WGU D366 Financial Statement Analysis
Section 2 Exam Review Questions and
Answers 100% Pass | Graded A+
David Mungai [Date] [Course title]
,WGU D366 Financial Statement Analysis
Section 2 Exam Review Questions and
Answers 100% Pass | Graded A+
What constitutes representational fairness of financial
information? - Answer>> An error-free accounts receivable
balance
What is one challenge in valuing assets and liabilities under the
mixed attribute measurement model? - Answer>> Deciding on
the proper valuation method of certain assets and liabilities
Valuation methods include historical, fair value, and mixes of the
two. Each method will give different results, affecting both the
balance sheet and income statement.
A company purchased a truck with a list price of $200,000 subject
to a 5% discount if paid within 30 days. The company paid within
30 days, so it received the discount. It paid $3,000 to obtain the
title to the truck and a $700 license fee for the first year of
operation. It paid $1,000 to paint the firm's name on the truck and
$2,000 for property and liability insurance for the first year of
operation.
What is the acquisition cost of this truck that the company should
record in its accounting records? - Answer>> $194,000
An aircraft manufacturer sold a plane to an airline on January 1,
2020. The sales agreement required the airline to pay $1 million
immediately and $1 million on December 31 of each year for 20
years, beginning on December 31, 2020. The aircraft
manufacturer and airline agree that 7% is an appropriate interest
rate for this arrangement.
What is the present value of the receivable on the aircraft
manufacturer's books on January 1, 2020, immediately after
, receiving the $1 million down payment? - Answer>>
$10,594,014
A company purchased land, prepared it for use, and constructed
a building on it. The costs were as follows:
Purchase price of the land$250,000Commission paid to real
estate agent$10,000Rezoning permit fee$7,500Cost of razing and
removing existing building$25,000Cash received for scraps of old
building materials$7,000Construction cost of new
building$500,000Cost of landscaping the property$28,000Cost of
property taxes for first year of occupation$15,000
What should the company record as the cost of the land on the
balance sheet? - Answer>> $285,500
Which of these would be recorded on a company's balance sheet
as an asset? - Answer>> An increase in the value of stocks of
another company held as an investment
What represents an exchange of economic value in terms of
revenue recognition? - Answer>> Comprehensive income is
realized in a market transaction
Two friends contribute $40,000 each to form a new business. The
owners use this amount to purchase a piece of equipment for
$80,000 cash. They estimated that the useful life of the equipment
is five years, and the salvage value is $15,000. They rent out the
equipment to a customer for an annual rental of $20,000 per year
for five years. Annual cash operating costs for insurance, taxes,
and the other items total $5,000 annually. At the end of the fifth
year, the owners sell the equipment for $18,000 instead of the
original estimated $15,000 salvage value.
What is the total net income for the five-year period? -
Answer>> $13,000
