Intermediate Accounting Exam 2 Review UPDATED Exam Questions and CORRECT Answers ONLY
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Course
Intermediate Accounting
Institution
Intermediate Accounting
Intermediate Accounting Exam 2 Review
UPDATED Exam Questions and
CORRECT Answers ONLY
True or false: An annuity due is the same as an ordinary annuity. - Correct Answer- False
In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity,
the payment occurs at ...
Intermediate Accounting Exam 2 Review
UPDATED Exam Questions and
CORRECT Answers ONLY
True or false: An annuity due is the same as an ordinary annuity. - Correct Answer- False
In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity,
the payment occurs at the end of the period.
In a deferred annuity, a two-step process can be used to calculate the present value of the
annuity. The first step requires the calculation of the present value of the annuity at the
beginning of the annuity period. The second step involves discounting the amount calculated
in step 1
-to its future value at maturity
-to its future value as of today
-to its present value as of today
-to its present value at maturity - Correct Answer- to its present value as of today
The amount received for an extended warranty is initially
-recognized as a deferred revenue liability.
-ignored.
-combined with the contract price for the related product. - Correct Answer- recognized as a
deferred revenue liability.
Options for additional goods or services are considered performance obligations if they
provide a material right to the customer that the customer
-did not expect when entering into the contract.
-expected when entering into the contract.
,-would not receive otherwise.
-would receive otherwise. - Correct Answer- would not receive otherwise.
Which of the following situations may make the contract price less apparent? (Select all that
apply.)
-Fixed price listed in contract
-Determining whether the seller is acting as principal or agent
-Variable consideration provisions
-Sales with right of return - Correct Answer- -Determining whether the seller is acting as
principal or agent
-Variable consideration provisions
-Sales with right of return
In a(n) ______________ ______________, the payment is received or made at the beginning
of the period, whereas in a(n) _____________ _____________, the payment is received at
the end of each period. (Enter one word per blank.) - Correct Answer- annuity due, ordinary
annuity
On January 1st, Guarder Consulting enters into a one-year contract with Smith Co. to
restructure some of Smith's processes with a goal of cost savings. Smith pays Guarder an up-
front fixed fee of $48,000 on January 1st. Guarder will also earn an additional $12,000 bonus
if Smith achieves $100,000 of cost savings. Guarder estimates a 70% chance that Smith will
achieve $100,000 of cost savings. Assuming that Guarder determines the transaction price as
the most likely amount, what amount of revenue will be recorded at the end of the first
month? - Correct Answer- 5,000
Which of the following steps are involved in calculating the present value of a deferred
annuity? (Select all that apply.)
,-Calculate the FV of the annuity as of the end of the annuity period.
-Discount the lump sum from the annuity calculation to its present value as of today.
-Calculate the PV of the annuity as of the beginning of the annuity period.
-Discount the lump sum from the annuity calculation to its future value at maturity. - Correct
Answer- -Discount the lump sum from the annuity calculation to its present value as of today.
-Calculate the PV of the annuity as of the beginning of the annuity period.
Koster Inc. recognized $10,000 of service revenue, which represents one-half of the
estimated bonus it expects to receive at the end of the year. On October 1, Koster re-assesses
the situation and is unable to conclude that it is probable it will meet the conditions for
receiving the bonus. What should Koster do?
-Reverse half of the already recognized revenue on October 1
-Reverse the already recognized revenue on October 1
-Wait until the end of the year when the uncertainty is resolved - Correct Answer- Reverse the
already recognized revenue on October 1
Because extended warranties usually are priced and sold separately from the related product,
they (Select all that apply.)
-can be viewed as separate transactions
-are considered separate performance obligations
-cannot be viewed as separate transactions
-are not accounted for as separate performance obligations - Correct Answer- -can be viewed
as separate transactions
-are considered separate performance obligations
Which of the following are in essence financing (loan) arrangements? (Select all that apply.)
-Customer pays prior to delivery of goods
-Customer may pay within 60 days of delivery
-Customer pays purchase price on delivery - Correct Answer- -Customer pays prior to
delivery of goods
, -Customer may pay within 60 days of delivery
Which of the following likely would be treated as a separate performance obligation related
to the purchase of a pair of prescription eye glasses?
-A eye glass case needed to protect the lenses
-A micro-fiber cleaning cloth that is included with the glasses.
-An unlimited time coupon for 50% off an additional pair of eye glasses - Correct Answer- -
An unlimited time coupon for 50% off an additional pair of eye glasses
When consigned goods are sold, the consignee remits what amount to the consignor?
-The selling price
-The cash amount paid by the buyer
-The selling price less commissions and expenses
-The selling price less cost of goods sold - Correct Answer- -The selling price less
commissions and expenses
Which of the following situations may make the contract price less apparent? (Select all that
apply.)
-Variable consideration provisions
-The time value of money
-Payment by the seller to the customer
-Fixed price listed in contract - Correct Answer- -Variable consideration provisions
-The time value of money
-Payment by the seller to the customer
If the customer controls the work-in-process related to a long-term contract, the seller should
probably recognize revenue
over time.
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