Financial Accounting Advanced Topics Quiz

Financial Accounting Advanced Topics Quiz Answer. In this post you will get Quiz & Assignment Answer Of Financial Accounting Advanced Topics Quiz

 

Financial Accounting Advanced Topics Quiz

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Module 1 Quiz

1.
Question 1
PepsiCo has spent $30,000 to train 600 new engineers. The training is to prepare the engineers for a project that will last for three years. How should the company treat this expenditure in its books?

1 point

  • Liability
  • Revenue
  • Expense
  • Asset

2.
Question 2
Coca-Cola installed a new assembly line production equipment at a cost of $165,000. The company had to rearrange the assembly line and remove a wall to install the equipment. The rearrangement costed $14,000 and the wall removal costed $6,000. What should be the amount of capitalized costs (i.e., asset on the balance sheet) associated with this equipment?

1 point

  • $165,000
  • $171,000
  • $179,000
  • $185,000

3.
Question 3
Which of the following happens when depreciation is recorded?

1 point

  • Assets decrease and liabilities increase.
  • Assets increase and stockholders’ equity increases.
  • Assets decrease and stockholders’ equity increases.
  • None of the above

4.
Question 4
A firm purchased a machine for $65,000. The machine is estimated to have a useful life of 10 years with a salvage value of $5,000. If the firm uses straight-line depreciation method, depreciation expense for year 4 is:

1 point

  • $6,000
  • $8,000
  • $15,000
  • $10,000

5.
Question 5
Gain or loss on disposal of an asset is the difference between the sale price of an asset and

1 point

  • The cost of the asset
  • The cost of the asset less depreciation expense in the year of sale
  • The cost of the asset less accumulated depreciation of the asset up to the date of disposal
  • None of the above

6.
Question 6
Omega Co. uses straight-line depreciation method for all of its depreciable assets. It sold an old machine on December 31, 2016, that it purchased on January 1, 2015, for $300,000. The asset is originally estimated to have a 3-year useful life and no residual value. If the sales price of the used machine is $100,000, what is the gain or loss on sale?

1 point

  • No gain or loss
  • Loss of $100,000
  • Gain of $300,000
  • Gain of $200,000

7.
Question 7
Which of the following conditions must exist in order for an impairment loss to be recognized under US GAAP?

1 point

  • The book value of the asset is less than its fair value.
  • The book value of the asset is more than its fair value.
  • A & B
  • None of the above

8.
Question 8
Come Home, Incorporated sold some office equipment for $52,000 on December 31, 2018. The original cost of the equipment was $80,000 with a residual value of $5,000 and a useful life of 10 years. Assume the machine was purchased on January 1, 2015 and depreciated using the straight-line method. What amount of gain or loss should Come Home record at the time of the sale of this equipment on December 31, 2018?

1 point

  • Loss of $2,000
  • Loss of $9,500
  • Gain of $2,000
  • Gain of $9,500

9.
Question 9
A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the second year, what amount will be reported for accumulated depreciation?

1 point

  • $3,000
  • $6,000
  • $7,500
  • $9,000

10.
Question 10
A building was purchased for $50,000. The asset has an expected useful life of 6 years and depreciation expense each year is $8,000 using the straight-line method. What is the residual value of the building?

1 point

  • $0
  • $2,000
  • $4,000
  • $6,000

 

Module 2 Quiz

1.
Question 1
Long-term liabilities should be valued at

1 point

Present value

Principal value

Face value

Cost

2.
Question 2
XYZ Co. considers how to record two new liabilities. The first liability is due in nine months with a face value of $500,000 and a present value of $420,000. The second one is due in five years with a face value of $2,000,000 and a present value of $1,150,000. What is the increase in liabilities section of XYZ Co.’s balance sheet due to these two new liabilities?

1 point

$1,570,000

$1,650,000

$2,420,000

$2,500,000

3.
Question 3
Which of the following is NOT a current liability?

1 point

Loan due in 11 months

Payroll liability

Bond that will mature in 13 months

Dividends payable

4.
Question 4
Murphy Inc. has two new liabilities. The first liability is due in one year and has a face value of $1,500,000 and present value of $1,388,889. The second liability is due in three years and has a face value of $6,000,000 and a present value of 4,507,889. What is the increase in liabilities section of Murphy Inc.’s balance sheet due to these two new liabilities?

1 point

$7,388,889

$6,007,889

$7,500,000

$5,896,778

5.
Question 5
Assume that a firm issues a par bond of $1,000,000 on January 1, 2015, due in five years. The bond has a 10% coupon rate paid semi-annually. What is the value of this bond in 2017 balance sheet?

1 point

$100,000

$1,000,000

$50,000

$0

6.
Question 6
Assume that a firm issues a par bond of $1,000,000 on January 1, 2015, due in five years. The bond has a 10% coupon rate paid semi-annually. What is the total amount of interest payment associated with this bond in year 2018?

1 point

$200,000

$300,000

$50,000

$100,000

7.
Question 7
At the beginning of 2018, Angel Corporation began offering a one-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2018 were $180 million. The units were repaired or replaced at a cost of $5.3 million in 2018. The amount of warranty expense on Angel’s 2018 income statement is:

1 point

$5.3 million

$7.2 million

$9.0 million

$27.0 million

8.
Question 8
Away Travel filed a lawsuit against West Coast Travel seeking damages for copyright violations. West Coast Travel’s legal counsel believes it is possible that West Coast Travel will settle the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally possible. How should West Coast Travel report this litigation?

1 point

As a liability for $100,000 with disclosure of the range

As a liability for $150,000 with disclosure of the range

As a liability for $200,000 with disclosure of the range

As a disclosure only. No liability is reported.

9.
Question 9
On January 1, 2018, OU Company issued 12% bonds with a $20 million face value and a maturity date of December 31, 2019. The market rate is 14%. Coupon payments are due semi-annually and the first coupon payment is due on June 30, 2018. What is the present value of the bond at issuance (i.e., January 1, 2018)?

1 point

$15,338,060

$19,638,396

$20,678,442

$19,322,558

$20,000,000

10.
Question 10
Based on the information in the previous question regarding the issuance of the bond by OU Company, what is the amount of interest expense to be recorded on June 30, 2018?

1 point

$1,374,688

$2,715,839

$1,200,000

$1,363,260

$1,352,579

11.
Question 11
Firm A leases equipment from Firm B for 7 years. Firm A will pay $5,000 at the end of every year for the next 7 years. Assume that the discount rate of Firm A is 8%. Also assume that the lease term and the useful life of the equipment are the same. The present value of the equipment lease payments at the inception of the lease is $26,032. What is the amount of depreciation expense to be recorded by Firm A for the first year of the lease if Firm A uses the straight line depreciation method?

1 point

$4,294

$2,083

$3,719

$1,859

$5,206

12.
Question 12
Based on the information in the question above regarding the lease by Firm A, what is the amount of ending lease payable at the end of year 1 after the first lease payment?

1 point

$23,115

$22,891

$23,949

$21,032

$22,313

 

 

Module 3 Quiz

1.
Question 1
Can a firm record dividend payments to its shareholders as expenses?

1 point

Yes

No

2.
Question 2
Lamp Co. is established on January 1, 2015. It has 25,000 authorized shares and each common share has a par value of $10. The firm issues 15,000 shares at $12 per share on January 2, 2015 and earns net income of $230,000 during year 2015. What is the total shareholders’ equity at the end of year 2015?

1 point

$380,000

$530,000

$480,000

$410,000

3.
Question 3
Lamp Co. is established on January 1, 2015. It has 25,000 authorized shares and each common share has a par value of $10. The firm issues 15,000 shares at $12 per share on January 2, 2015 and earns net income of $230,000 during year 2015. What is the retained earnings balance at the end of year 2015?

1 point

$150,000

$30,000

$4,100,000

$230,000

4.
Question 4
Which of the following statements is false?

1 point

Dividends are not paid for treasury shares.

None of the above

Cash dividends reduce net income.

Dividends reduce retained earnings.

5.
Question 5
When treasury stock is purchased by cash, what is the effect of this transaction on the balance sheet?

1 point

Assets decrease and stockholders’ equity decreases.

Assets decrease and stockholders’ equity increases.

Assets increase and stockholders’ equity decreases.

No change

6.
Question 6
Mars Co. has 50,000 authorized shares, 35,000 outstanding shares, 3,000 treasury stock, and pays a cash dividend of $1 per common stock. How much is paid for dividends?

1 point

$38,000

$35,000

$53,000

$50,000

7.
Question 7
Bowling Co. begins its operations in January 2015 by issuing 2,000 shares of common stock at $4 per share. The par value of the stock is $1 per share. The firm repurchases 600 shares at $5 per share in June 2016. What amount should Bowling Co. report as treasury stock on its balance sheet for the year 2016?

1 point

($600)

($2,400)

($1,200)

($3,000)

8.
Question 8
Franck Co. provides the following information for the year 2015:

Net Income in year 2015 $95,000
Number of outstanding shares 80,000 shares
Treasury stock 5,000 shares
Number of authorized shares 100,000 shares
What is the earnings per share for the year ended December 31, 2015?

1 point

1.19

0.90

1.12

0.95

9.
Question 9
When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:

1 point

An increase to Cash for $25,000

A decrease to Additional Paid-in Capital for $25,000

An increase to Common Stock for $250,000

An increase to Additional Paid-in Capital for $225,000

10.
Question 10
Chainmail Mall had 100,000 outstanding shares of common stock. On June 16, 2018, Chainmail repurchased 20,000 shares of its own stock at $30 per share. On July 23, 2018, Chainmail resold 10,000 shares at $28 per share. What net effect did the repurchase and the resell of common stock have on the accounting equation?

1 point

Increase in assets and decrease in stockholders’ equity

Decrease in assets and increase in stockholders’ equity

Increase in assets and increase in stockholders’ equity

Decrease in assets and decrease in stockholders’ equity

11.
Question 11
Honest Joe, Corp. repurchases and retires 5,000 shares of common stock for $30,000. These shares have a par value of $2 each and were originally sold to investors for $8 per share. The retirement of these shares would be recorded with a(n):

1 point

A decrease to Additional Paid-in Capital Retirement for $10,000

A decrease to Retained Earnings for $10,000

An increase to Additional Paid-in Capital Retirement for $10,000

An increase to Common Stock for $30,000

12.
Question 12
Tomorrow, Inc. has the following capital structure in 2018: common stock totaling 200,000 shares and convertible preferred stock totaling 10,000 shares. The preferred stock is convertible into 25,000 shares of common stock. During 2018, Tomorrow, Inc. paid dividends of $2.00 per share on its common stock and $1.50 per share on its preferred stock. Net Income in 2018 was $315,000. Calculate Tomorrow Inc.’s Diluted EPS.

1 point

$1.33 per share

$1.40 per share

$1.50 per share

$1.58 per share

 

 

Module 4: Quiz

1.
Question 1
Which of the following will not show up on the cash flows from financing activities?

1 point

Interest paid

Borrow from a bank

Pay dividends

Issue a bond

2.
Question 2
ABC Co. provides the following information for the year 2016. Net income = $30,000, depreciation expense = $1,000, accounts receivable increased by $300, inventory decreased by $600, and accounts payable increased by $900. Based on this information alone, what is cash flow from operating activities in 2016?

1 point

$30,700

$32,200

$31,600

$31,200

3.
Question 3
Which of the following would NOT be a part of the investing section of the statement of cash flows?

1 point

Sale of equipment

Purchase of inventory

Purchase another firm’s common shares

Acquisition of land

4.
Question 4
XYZ Co. provides the following information for the year 2016. Issue common stock for $28,000, sell factory machines for $3,000, pay cash dividends of $3,000, purchase common shares of Zillow Co. for $10,000, pay accounts payable of $4,000. What is the net cash inflow (outflow) from financing activities?

1 point

$15,000

($15,000)

$25,000

($25,000)

5.
Question 5
Which of the following should not be added to net income when calculating cash flows from operations?

1 point

Loss from the sale of a fixed asset

Increase in accounts receivable

Increase in accounts payable

Depreciation expense

6.
Question 6
Which of the following items would not be part of the financing section of the statement of cash flows?

1 point

The repurchase of the company’s own stock

The payment of interest

The payment of dividends

The repayment of debt

7.
Question 7
Cash flows statements explain in detail …

1 point

Net income on the income statement

The change in retained earnings between two years

The change in cash balances on the balance sheet between two years

None of the above

8.
Question 8
XYZ Co. provides the following information for the year 2016. Issue common stock for $28,000, sell factory machines for $3,000, pay cash dividends of $3,000, purchase common shares of Zillow Co. for $10,000, pay accounts payable of $4,000. What was the net cash inflow (outflow) from investing activities?

1 point

$7,000

($7,000)

($21,000)

$21,000

9.
Question 9
Consider the following items:

(a) Decrease in accounts receivable (f) Gain on the sale of equipment
(b) Issuance of common stock (g) Depreciation expense
(c) Increase in interest receivable (h) Payment of dividends
(d) Purchase of land (i) Decrease in utilities payable
(e) Decrease in accounts payable (j) Increase in inventory
How many of these items would be subtracted from net income when using the indirect method to prepare the operating activities section of the statement of cash flows?

1 point

1

2

4

5

10.
Question 10
Blue Pasture’s had cash flows for the year as follows ($ in millions):

CASH RECEIVED FROM:
Customers $1,800
Interest on investments 200
Sale of land 100
Sale of common stock 600
Issuance of debt securities 2,000
CASH PAID FOR:
Interest on debt $300
Income tax 80
Debt principal reduction 1,500
Purchase of equipment 4,000
Purchase of inventory 1,000
Dividends on common stock 200
Operating expenses 500
Using the direct method, Blue Pasture’s would report net cash inflows (outflows) from operating activities in the amount of:

1 point

($80)

$120

$200

$420

11.
Question 11
In 2018, Hang On Company incurred sales on account of $100,000. The company also has the following information:

December 31, 2018 December 31, 2017
Accounts Receivable $20,000 $50,000
Accounts Payable $40,000 $65,000
What is the amount of cash received from customers for Hang On Company in 2018?

1 point

$45,000

$70,000

$100,000

$130,000

 

Peer-graded Assignment: Module 4 Peer Assessment

 

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