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Accounting and International Convergence Process

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Certain U.S. accounting standards have been, and will be, amended to aid in the international convergence process. The process of changing these standards usually involves
a short deliberation followed by a vote of the U.S. Congress
acceptance of the change by the Internal Revenue Service
rejecting all existing standards and developing an entirely new concept
selecting the best standard between existing U.S. and international standards

When reconciling its accounts, Ajax Company found the accounts receivable general ledger account had a balance of $30,000, and the accounts receivable subsidiary ledger account balances totaled $28,000. The most likely reason for this difference was
a sale to a customer was recorded twice in the subsidiary ledger
cash received from a customer was posted twice to the subsidiary ledger
a sale to a customer was not posted to the general ledger
cash received from a customer was recorded twice in the general ledger

Which statement is true?
All purchases should be recorded in a purchases journal.
Closing and reversing entries will be found in the sales journal.
Returned merchandise from a customer should be entered in the sales journal.
All cash sales should be recorded in the cash receipts journal.

Which statement is not true?
The general journal is still a necessity, even when special journals are used.
If a cash payments journal is in use, postings are usually made only at the end of the month.
All transactions involving the receipt of cash are recorded in the cash receipts journal.
A purchase of a desk calculator for the office should not be recorded in the purchases journal.

The Clipper, Inc., uses the accrual basis of accounting. Clipper's rent expense account had a $14,000 balance at the end of the year. The prepaid rent account had a $5,000 balance at the beginning of the year and a $7,000 balance at the end of the year. How much cash was paid for rent during the year?
$7,000
$9,000
$12,000
$16,000

The Waller Company uses the accrual basis of accounting. Waller Company's wages expense account had a $510,000 balance at the end of the year. The wages payable account had a $23,000 balance at the beginning of the year and a $45,000 balance at the end of the year. How much cash was paid for wages during the year?
$488,000
$510,000
$532,000
$555,000

The Slaughter Company uses the cash basis of accounting. Slaughter Company collected $850,000 from its customers during 2010. Customers owed Slaughter $50,000 of accounts receivable at the beginning of 2010, and $90,000 of accounts receivable at the end of 2010. What is Slaughter's sales revenue for 2010 under the accrual basis of accounting?
$810,000
$850,000
$890,000
$940,000

All of the following are examples of subsequent events that would be disclosed in the footnotes to the financial statements except
fire or flood loss
a litigation settlement
a bond issuance after the balance sheet date
the inability to collect a major customer's accounts receivable

According to APB Opinion No. 22, the initial note to the financial statements should describe
the calculation of comprehensive income
the significant concentrations of credit risk
the significant accounting policies
the objectives of holding derivatives and the strategies for achieving them

A reader might find information about gain contingencies in an annual report by examining
a contingent account receivable
an accrued revenue
a deferred revenue
footnote disclosures

GAAP requires that all derivative financial instruments be reported at their
historical cost
fair value
present value
par value

Activities between affiliated entities such as subsidiaries must be disclosed in the financial statements of a corporation as
segment analysis
significant relationships
related-party transactions
contingent activities

Under international accounting standards, liabilities and owners' equity on the balance sheet usually appear in which order?
capital, noncurrent liabilities, and current liabilities
current liabilities, noncurrent liabilities, and capital
capital, current liabilities, and noncurrent liabilities
noncurrent liabilities, current liabilities, and capital

The integrated disclosures required by the SEC for all regulated companies include all of the following except
dividends on common stock
management's discussion
common stock market prices
book value of common shares

A company is required to report earnings per share on
Net Income Comprehensive Income
Yes Yes
No No
Yes No
No Yes

Characteristics of risk as they relate to the uncertainty or unpredictability of the future results of a company include
the greater the risk, the higher the rate of return expected by investors
risk increases as the range and timeframe within which future results are likely to fall increases
risk increases as the range and timeframe within which future results are likely to fall decreases
the greater the risk, the higher the rate of return expected by creditors

In 2007, the CFA Institute Centre for Financial Market Integrity proposed a new financial model to replace the traditional earnings number. Which of the following characteristics does the proposed statement of changes in net assets available to stockholders exclude?
It recognizes all transactions and events that change net assets.
Line items would be reported by the nature of the item.
Line items would be reported by the function for which the resource is consumed.
It includes the effects of all investing and financing activities.

The following information relates to the Smith Company:

What is the unadjusted January 1, 2010, balance in retained earnings?
$1,170
$1,320
$1,470
$1,630

IFRS reporting requires all of the following items except
earnings per share disclosure
comprehensive income disclosure in a statement of stockholders' equity
disclosure of the results of discontinued operations
operating expenses disclosure

Differences that currently exist between IFRS and U.S. GAAP with regard to the presentation of information on the income statement include all of the following except
different acceptable terminology relating to revenue items
depreciation measures differ when equipment has been revalued
different performance measures such as EBITDA are permitted under IFRS
differences resulting because IFRS does not require the use of accrual accounting under the historical cost framework

The Philip Company had the following information available for the fiscal year ended December 31, 2010:

Philip's inventory turnover for 2010 was
3 times
4 times
5.33 times
6 times

The following information was obtained from the records of Trophy Company for 2010:

How many times was interest earned in 2010?
1.25 times
1.75 times
2.75 times
32.5 times

Monroe Company reported the following information for the year ended December 31, 2010:

Monroe's earnings per share for 2010 was
$6.67
$6.00
$5.11
$0.15

Morgan Company reported the following information for the year ended December 31, 2010:

Morgan's 2010 price/earnings ratio was
0.17 times
5.25 times
6.00 times
4.67 times

On September 1, 2010, the Baker Company received $44,940 from 4-Most Finance Company. To pay off this loan, the Baker Company will have to pay 4-Most $10,000 each year for 10 years. The first payment is due September 1, 2011. Which interest rate compounded annually is Baker paying on this loan?
12%
15%
18%
24%

Paul's Painting Co. acquired a new $800,000 press on April 1, 2010. Paul's will make six equal payments based upon 8% compound interest, starting on March 31, 2011. How much will each payment be?
$504,136
$173,056
$160,234
$109,052

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