Question

1. The Statement of Cash Flows does not report the effects of

: Select one: a. Cash dividends paid. b. Common shares issued for cash to pay for assets or to pay debt. c. Common shares purchased for cancellation. d. Common shares issued as the result of a stock dividend

2.

Which of the following loss contingencies ordinarily will NOT be accrued as liabilities?

Select one:

a. Guarantees of indebtedness of others.

b. Pending lawsuits whose outcome is uncertain.

c. None of these will be accrued

d. Disputes over additional income taxes for prior years.

3. The January 1, 2006 status of long-term construction project No. 6 is as follows. Assume the completed contract method.
Costs incurred to date $20,000
Contract price $80,000
Estimated remaining cost to complete is $40,000
On December 31, 2006, the estimated remaining cost to complete was still $40,000, and $25,000 of cost had been incurred during 2006. What is the January 1, 2007 balance of Construction-in-Process?

Select one:

a. $45,000

b. $50,000

c. $30,000

d. $40,000

4. Which of the following is the most conservative (slowest to recognize) revenue recognition method?

Select one:

a. Instalment method of revenue recognition

b. Production method

c. Cost recovery method

d. Percentage of completion method

5.

Which of the following would be non-adjusting subsequent event(s)?

Select one:

a. Bankruptcy filing by the company's major customer, which accounted for 60% of the company's receivables at the balance sheet date.

b. An insured fire loss shortly after the company's year-end.

c. The company announces restructuring plans shortly before its year-end.

d. A sale of goods to a Company with good current ratio

Answer 1

1. The Statement of Cash Flows does not report the effects of

Option D : Common shares issued as the result of a stock dividend.

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2. Which of the following loss contingencies ordinarily will NOT be accrued as liabilities?

Option B : Pending lawsuits whose outcome is uncertain.

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3.

Option A : $45,000

on January 1, 2007 balance of Construction-in-Process = Cost incurred till date = $20,000 + $25,000 = $45,000.

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4. Which of the following is the most conservative (slowest to recognize) revenue recognition method?

Option C : Cost recovery method.

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5. Which of the following would be non-adjusting subsequent event(s)?

Option B : An insured fire loss shortly after the company's year-end.