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26 terms

if3

STUDY
PLAY
The cumulative effect of an accounting change is not computed for a change
a. from the LIFO method to the FIFO method
b. to the percentage of completion method from the completed contract method
c. to the LIFO method _____ the FIFO method
d. all of the options require computation of the cumulative effect of the change
from
Changes in estimates must be accounted for
a. consistently
b. currently
c. __________
d. retrospectively
prospectively
A change in reporting entity is accounted for
a. propsectively
b. currently
c. __________
d. consistently
retrospectively
All of the following are examples of accounting errors except a
a. change from an unacceptable accounting principle to an acceptable accounting principle
b. change in estimate that occurs due to a clearly unrealistic original estimate
c. misuse of facts
d. ____ of the options are accounting errors
all
Corrections of error must be accounted for
a. currently
b. by showing pro forma data
c. as _____ period adjustments
d. prospectively
prior
Which of the following is not a reason why companies prefer certain accounting methods?
a. bonus payments
b. ______ structure
c. political costs
d. smooth earnings
asset
All of the following involve counterbalancing errors except the
a. failure to record prepaid expenses
b. failure to record __________
c. understatement of ending inventory
d. overstatement of purchases
depreciation
Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of
a. materiality
b. __________
c. conversatism
d. objectivity
consistency
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 _________ method of depreciation for plant assets
c. an change from full cost to successful efforts in the extractive industry
d. a change from completed contract to percentage of completion
different
Which of the following is not a retrospective type accounting change?
a. completed contract method to the percentage of completion method for long term contracts
b. LIFO method to the FIFO method for inventory valuation
c. _____of the years digits method to the straight line method
d. full cost method to another method in the extractive industry
sum
Which of he following is accounted for as a change in accounting principle?
a. a change in the estimated useful life of plant assets
b. a change from the cash basis of accounting to the accrual basis of accounting
c. a change from expensing immaterial expenditures to deferring and amortizing them as they become material
d. a change in __________ valuation from average cost to FIFO
inventory
Which of the following disclosures is required for a change from sum of years digits to straight line?
a. the cumulative effect on prior years, net of tax, in the current retained earnings statement
b. restatement of prior years' income statements
c. re-__________ of current and future years' depreciation
d. all of these are required
computation
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 Construction in Process
b. debit to Loss on Long term Contracts in the amount of the difference on prior years, net of tax
c. debit to ________ _________ in the amount of the difference on prior years, net of tax
d. credit to Deferred Tax Liability
retained earnings
Which of the following disclosures is required for a change from LIFO to FIFO?
a. the cumulative effect on prior years, net of tax, in the current retained earnings statement
b. the justification for the change
c. restated prior year income statements
d. ______ of these are required
all
Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?
a. a change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported
b. a change in accounting ________ for which the financial statements for prior periods included for comparative purposes should be presented as __________ reported
c. a change in accounting estimate for which the financial statements for prior period included for compatative purposes should be restated
d. a change in accounting principle for which the financial statements for prior periods included for comaprative purposes should be restated
principle previously
Which type of accounting change should always be accounted for in current and future periods?
a. change in accounting principle
b. change in reporting entity
c. change in accounting ________
d. correction of an error
estimate
Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate?
a. current period and _________
b. current period and retrospectively
c. retrospectively only
d. current period only
prospectively
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 ________
c. prior period adjustment
d. correction of an error
estimate
The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a remaining life of 10 years. Based on this information, the accountant should
a. continue to depreciate the building over the original 50 year life
b. _________ the remaining book value over the remaining life of the asset
c. adjust accumulated depreciation to its appropriate balance, through net income, based on a 40 year life, and then depreciate the adjusted book value as thought the estimated life had always been 40 years
d. adjust accumulated depreciation to its appropriate balance through retained earnings, based on a 40 year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years
depreciate
Which of the following statements is correct?
a. changes in accounting principle are always handled in current or prospective period
b. prior statements should be restated for changes in accounting estimates
c. a change from _________ certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate
d. correction of an error related to prior period should be considered as an adjustment to current year net income
expensing
Which of the following describes a change in reporting entity?
a. a company acquires a subsidiary that is to be accounted for as a purchase
b. a manufacturing company expands its market from regional to nationwide
c. a company divests itself of a European branch sales office
d. _________ the companies included in combined financial statements
changing
An example of a correction of an error in previously issued financial statements is a change
a. from the FIFO method to inventory valuation to the LIFO method
b. in the service life of plant assets, based on changes in the economic environment
c. from the _______ basis of accounting to the accrual basis of accounting
d. in the tax assessment related to a prior period
cash
The primary purpose of the statement of the cash flows is to provide information about the
a. entity's ability to generate future cash flows
b. entity's cash _______ and cash payments during a period
c. reasons for the difference between net income and net cash flow from operating activities
d. entity's ability to pay dividends and meet obligations
receipts
Activities involving the cash effects of transactions that enter into the determination of net income are
a. noncash investing and financing activities
b. ________ activities
c. investing activities
d. financing activities
operating
The information to prepare the statement of cash flows come from all of the following sources except
a. selected transaction data
b. comparative balance sheets
c. current income statement
d. _______ _________ statement
retained earnings
Net cash flow from operating activities is determined by eliminating
a. noncash expenses from net income
b. noncash ________ and noncash __________ from net income
c. earned revenues from net income
d. incurred expenses from net income
revenues expenses