C)Representacashflowhedge.0D)Notqualifyasahedge.

11.Merchandisesold FOBshippingpointindicatesthat0A)Thesellerpaysthefreight.

0B)Thesaleisnotconsummateduntilthemerchandisereachesthepointtowhichitisbeingshipped.

0C)Thecommoncarrierholdsttleuntilthemerchandiseisdelivered. 0D)Thebuyerholdstitleafterthemerchandiseleavestheseller’slocation.

12. Whichofthefollowingisreportedasanoperatingactivityinthestatementofcashflows?

0A)Thepaymentofinterestonlong-termnotes.0B)Thepaymentofdividends.

0C)Thesaleofofficeequipment.

0D)Theissuanceofastockdividend.

 

Assessment:01:13

 

13. MarsInc.hasadefinedbenefrtpensionplan.OnDecember31(theendofthefiscalyear),thecompanyreceivedthePBOreportfromtheactuary.Thefollowinginformationwasincludedinthereport:endingPBO,$110,000;benefitspaidtoretirees,$10,000;interestcost,57,200.Thediscountrateappliedbytheactuarywas8%.WhatwasthebeginningPBO?

OA)$112,000.0B)$107,200.

0C)$100,000.

0D)$90,000.

 

 

 

21. Whenusingthepercentage-of-completionmethodofaccountingforlong-termcontracts,thepercentageofcompletionusedtorecognizegrossprofitinthefirstyearusuallyisdeterminedbymeasurng:

0A)Costsincurredinfirstyear,dividedbyestimatedgrossprofit.

0B)Costsincurredinthefirstyear,dividedbyestmatedremainingcoststocompletetheproject.

0C)Costsincurredinfirstyear.dividedbyestimatedtotalcostsofthecompletedproject.

1)Noneoftheseiscorrect.

22. Hedgingisusedtodealwithexposureto:

0A)Cashflowrisk.

0B)Fairvaluerisk.

0C)Allofthesearecorrect.

1)Foreignexchangerisk.

23. IfOinsburryCompanyconcludedthataninvestmentoriginallydassifiedasatradingsecuritywouldnowmoreappropriatelybeclassifiedasheldtomaturity,Dinsburrywould:

0A)notreclassifytheinvestment,asoriginalclassificationsareirrevocable.

0B)reclassifytheinvestmentasheldtomaturity,buttherewouldbenoincomeeffect.

0C)reclassfytheinvestmentasheldtomaturityandtreatthefairvalueasofthedateofreclassificationastheinvestmenfsamortizedcostbasisforfutureamortization.

1)reclassifytheinvestmentasheldtomaturityandimmediatelyrecognizeinnetincomeallunrealizedgainsandlossesasoftheredassificationdate.

24. Whenrecognizingcompensationunderastockoptionplan,unanticipatedforfeituresaretreatedas:

0A)Anincomeitem.

0B)Achangeinestimate.

0C)Achangeinaccountingprinciple.OO)Aloss

25. Considerthefollowing:

I.presentvalueofvestedbenefrtsatpresentpaylevels

II. presentvalueofnon-vestedbenefrtsatpresentpaylevels

Ill.presentvalueofadditionalbenefitsrelatedtoprojectedpayincreases

Whichoftheaboveconstitutestheaccumulatedbenefitobligation?

OA)l,11,111.

OB)11only.Oq11&111.00)1&11.

.

 

9. Theinterestexpenseisforthetimethebondswere outstandingduringthe reportingperiod-7monthsinthiscase.

 

Assessment: 01:14:25

 

A$500,000bondissuesoldfor98.Therefore,thebonds:

0A)Soldatadiscountbecausethe effectiveinterestratewaslowerthantheface rate.0B)Soldat apremiumbecause th:e statedrateofinterest washigherthan theyieldrate.OqSoldforthe$500,000 faceamountless$10,000ofaccruedinterest.

0D) Soldatadiscountbecausethestated rate ofinterestwaslowerthantheeffective rate.

10. Whichofthefollowingstatementscharacterizesaleveragedlease?

0A)Thelessortreats theleaseas anoperatinglease.

0B)Thelessor’sinterestrateisalwayshigherbecausetheleaseisleveraged.

0C)Thelesseemakesleasepaymentstothelessor’slender.

0D) Thelessorborrowspartof theacquisitionprice oftheleasedassetfromathirdpartylender.

11. Straight-line amortization ofbonddiscountorpremium:

0A)Providesthesameamountofinterestexpenseeachperiodas doestheeffectiveinterestmethod.

0B)Providesthesametotalamountofinterestexpenseoverthelifeofthebondissueasdoestheeffectiveinterest method.

0C)Isapproprate fordeepdiscou.nt bonds.

0D) Canbe usedforamortization <ifdiscountorpremiuminallcasesandcircumstances.

12. WisonInc.developedabusinessstrategythatusesstockoptionsasamajorcompensationincentiveforts top executives.OnJanuary1,2009,20millionoptionswere granted,each givingtheexecutiveowningthemtherighttoacquirefive$1parcommon shares. Theexercisepriceisthemarketpriceonthegrantdate-$10pershare.OptionsvestonJanuary1,2013. Theycannotbe exercisedbeforethatdate andwillexpireonDecember31,2015. Thefairvalueofthe20mill onoptions,estmatedbyanappropriateoptonpricingmode,is$40peroption.

On March1,2013,whenthemarketpriceof Wilson’sstockwas$14 pershare,3millionoftheoptionswereexercised.The journalentry torecordthiswouldrnclude:

0A)Acrediltopaid-incapital-excess ofparfor$255million

0B) Acredittocommonstock for$75million

0C)Allofthesearecorrect.

0D) Adebittopaid-incapital- stockoptionsfor $42 million.

 

11. Whichofthefollowingisnotamong thecriteriaforclassifyingaleaseasacapitallease?

0A)Theagreementcontainsabargainpurchaseoption.

0B)Thepresentvalueoftheminimumleasepaymentsisequaltoorgreaterthan90%ofthefairvalueoftheasset

0C)Theagreementspecifiesthatownershipoftheassettransferstothelessee.

0D)Thenoncancelableleasetermisequalto90%ormoreoftheexpectedeconomiclifeoftheasset.

12. Anoptionscontracttohedgepossiblefuturepricechangesofaninventory•Ofsupplypartswould:

0A)Representafairvaluehedge.

0B)Representaforeigncurrencyhedge.

0C)Representacashflowhedge.0D)Notqualifyasahedge.

11.Merchandisesold FOBshippingpointindicatesthat0A)Thesellerpaysthefreight.

0B)Thesaleisnotconsummateduntilthemerchandisereachesthepointtowhichitisbeingshipped.

0C)Thecommoncarrierholdsttleuntilthemerchandiseisdelivered. 0D)Thebuyerholdstitleafterthemerchandiseleavestheseller’slocation.

14. Whichofthefollowingisreportedasanoperatingactivityinthestatementofcashflows?

0A)Thepaymentofinterestonlong-termnotes.0B)Thepaymentofdividends.

0C)Thesaleofofficeequipment.

0D)Theissuanceofastockdividend.

 

Assessment:01:13

 

15. MarsInc.hasadefinedbenefrtpensionplan.OnDecember31(theendofthefiscalyear),thecompanyreceivedthePBOreportfromtheactuary.Thefollowinginformationwasincludedinthereport:endingPBO,$110,000;benefitspaidtoretirees,$10,000;interestcost,57,200.Thediscountrateappliedbytheactuarywas8%.WhatwasthebeginningPBO?

OA)$112,000.0B)$107,200.

0C)$100,000.

0D)$90,000.

 

 

 

26. Whenusingthepercentage-of-completionmethodofaccountingforlong-termcontracts,thepercentageofcompletionusedtorecognizegrossprofitinthefirstyearusuallyisdeterminedbymeasurng:

0A)Costsincurredinfirstyear,dividedbyestimatedgrossprofit.

0B)Costsincurredinthefirstyear,dividedbyestmatedremainingcoststocompletetheproject.

0C)Costsincurredinfirstyear.dividedbyestimatedtotalcostsofthecompletedproject.

1)Noneoftheseiscorrect.

27. Hedgingisusedtodealwithexposureto:

0A)Cashflowrisk.

0B)Fairvaluerisk.

0C)Allofthesearecorrect.

1)Foreignexchangerisk.

28. IfOinsburryCompanyconcludedthataninvestmentoriginallydassifiedasatradingsecuritywouldnowmoreappropriatelybeclassifiedasheldtomaturity,Dinsburrywould:

0A)notreclassifytheinvestment,asoriginalclassificationsareirrevocable.

0B)reclassifytheinvestmentasheldtomaturity,buttherewouldbenoincomeeffect.

0C)reclassfytheinvestmentasheldtomaturityandtreatthefairvalueasofthedateofreclassificationastheinvestmenfsamortizedcostbasisforfutureamortization.

1)reclassifytheinvestmentasheldtomaturityandimmediatelyrecognizeinnetincomeallunrealizedgainsandlossesasoftheredassificationdate.

29. Whenrecognizingcompensationunderastockoptionplan,unanticipatedforfeituresaretreatedas:

0A)Anincomeitem.

0B)Achangeinestimate.

0C)Achangeinaccountingprinciple.OO)Aloss

30. Considerthefollowing:

III. presentvalueofvestedbenefrtsatpresentpaylevels

IV. presentvalueofnon-vestedbenefrtsatpresentpaylevels

Ill.presentvalueofadditionalbenefitsrelatedtoprojectedpayincreases

Whichoftheaboveconstitutestheaccumulatedbenefitobligation?

OA)l,11,111.

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