When searching for unrecorded liabilities at year-end, the population identified for sampling would be

When searching for unrecorded liabilities at year-end, the population identified for sampling would be  A. Cash receipts from related parties...

Purchase cutoff procedures should be designed to test whether or not all inventory

Purchase cutoff procedures should be designed to test whether or not all inventory  A. Purchased and received before the year-end was recorded...

Substantive procedures to examine the cutoff assertion for accounts payable include

Substantive procedures to examine the cutoff assertion for accounts payable include  A. Selecting a sample of vouchers and agreeing them to authorized...

Substantive procedures to examine the completeness assertion for accounts payable include

Substantive procedures to examine the completeness assertion for accounts payable include  A. Selecting a sample of vouchers and agreeing them...

Substantive procedures to examine the occurrence assertion for accounts payable include

Substantive procedures to examine the occurrence assertion for accounts payable include  A. Selecting a sample of vouchers and agreeing them...

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose...

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to underlying documents, the auditor is gathering evidence primarily in support of the assertion that

When an auditor selects a sample of items from the vouchers payable register for the last month of the period under audit and traces these items to...

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?

Which of the following is the most effective control activity to detect vouchers prepared for the payment of goods that were not received?  A....

To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is

To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine a sample of paid vouchers and determine...

An entity's internal control requires that for every check request there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all

An entity's internal control requires that for every check request there be an approved voucher, supported by a prenumbered purchase order and a prenumbered...

An auditor wishes to perform tests of controls on an entity's cash disbursements procedures. If the control activities leave no audit trail of documentary evidence, the auditor most likely will test the procedures by

An auditor wishes to perform tests of controls on an entity's cash disbursements procedures. If the control activities leave no audit trail of documentary...

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise. Which of the following procedures provides the greatest assurance that this control is operating effectively?

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise....

Tests of controls for the occurrence assertion for purchases include all of the following except:

Tests of controls for the occurrence assertion for purchases include all of the following except:  A. Evaluating proper segregation of duties. B....

As an in-charge auditor, you are reviewing a summary of control weaknesses in cash disbursement procedures. Which one of the following weaknesses, standing alone, should cause you the least concern?

As an in-charge auditor, you are reviewing a summary of control weaknesses in cash disbursement procedures. Which one of the following weaknesses, standing...

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered...

In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the checks also

In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the checks also  A. Reviews the...

Operating control over the check signature plate normally should be the responsibility of the

Operating control over the check signature plate normally should be the responsibility of the  A. Secretary. B. Chief accountant. C. Vice President...

A voucher

A voucher  A. Is a bill from the vendor. B. Is a document that records the receipt of goods. C. Is a document that requests goods from an authorized...

The authority to accept incoming goods in receiving should be based on a(an)

The authority to accept incoming goods in receiving should be based on a(an)  A. Vendor's invoice. B. Materials requisition. C. Bill of lading. D....

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the  A. Receiving...

An entity's procurement system ends with the assumption of a liability and the eventual payment of the liability. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the procurement system?

An entity's procurement system ends with the assumption of a liability and the eventual payment of the liability. Which of the following best describes...

Which of the following audit procedures is least likely to detect an unrecorded liability?

Which of the following audit procedures is least likely to detect an unrecorded liability?  A. Analysis and recomputation of interest expense. B....

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?

Which of the following procedures relating to the examination of accounts payable could the auditor delegate entirely to the entity's employees?  A....

The auditor is most likely to verify accrued commissions payable in conjunction with the

The auditor is most likely to verify accrued commissions payable in conjunction with the  A. Sales cutoff review. B. Verification of employees. C....

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because  A. Accrued...

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance...

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?  A. Reconcile receiving reports...

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine that

An auditor compares information on canceled checks with information contained in the cash disbursements journal. The objective of this test is to determine...

An auditor performs a test to determine whether all merchandise was received for which the entity was billed. The population for this test consists of all

An auditor performs a test to determine whether all merchandise was received for which the entity was billed. The population for this test consists...

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?

An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely...

An important primary purpose of the auditor's review of the entity's procurement system should be to determine the effectiveness of the activities to protect against

An important primary purpose of the auditor's review of the entity's procurement system should be to determine the effectiveness of the activities to...

The cash disbursements journal is also called the

The cash disbursements journal is also called the  A. Voucher register. B. Purchases journal. C. Check register. D. Accounts payable subsidiary...

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of...

Unrecorded liabilities are most likely to be found during the review of which of the following documents?

Unrecorded liabilities are most likely to be found during the review of which of the following documents?  A. Unpaid bills. B. Shipping records. C....

The accounts payable department receives the purchase order form to accomplish all of the following except to:

The accounts payable department receives the purchase order form to accomplish all of the following except to:  A. Compare invoice price to purchase...

The cutoff assertion for accounts payable includes

The cutoff assertion for accounts payable includes  A. Determining whether all accounts payable are recorded. B. Determining whether all accounts...

The occurrence assertion for accounts payable includes

The occurrence assertion for accounts payable includes  A. Determining whether all accounts payable are recorded. B. Determining whether all...

In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support?

In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion...

A debit memo

A debit memo  A. Reduces the amount of accounts payable due to a vendor. B. Reduces accounts payable when payment is made. C. Is used by vendors...

Which of the following accounts is not affected by cash disbursement transactions?

Which of the following accounts is not affected by cash disbursement transactions?  A. Cash. B. Accounts payable. C. Purchase discounts. D....

A product cost is

A product cost is  A. An expense allocated by a systematic procedure. B. Recognized during the period in which a liability is incurred. C....

When an auditor tests a computerized accounting system, which of the following is true of the test data approach?

When an auditor tests a computerized accounting system, which of the following is true of the test data approach?  A. Test data are processed...

When testing a computerized accounting system, which of the following is false regarding the test data approach?

When testing a computerized accounting system, which of the following is false regarding the test data approach?  A. The test data need to consist...

Which of the following is false?

Which of the following is false?  A. Regardless of the achieved level of control risk in connection with the audit of the financial statements,...

For which of the following internal controls would an auditor be least likely to perform tests of internal controls closer to the "as of" date?

For which of the following internal controls would an auditor be least likely to perform tests of internal controls closer to the "as of" date?  A....

Section 404 of the Sarbanes-Oxley Act includes which of the following?

Section 404 of the Sarbanes-Oxley Act includes which of the following?  A. A requirement that management of a publicly traded company issues...

The advantages of generalized audit software include all of the following except:

The advantages of generalized audit software include all of the following except:  A. It involves auditing while the data are being processed...

Which of the following is true of generalized audit software packages?

Which of the following is true of generalized audit software packages?  A. They can be used only in auditing online computer systems. B. They...

An auditor will use the IT test data method in order to gain certain assurances with respect to the

An auditor will use the IT test data method in order to gain certain assurances with respect to the  A. Input data. B. Machine capacity. C....

According to the COSO definition of safeguarding of assets

According to the COSO definition of safeguarding of assets  A. Controls over financial reporting are effective if they provide reasonable assurance...

AAA & Associates recently finished auditing LinktheEarth Corporation's internal control over financial reporting. AAA found a number of material weaknesses in the entity's internal control. Link the Earth's management remediated all of the weaknesses that AAA found. However, the auditors did not have sufficient time to retest the controls. What report should AAA issue with regards to internal control over financial reporting at year-end?

AAA & Associates recently finished auditing LinktheEarth Corporation's internal control over financial reporting. AAA found a number of material...

A modification of the standard report is required for all of the following conditions except:

A modification of the standard report is required for all of the following conditions except:  A. There is a restriction on the scope of the...

Which of the following statements included in management's assessment of the effectiveness of internal control over financial reporting would be considered acceptable for issuing an unqualified opinion?

Which of the following statements included in management's assessment of the effectiveness of internal control over financial reporting would be considered...

Examples of entity-level controls include

Examples of entity-level controls include  A. Management's risk assessment process. B. Controls to monitor results of operations. C. The period-end...

In the context of an audit of internal controls, the auditor must document all of the following except:

In the context of an audit of internal controls, the auditor must document all of the following except:  A. The extent to which he or she relied...

Management's written representations concerning internal control are

Management's written representations concerning internal control are  A. Addressed to the users of the financial statements. B. Normally drafted...

To obtain an understanding of significant processes and relevant subprocesses, auditors would be least likely to use which of the following techniques?

To obtain an understanding of significant processes and relevant subprocesses, auditors would be least likely to use which of the following techniques?  A....

Which of the following statements is false?

Which of the following statements is false?  A. The PCAOB focuses on the financial reporting objective of internal controls. B. Management is...

Which of the following is true regarding management's documentation of internal controls?

Which of the following is true regarding management's documentation of internal controls?  A. Some documentation should focus on controls designed...

Which of the following is not an element of management's assessment process for the effectiveness of internal control?

Which of the following is not an element of management's assessment process for the effectiveness of internal control?  A. Evaluating the likelihood...

The PCAOB's definition of internal control over financial reporting specifically mentions all of the following control activities except:

The PCAOB's definition of internal control over financial reporting specifically mentions all of the following control activities except:  A....

ACL is an example of

ACL is an example of  A. An EDI software package. B. An IT software package. C. Software that allows auditors to retrieve and evaluate data...

Which of the following is an advantage of generalized computer audit packages?

Which of the following is an advantage of generalized computer audit packages?  A. They are all written in one identical computer language. B....

The five step process in the audit of ICFR includes

The five step process in the audit of ICFR includes  A. Form an opinion on the safeguarding of the entity's assets. B. Identify controls to...

The auditor is least likely to use generalized audit software to

The auditor is least likely to use generalized audit software to  A. Perform analytical procedures on the entity's data. B. Access information...

Which of the following audit procedures would an auditor be least likely to perform using a generalized computer audit program?

Which of the following audit procedures would an auditor be least likely to perform using a generalized computer audit program?  A. Searching...

The primary purpose of a generalized computer audit program is to allow the auditor to

The primary purpose of a generalized computer audit program is to allow the auditor to  A. Use the entity's employees to perform routine audit...

An "integrated audit"

An "integrated audit"  A. Will, in most cases, lead to a substantive audit strategy. B. Denies the auditor access to information about the entity's...

Which of the following is not true?

Which of the following is not true?  A. The auditor should not communicate with management until the audit of internal control over financial...

Prior to issuing a report on internal controls over financial reporting, an auditor is required to

Prior to issuing a report on internal controls over financial reporting, an auditor is required to  A. Perform procedures sufficient to identify...

Which of the following concerning the auditor's report on internal control over financial reporting is correct?

Which of the following concerning the auditor's report on internal control over financial reporting is correct?  A. The auditor's report contains...

Public reporting on the effectiveness of internal control over financial reporting, as required by the Sarbanes-Oxley Act, includes

Public reporting on the effectiveness of internal control over financial reporting, as required by the Sarbanes-Oxley Act, includes  A. A statement...

S&H Associates has just performed an audit of Bob's Bikes. S&H was unable to obtain a written representation from management about internal control. Which of the following is true?

S&H Associates has just performed an audit of Bob's Bikes. S&H was unable to obtain a written representation from management about internal...

Which of the following is least likely to represent a material weakness in internal control for Flynt Corporation?

Which of the following is least likely to represent a material weakness in internal control for Flynt Corporation?  A. Flynt Corporation's computer...

In determining the extent to which the auditor may use the work of others in the audit of ICFR, the auditor should do all of the following except:

In determining the extent to which the auditor may use the work of others in the audit of ICFR, the auditor should do all of the following except:  A....

An auditor performing an audit of internal control over financial reporting would be required to

An auditor performing an audit of internal control over financial reporting would be required to  A. Rely on the work of internal auditors. B....

The main goal of auditing internal control is

The main goal of auditing internal control is  A. To allow the auditor to fix any internal control deficiencies. B. To form an opinion on the...

Which of the following is not a primary objective of internal control as established by COSO?

Which of the following is not a primary objective of internal control as established by COSO?  A. Efficiency and effectiveness of operations. B....

Management documentation should include all of the following except:

Management documentation should include all of the following except:  A. Documentation regarding the auditor's evaluation of internal controls. B....

Which of the following is not a topic that requires special consideration by management during management's internal control assessment process and by the auditor during the audit of internal control?

Which of the following is not a topic that requires special consideration by management during management's internal control assessment process and...

A deficiency that implies that there is a reasonable possibility of misstatement in the financial statements that is significant but not material is

A deficiency that implies that there is a reasonable possibility of misstatement in the financial statements that is significant but not material is  A....

The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk. This is an example of

The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk. This is an example of  A....

According to the PCAOB, who is responsible for the reliability of the internal controls over financial reporting process of an entity?

According to the PCAOB, who is responsible for the reliability of the internal controls over financial reporting process of an entity?  A. The...

Section 404 of the Sarbanes-Oxley Act requires the auditor to provide which of the following:

Section 404 of the Sarbanes-Oxley Act requires the auditor to provide which of the following:  A. Reasonable assurance on the financial statements,...

An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means

An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means  A. The auditor must consider the integrated thoughts and ideas...

In order for an external auditor to complete an audit of a public company, the entity's management must comply with all of the following except:

In order for an external auditor to complete an audit of a public company, the entity's management must comply with all of the following except:  A....

To avoid leased asset capitalization, companies can devise lease agreements that fail to satisfy any of the four leasing criteria. Which of the following is not one of the ways to accomplish this goal?

To avoid leased asset capitalization, companies can devise lease agreements that fail to satisfy any of the four leasing criteria. Which of the following...

The Lease Liability account should be disclosed as

The Lease Liability account should be disclosed as a. all current liabilities. b. all noncurrent liabilities. c. current portions in current liabilities...

Which of the following statements is correct?

Which of the following statements is correct? a. For direct-financing leases, initial direct costs are added to the net investment in the lease. b....

For a sales-type lease,

For a sales-type lease, a. the sales price includes the present value of the unguaranteed residual value. b. the present value of the guaranteed residual...

A lessor with a sales-type lease involving an unguaranteed residual value available to the lessor at the end of the lease term will report sales revenue in the period of inception of the lease at which of the following amounts?

A lessor with a sales-type lease involving an unguaranteed residual value available to the lessor at the end of the lease term will report sales revenue...

The primary difference between a direct-financing lease and a sales-type lease is the

The primary difference between a direct-financing lease and a sales-type lease is the a. manner in which rental receipts are recorded as rental income. b....

The initial direct costs of leasing

The initial direct costs of leasing a. are generally borne by the lessee. b. include incremental costs related to internal activities of leasing,...

When lessors account for residual values related to leased assets, they

When lessors account for residual values related to leased assets, they a. include the residual value because they always assume the residual value...

If the residual value of a leased asset is guaranteed by a third party

If the residual value of a leased asset is guaranteed by a third party a. it is treated by the lessee as no residual value. b. the third party is...

In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as

In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing...

In a lease that is appropriately recorded as a direct-financing lease by the lessor, the unearned income

In a lease that is appropriately recorded as a direct-financing lease by the lessor, the unearned income a. should be amortized over the period of...

Which of the following would not be included in the Lease Receivable account?

Which of the following would not be included in the Lease Receivable account? a. Guaranteed residual value b. Unguaranteed residual value c. A bargain...

Based solely upon the following sets of circumstances indicated below, which set gives rise to a sales-type or direct-financing lease of a lessor?

Based solely upon the following sets of circumstances indicated below, which set gives rise to a sales-type or direct-financing lease of a lessor? Transfers...

A lessee with a capital lease containing a bargain purchase option should depreciate the leased asset over the

A lessee with a capital lease containing a bargain purchase option should depreciate the leased asset over the a. asset's remaining economic life. b....

From the lessee's perspective, in the earlier years of a lease, the use of the

From the lessee's perspective, in the earlier years of a lease, the use of the a. capital method will enable the lessee to report higher income, compared...

Lessees prefer to account for their leases as operating lease because:

Lessees prefer to account for their leases as operating lease because: a. it increases their debt to total equity ratio. b. it decreases the income...

In computing the present value of the minimum lease payments, the lessee should

In computing the present value of the minimum lease payments, the lessee should a. use its incremental borrowing rate in all cases. b. use either...

In computing depreciation of a leased asset, the lessee should subtract

In computing depreciation of a leased asset, the lessee should subtract a. a guaranteed residual value and depreciate over the term of the lease. b....

Minimum lease payments may include a

Minimum lease payments may include a a. penalty for failure to renew. b. bargain purchase option. c. guaranteed residual value. d. any of these. Answer: any...

Which of the following is a correct statement of one of the capitalization criteria?

Which of the following is a correct statement of one of the capitalization criteria? a. The lease transfers ownership of the property to the lessor. b....

The methods of accounting for a lease by the lessee are

The methods of accounting for a lease by the lessee are a. operating and capital lease methods. b. operating, sales, and capital lease methods. c....

The amount to be recorded as the cost of an asset under capital lease is equal to the

The amount to be recorded as the cost of an asset under capital lease is equal to the a. present value of the minimum lease payments. b. present value...

What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee?

What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? a. There is no impact as...

An essential element of a lease is that the

An essential element of a lease is that the a. lessor conveys less than his or her total interest in the property. b. lessee provides a sinking fund...

While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that

While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales...

Which of the following best describes current practice in accounting for leases?

Which of the following best describes current practice in accounting for leases? a. Leases are not capitalized. b. Leases similar to installment purchases...

Which of the following is an advantage of captive leasing companies over the other players in the leasing market?

Which of the following is an advantage of captive leasing companies over the other players in the leasing market? a. They have access to low-cost...

Major reasons why a company may become involved in leasing to other companies is (are)

Major reasons why a company may become involved in leasing to other companies is (are) a. interest revenue. b. high residual values. c. tax incentives. d....

Which of the following statements is true about postretirement health care benefits?

Which of the following statements is true about postretirement health care benefits? a. They are generally funded. b. The benefits are well-defined...

The main purpose of the Pension Benefit Guaranty Corporation is to

The main purpose of the Pension Benefit Guaranty Corporation is to a. require minimum funding of pensions. b. require plan administrators to publish...

Which of the following disclosures of pension plan information would not normally be required?

Which of the following disclosures of pension plan information would not normally be required? a. The major components of pension expense b. The amount...

According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely,...

Which of the following is true of pension termination?

Which of the following is true of pension termination? a. Companies can terminate a pension plan whenever they wish to do so. b. Terminating a pension...

A pension asset is reported when

A pension asset is reported when a. the accumulated benefit obligation exceeds the fair value of pension plan assets. b. the accumulated benefit obligation...

A pension liability is reported when

A pension liability is reported when a. the projected benefit obligation exceeds the fair value of pension plan assets. b. the accumulated benefit...

A pension fund gain or loss that is caused by a plant closing should be

A pension fund gain or loss that is caused by a plant closing should be a. recognized immediately as a gain or loss on the plant closing. b. spread...

The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets.

The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets. Expected Return Corridor...

Gains and losses that relate to the computation of pension expense should be

Gains and losses that relate to the computation of pension expense should be a. recorded currently as an adjustment to pension expense in the period...

The actuarial gains or losses that result from changes in the projected benefit obligation are called

The actuarial gains or losses that result from changes in the projected benefit obligation are called Asset Liability Gains & Losses Gains &...

Whenever a defined-benefit plan is amended and credit is given to employees for years of service provided before the date of amendment

Whenever a defined-benefit plan is amended and credit is given to employees for years of service provided before the date of amendment a. both the...

Prior service cost is amortized on a

Prior service cost is amortized on a a. straight-line basis over the expected future years of service. b. years-of-service method or on a straight-line...

When a company amends a pension plan, for accounting purposes, prior service costs should be

When a company amends a pension plan, for accounting purposes, prior service costs should be a. treated as a prior period adjustment because no future...

When a company adopts a pension plan, prior service costs should be charged to

When a company adopts a pension plan, prior service costs should be charged to a. accumulated other comprehensive income (PSC). b. operations of prior...

A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the

A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the a. projected benefit obligation exceeds the...

Which of the following items should be included in pension expense calculated by an employer who sponsors a defined-benefit pension plan for its employees?

Which of the following items should be included in pension expense calculated by an employer who sponsors a defined-benefit pension plan for its employees? Amortization...

In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as

In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as a....

The actual return on plan assets

The actual return on plan assets a. is equal to the change in the fair value of the plan assets during the year. b. includes interest, dividends,...

One component of pension expense is actual return on plan assets. Plan assets include

One component of pension expense is actual return on plan assets. Plan assets include a. assets that a company holds to earn a reasonable return,...

The interest on the projected benefit obligation component of pension expense

The interest on the projected benefit obligation component of pension expense a. reflects the incremental borrowing rate of the employer. b. reflects...

In computing the service cost component of pension expense, the FASB concluded that

In computing the service cost component of pension expense, the FASB concluded that a. the accumulated benefit obligation provides a more realistic...

The computation of pension expense includes all the following except

The computation of pension expense includes all the following except a. service cost component measured using current salary levels. b. interest on...

The relationship between the amount funded and the amount reported for pension expense is as follows:

The relationship between the amount funded and the amount reported for pension expense is as follows: a. pension expense must equal the amount funded. b....

Vested benefits

Vested benefits a. usually require a certain minimum number of years of service. b. are those that the employee is entitled to receive even if fired. c....

Differing measures of the pension obligation can be based on

Differing measures of the pension obligation can be based on a. all years of service—both vested and nonvested—using current salary levels. b. only...

The projected benefit obligation is the measure of pension obligation that

The projected benefit obligation is the measure of pension obligation that a. is required to be used for reporting the service cost component of pension...

The accumulated benefit obligation measures

The accumulated benefit obligation measures a. the pension obligation on the basis of the plan formula applied to years of service to date and based...

Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation?

Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation? a....

In accounting for a defined-benefit pension plan

In accounting for a defined-benefit pension plan a. an appropriate funding pattern must be established to ensure that enough monies will be available...

Which of the following is not a characteristic of a defined-contribution pension plan?

Which of the following is not a characteristic of a defined-contribution pension plan? a. The employer's contribution each period is based on a formula. b....

In a defined-benefit plan, a formula is used that

In a defined-benefit plan, a formula is used that a. requires that the benefit of gain or the risk of loss from the assets contributed to the pension...

In a defined-contribution plan, a formula is used that

In a defined-contribution plan, a formula is used that a. defines the benefits that the employee will receive at the time of retirement. b. ensures...

In all pension plans, the accounting problems include all the following except

In all pension plans, the accounting problems include all the following except a. measuring the amount of pension obligation. b. disclosing the status...

In a defined-benefit plan, the process of funding refers to

In a defined-benefit plan, the process of funding refers to a. determining the projected benefit obligation. b. determining the accumulated benefit...

In determining the present value of the prospective benefits (often referred to as the projected benefit obligation), which of the following are considered by the actuary?

In determining the present value of the prospective benefits (often referred to as the projected benefit obligation), which of the following are considered...

True or False: Purchase returns and purchase discounts are ignored when computing cost-to-retail ratios for the retail method.

True or False: Purchase returns and purchase discounts are ignored when computing cost-to-retail ratios for the retail method. Answer: FALS...

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups. Answer:...

True or False: Inventory written down due to LCM may be written back up if market values go back up.

True or False: Inventory written down due to LCM may be written back up if market values go back up. Answer: FALS...

True or False: Losses on reduction to LCM may be charged to either cost of goods sold or to a current loss account without distorting financial statement ratios.

True or False: Losses on reduction to LCM may be charged to either cost of goods sold or to a current loss account without distorting financial statement...

True or False: The purpose of ceilings and floors in LCM is to prevent profit distortion.

True or False: The purpose of ceilings and floors in LCM is to prevent profit distortion. Answer: TRU...

True or False: The primary motivation behind LCM is consistency.

True or False: The primary motivation behind LCM is consistency. Answer: FALS...

True or False: Net Realizable Value is selling price less costs of completion and disposal.

True or False: Net Realizable Value is selling price less costs of completion and disposal. Answer: TRU...

True or False: In determining lower-of-cost-or-market, market is the expected selling price under normal operations.

True or False: In determining lower-of-cost-or-market, market is the expected selling price under normal operations. Answer: FALS...

Transfers between categories

Transfers between categories a. result in companies omitting recognition of fair value in the year of the transfer. b. are accounted for at fair value...

"Gains trading" or "cherry picking" involves

"Gains trading" or "cherry picking" involves a. moving securities whose value has decreased since acquisition from available-for-sale to held-to-maturity...

A debt security is transferred from one category to another. Generally acceptable accounting principles require that for this particular reclassification (1) the security be transferred at fair value at the date of transfer, and (2) the unrealized gain or loss at the date of transfer currently carried as a separate component of stockholders' equity be amortized over the remaining life of the security. What type of transfer is being described?

A debt security is transferred from one category to another. Generally acceptable accounting principles require that for this particular reclassification...

When an investment in an available-for-sale security is transferred to trading because the company anticipates selling the stock in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be

When an investment in an available-for-sale security is transferred to trading because the company anticipates selling the stock in the near future,...

When an investment in a held-to-maturity security is transferred to an available-for-sale security, the carrying value assigned to the available-for-sale security should be

When an investment in a held-to-maturity security is transferred to an available-for-sale security, the carrying value assigned to the available-for-sale...

A reclassification adjustment is reported in the

A reclassification adjustment is reported in the a. income statement as an Other revenue or expense. b. stockholders' equity section of the balance...

The fair value option allows a company to

The fair value option allows a company to a. value its own liabilities at fair value. b. record income when the fair value of its bonds increases. c....

Dublin Company holds a 30% stake in Club Company which was purchased in 2015 at a cost of $3,000,000. After applying the equity method, the Investment in Club Company account has a balance of $3,040,000. At December 31, 2015 the fair value of the investment is $3,120,000. Which of the following values is acceptable for Dublin to use in its balance sheet at December 31, 2015?

Dublin Company holds a 30% stake in Club Company which was purchased in 2015 at a cost of $3,000,000. After applying the equity method, the Investment...

Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2014, Cosby had net earnings of $300,000 and paid dividends of $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively?

Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2014, Cosby had net earnings of $300,000 and paid dividends of $30,000. Judd mistakenly...

Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the a. investor sells...