3. Which financial statement reports operating performance for a specific period of time?
a.
Balance sheet
b.
Income statement
c.
Statement of changes in shareholders’ equity
d.
Statement of retained earnings
e.
Statement of Cash Flows
44. Revenue and expense accounts
a.
are permanent accounts.
b.
are temporary accounts.
c.
reflect cumulative changes in each account since the organization of the firm.
d.
record all cash receipts and cash disbursements.
e.
none of the above.
45. Recognition of revenue usually occurs when
a.
the firm pays for the related expenses.
b.
the revenue is earned, such as at the time of the sale or delivery of the goods.
c.
a signed, legally binding contract is received.
d.
an advance payment for the goods is received.
e.
none of the above.
46. Dividends
a.
are a period cost.
b.
are a distribution of assets to owners.
c.
enter into the calculation of net income.
d.
appear on both the balance sheet and income statement.
e.
none of the above.
2. The criteria for asset recognition include(s):
a.
the firm owns or controls the right to use the item.
b.
the right to use the item arises as a result of a past transaction or exchange.
c.
the future benefit has a relevant measurement attribute that can be quantified with sufficient reliability.
d.
Answers a, b and c are correct.
e.
None of these answer choices is correct.
6. _____ is the net cash (selling price less selling costs) that the firm would receive if it sold the asset today, in orderly fashion in an arm’s-length transaction. It is an example of an exit value, because it reflects a price that the firm would receive in a transaction in which an asset leaves the firm.
a.
Current Replacement Cost
b.
Net Realizable Value
c.
Fair Value
d.
Present Value of Future Net Cash Flows
e.
Acquisition cost
7. IFRS defines _____ as a current exchange value, which can mean either a current entry price or a current exit price.
a.
Current Replacement Cost
b.
Net Realizable Value
c.
Fair Value
d.
Present Value of Future Net Cash Flows
e.
Acquisition cost
8. _____ is the amount that results from using an appropriate interest rate to discount one or more future cash flows to the present. It is the sum of the present values of the individual future cash inflows and outflows associated with an asset. It isnot, in and of itself, a measurement attribute. Rather, it is a means of arriving at a measurement attribute.
a.
Current Replacement Cost
b.
Net Realizable Value
c.
Fair Value
d.
Present Value of Future Net Cash Flows
e.
Acquisition cost
10. The distinction between recognition and realization is essential to accrual accounting, hence the importance accorded to recognition criteria. Firms recognize items that qualify for inclusion in the financial statements when they enter the financial statements. In the case of value decreases, the firm
a.
recognizes the decreases as impairment expenses when it realizes the collection of the reduced cash flows.
b.
recognizes the decreases as cost of goods sold when the decreases occur before it realizes the collection of the reduced cash flows.
c.
recognizes the decreases as impairment expenses when the decreases occur before it realizes the collection of the reduced cash flows.
d.
recognizes the decreases as cost of goods sold when it realizes the collection of the reduced cash flows.
e.
None of these answer choices is correct.
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