Question

1The costs of issuing debt under GAAP require

a*That the debit of the issuance costs be compensated with the debt to the lowest bonds

b*The debit of issuance costs is offset against the debt to increase the bonds payable

c*A debit to the debt issuance asset account which is amortized during the duration of the debt.

2-GAAP requires that if the company chooses to report bonds at fair value they

a*They must report the changes as the increase or decrease of the bonds payable

b*They must report the changes in fair value in the unrealized profit or loss account and the fair value adjustment account

c*There is no option for this under GAAP only in IFRS

3-A lease of ___ includes a non-cancelable lease term and an agreement for a reduced purchase option

a*Capital

b*Operative

c*Patrimony

4-Accounting for income taxes is consistent with the ____ accounting concept

a*Unit of measurement

b*Accrued

c*Historical cost

5-All the following elements will create a tax for deferred assets EXCEPT

a*Estimated warranty costs, the tax is deductible when paid

b*Expense for bad debts when using the provision method for accounting and direct amortization for taxes

c*Interests received in municipal bonds

6-Deferred tax assets and liabilities are classified in the Balance Sheet

a*As current and non-current depending on how the liabilities or related assets are classified

b*As current assets or liabilities, since taxes are assumed to be paid within a period of 1 year

c*As current assets but non-current liabilities, since there is no guarantee that taxes will be paid in the future depending on the profits of the company

7-Which of the following will increase the expense for the periodic pension employer in the year in which the event occurs?

a*Amortization of net earnings

b*Service costs

c*Expected return on plan assets

8-Spending for pension service and interest costs under GAAP and IFRS:

a*They are treated in the same way

b*They are amortized during future periods for IFRS but are declared expenses for GAAP

c*They are declared as GAAP expenses but accounted for only until the pension plan for IFRS is paid

9-ABC declared paid dividends in cash in January of this year to its common shareholders. The dividend

a*It will be added to the denominator of the fraction of earnings per share of the current year

b*It will be subtracted from the numerator of the fraction of earnings per share of this year

c*t has no effect on earnings per share for the next year

10-Treasury shares

a*Reduce shareholders' equity (stockholder's equity)

b*They have no effect on the shareholders' equity (stockholder's equity)

c*Increase the value of the common shares while decreasing the value of the preferred shares

11-Which of the following is an example of a change in accounting principles?

a*A change in inventory costing systems

b*A change in the life expectancy of employees under a pension plan

c*Consolidation of a new subsidiary

12-When calculating the EPS of the dividends for shares distributed in June, they are

a*Calculated retrospectively

b*Calculated from June to the end of the year

c*Not used for EPS calculations, since they are not cash dividends

13-The Statement of cash flows contains all of the following EXCEPT

a*Operation activities

b*Cash activities

c*Financing activities

cted return on plan assets

Answer 1

1The costs of issuing debt under GAAP require a debit to the debt issuance asset account which is amortized during the duration of the debt.

2-GAAP requires that if the company chooses to report bonds at fair value they must report the changes as the increase or decrease of the bonds payable

3-A lease of Capital includes a non-cancelable lease term and an agreement for a reduced purchase option

4.Accounting for income taxes is consistent with the accrued accounting concept. Total tax expense (Current tax + deferred Tax) is matched with tax on accounting profit.

5.All the following elements will create a tax for deferred assets EXCEPT Interests received in municipal bonds. Because the other two option results in creating temporary difference between accounting income and taxable income.

6.Deferred tax assets and liabilities are classified in the Balance Sheet as current and non-current depending on how the liabilities or related assets are classified

7-Which of the following will increase the expense for the periodic pension employer in the year in which the event occurs?

Service Cost increase the expense for the periodic pension employer in the year in which the event occurs.

Amortization of net earnings Service costs decreases the expense for the periodic pension employer in the year in which the event occurs.

8-Spending for pension service and interest costs under GAAP and IFRS

They are amortized during future periods for IFRS but are declared expenses for GAAP

9.ABC declared paid dividends in cash in January of this year to its common shareholders. The dividend has no effect on earnings per share for the next year.

10-Treasury shares reduce shareholders' equity (stockholder's equity)

11-Which of the following is an example of a change in accounting principles?

Consolidation of a new subsidiary

12-When calculating the EPS of the dividends for shares distributed in June, they are calculated retrospectively. For purpose of determining number of shares, weighted average is done.

13. The Statement of cash flows contains all of the following EXCEPT Cash Activities. Three components of cash flow includes cash from operation activities, financing activities and investing activities.