ACC/545 final 45 out of 45 correct 1) A company changes from percentage-of-completion to completed-contract, which is the method used for tax purposes. The entry to record this change should include a | A. debit to Retained Earnings in the amount of the difference on prior years, net of tax. | | B. debit to Loss on Long-Term Contracts in the amount of the difference on prior years, net of tax. | | C. credit to Deferred Tax Liability. | | D. debit to Construction in Process. | | | | 2) Which of the following is accounted for as a change in accounting principle? | A. A change from expensing immaterial expenditures to deferring and amortizing them as they become material | | B. A change from the cash basis of accounting
…show more content…
Net income, current assets, and retained earnings were understated. | | C. Net income and current assets were overstated and current liabilities were understated. | | D. Net income, current assets, and retained earnings were overstated. | | | | 20) Cross Co. accepted delivery of merchandise that it purchased on account. As of December 31, Cross had recorded the transaction, but did not include the merchandise in its inventory. What would be the effect of this on its financial statements for December 31? | A. Net income was correct and current assets were understated. | | B. Net income was overstated and current assets were understated. | | C. Net income was understated and current liabilities were overstated. | | D. Net income, current assets, and retained earnings were understated. | | | | 21) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in | A. an understatement of assets and net income. | | B. an understatement of cost of goods sold and liabilities and an overstatement of assets. | | C. an overstatement of assets and net income. | | D. an understatement of liabilities and an overstatement of owners' equity. …show more content…
reflects the rates at which pension benefits could be effectively settled. | | B. reflects the incremental borrowing rate of the employer. | | C. is the same as the expected return on plan assets. | | D. may be stated implicitly or explicitly when reported. | |
40) Windsor Company has outstanding both common stock and nonparticipating, noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by | A. the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value. | | B. a 2-for-1 split of the common stock. | | C. the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value. | | D. the payment of a previously declared cash dividend on the common stock. | | | | 41) Dividends are not paid on | A. nonparticipating preferred stock. | | B. Dividends are paid on all of these. | | C. noncumulative preferred stock. | | D. treasury common stock. | | |
Net income, current assets, and retained earnings were understated. | | C. Net income and current assets were overstated and current liabilities were understated. | | D. Net income, current assets, and retained earnings were overstated. | | | | 20) Cross Co. accepted delivery of merchandise that it purchased on account. As of December 31, Cross had recorded the transaction, but did not include the merchandise in its inventory. What would be the effect of this on its financial statements for December 31? | A. Net income was correct and current assets were understated. | | B. Net income was overstated and current assets were understated. | | C. Net income was understated and current liabilities were overstated. | | D. Net income, current assets, and retained earnings were understated. | | | | 21) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in | A. an understatement of assets and net income. | | B. an understatement of cost of goods sold and liabilities and an overstatement of assets. | | C. an overstatement of assets and net income. | | D. an understatement of liabilities and an overstatement of owners' equity. …show more content…
reflects the rates at which pension benefits could be effectively settled. | | B. reflects the incremental borrowing rate of the employer. | | C. is the same as the expected return on plan assets. | | D. may be stated implicitly or explicitly when reported. | |
40) Windsor Company has outstanding both common stock and nonparticipating, noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by | A. the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value. | | B. a 2-for-1 split of the common stock. | | C. the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value. | | D. the payment of a previously declared cash dividend on the common stock. | | | | 41) Dividends are not paid on | A. nonparticipating preferred stock. | | B. Dividends are paid on all of these. | | C. noncumulative preferred stock. | | D. treasury common stock. | | |