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KUIS FA 2 Anak Akun

1. The document contains a 25 question multiple choice quiz on accounting concepts related to leases, accounting policies, statements of cash flows, and inventory. 2. Questions cover topics such as the advantages of leasing, lease capitalization criteria, accounting for operating and capital leases from the lessee and lessor perspective, accounting for residual values, and classification of lease liabilities. 3. Other topics include accounting policy hierarchy, accounting for changes in estimates and accounting methods, accounting for errors, preparation of the statement of cash flows using direct and indirect methods, and classification of cash flows.

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98 views4 pages

KUIS FA 2 Anak Akun

1. The document contains a 25 question multiple choice quiz on accounting concepts related to leases, accounting policies, statements of cash flows, and inventory. 2. Questions cover topics such as the advantages of leasing, lease capitalization criteria, accounting for operating and capital leases from the lessee and lessor perspective, accounting for residual values, and classification of lease liabilities. 3. Other topics include accounting policy hierarchy, accounting for changes in estimates and accounting methods, accounting for errors, preparation of the statement of cash flows using direct and indirect methods, and classification of cash flows.

Uploaded by

elaine aurelia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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KUIS FA 2 – Alsut

1. Which of the following is not an advantage of leasing?


a. Off-balance-sheet financing
b. Less costly financing
c. 100% financing at fixed rates
d. All of these answer choices are advantanges

2. 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 lease contains a purchase option.
c. The lease term is equal to or more than 75% of the estimated economic life of the
leased property.
d. The minimum lease payments (excluding executory costs) equal or exceed 90% of
the fair value of the leased property.

3. In the earlier years of a lease, from the lessee's perspective, the use of the
a. capital method will enable the lessee to report higher income, compared to the
operating method.
b. capital method will cause debt to increase, compared to the operating method.
c. operating method will cause income to decrease, compared to the capital method.
d. operating method will cause debt to increase, compared to the capital method.

4. When lessors account for residual values related to leased assets, they
a. always include the residual value because they always assume the residual value
will be realized.
b. include the unguaranteed residual value in sales revenue.
c. recognize more gross profit on a sales-type lease with a guaranteed residual value
than on a sales-type lease with an unguaranteed residual value.
d. All of the above are true with regard to lessors and residual values.

5. 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 value is deducted to determine the
cost of goods sold.
c. the gross profit will be the same whether the residual value is guaranteed or
unguaranteed.
d. none of these answer choices are correct.

6. The Lease Liability account should be disclosed as


a. all current liabilities.
b. all noncurrent liabilities.
c. current portions in current liabilities and the remainder in noncurrent liabilities.
d. deferred credits.

7. Which of the following is not treated as a change in accounting principle?


a. A change from LIFO to FIFO for inventory valuation
b. A change to a different method of depreciation for plant assets
c. A change from full-cost to successful efforts in the extractive industry
d. A change from completed-contract to percentage-of-completion
8. If a particular transaction is not specifically addressed by IFRS, where should an
accountant turn to find hierarchy of guidance to be considered in the selection of an
accounting policy?
a. Accounting standards from other countries
b. IAS 8
c. The company’s board of directors
d. The company’s external auditors

9. When a company decides to switch from the double-declining balance method to the
straight-line method, this change should be handled as a
a. change in accounting principle.
b. change in accounting estimate.
c. prior period adjustment.
d. correction of an error.

10. Yee Construction Co. had followed the practice of expensing all materials assigned to
a construction job without recgonizing any residual inventory. On December 31,
2016, it was determined that residual inventory should be valued at $ 56,000. On this
amount, $ 23,000 arose during the current year. Based on this information, all of the
following statements are true regarding the effect on the financial statements to be
prepared statements to be prepared at the end of 2016 except
a. $ 23,000 should be reported in the 2016 statements as a reduction of materials
cost.
b. $ 33,000 should be reported as an adjustment to the beginning balance of retained
earnings in the 2016 financial statements.
c. This change should be handled as a correction of an error.
d. This change should be handled as a change in accounting estimate.

11. A company using a perpetual inventory system neglected to record a purchase of


merchandise on account at year end. This merchandise was omitted from the year end
physical count. How will these errors affect assets, liabilities, and equity at year end
and net income for the year?
Assets Liabilities Equity Net Income
a. No effect Understate Overstate Overstate
b. No effect Overstate Understate Understate
c. Understate Understate No effect No effect
d. Understate No effect Understate Understate

12. On January 1, 2013, Knapp Corporation acquired machinery at a cost of $ 250,000.


Knapp adopted the double declining balance method of depreciation for this
machinery and had been recording depreciation over an estimated useful life of ten
years, with no residual value. At the beginning of 2016, a decision was made to
change to the straight line method of depreciation for the machinery. The depreciation
expense for 2016 would be
a. $ 12,800
b. $ 18,286
c. $ 25,000
d. $ 35,714
13. On January 1,2013, Nobel Corporation acquired machinery at a cost of $ 600,000.
Nobel adopted the straight line method of depreciation for this machine and had been
recording depreciation over an estimated life of ten years, with no residual value. At
the beginning of 2016, a decision was made to change to the double declining balance
method of depreciation for this machine.
Assuming a 30% tax rate, the cumulative effect of this accounting change on
beginning retained earnings, is
a. $ 67,200
b. $ 0
c. $ 78,960
d. $ 112,800

14. Equipment was purchased at the beginning of 2013 for $ 204,000. At the time of its
purchase, the equipment was estimated to have a useful life of six years and a residual
value of $ 24,000. The equipment was depreciated using the straight line method of
depreciation through 2015. At the beginning of 2016, the estimate of useful life was
revised to a total life of eight years and the expected residual value was changed to $
15,000. The amount to be recorded for depreciation for 2016, reflecting these changes
in estimates is
a. $ 12,375
b. $ 19,800
c. $ 22,800
d. $ 23,625

15. Cash equivalents are


a. Treasury bills, commercial paper, and money market funds purchased with excess
cash.
b. Investments with original maturities of these months or less.
c. Readily convertible to known amounts of cash.
d. All of these answer choices are correct.

16. In a statement of cash flows, the cash flows from investing activities section should
report
a. The issuance of common stock in exchange for a factory building.
b. Stock dividends received.
c. A major repair to machinery charged to accumulated depreciation.
d. The factoring of accounts receivable.

17. When preparing a statement of cash flows, a decrease in prepaid insurance during a
period would require which of the following adjustments in determining cash flows
from operating activities?
Direct Method Indirect Method
a. Increase Decrease
b. Decrease Increase
c. Increase Increase
d. Decrease Decrease
18. Which of the following best represents the group that expressed to the IASB a strong
preference in favor of the direct method of the statement of cash flows?
a. Public companies.
b. Private companies.
c. Commercial lending officers.
d. None of these answer choices are correct.

19. All of the following would appear as significant non-cash transactions in the notes to
the financial statements, except
a. Issuance of shares of attorney services.
b. Issuance of shares to liquidate debt.
c. Issuance of bonds for land.
d. Issuance of preference shares.

20. All the following could potentially be classified as either reporting or investing cash
flows under IFRS, except
a. Interest received.
b. Dividends received.
c. Taxes paid that are specifically identified with investing.
d. Dividens paid.

Essay
21. Explain the following concepts
a. Bargain purchase option
b. Bargain renewal option
22. What is the difference between a lease receivable and a net investment in the lease?
23. Define a change in estimate and provide an illustration.
24. What are some of the key motivations that managers might have to change accounting
policies?
25. Identify and explain the major steps involved in preparing the statement of cash flows.

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