Intermediate Accounting 1 – WGU || with 100% Errorless
Answers.
Which two factors do investors consider when they analyze an entity's financial reports? correct
answers A) The company's ability to generate net cash inflows
B) Management's ability to protect and enhance invested capital
Which two statements convey the meaning of "generally accepted" within the context of
generally accepted accounting principles (GAAP)? correct answers An authoritative accounting
body has established principles in a specific area.
A standard behavior is universally practiced in a specific area.
NRV Ceiling (what's the formula) correct answers Net Sales - Cost to Complete for Sale = NRV
Ceiling
NPM = Normal Profit Margin (what's the formula) correct answers = NRV * NPM% = Profit
Margin
NRV Floor (what's the formula) correct answers Floor = NRV - Profit Margin
Estimated value of inventory formula correct answers = Beginning Inventory + Y2D Purchases -
COGS
COGS = Sales (100%) - Gross Profit % = %
=Beg Inv +Y2D Purchases - COGS%
Declining bal correct answers =100/yrs of life = ___ * = __%
Beg Balance * % =
What can investors assess by reviewing information in the balance sheet, income statement,
statement of owners' equity, and statement of cash flows? correct answers The amount, timing,
and uncertainty of cash flows
What role does the Securities and Exchange Commission (SEC) have in setting accounting
standards? correct answers ensure the reliability of financial statements issued by public
companies.
How many of the seven Financial Accounting Standards Board (FASB) members must support a
new accounting standard update? correct answers 4
Which two statements about the Statements of Financial Accounting Concepts developed by the
Financial Accounting Standards Board (FASB) are correct?
A) They were developed to create a conceptual framework for financial reporting.
B) They go through a different process from standards statements prior to issuance.
,C) They provide a basis for determining future accounting and reporting standards.
D) They establish generally accepted accounting principles (GAAP). correct answers A & C
They were developed to create a conceptual framework for financial reporting.
They provide a basis for determining future accounting and reporting standards
What is the purpose of generally accepted accounting principles (GAAP)? correct answers To
provide all authoritative literature or support related to a specific topic
What are two elements of the Financial Accounting Standards Board (FASB) Codification
framework?
A) Chapters
B) Sections
C) Classifications
D) Topics correct answers B & D
Sections & Topics
Financial Statement Element - Assets correct answers Probable future economic benefits
obtained as a result of past transactions or events
Financial Statement Element - Distributions to Owners correct answers Decreases in net assets of
an entity resulting from transferring assets, rendering services, or incurring liabilities by the
enterprise to owners
Financial Statement Element - Expenses correct answers Use of assets and/or incurrences of
liabilities during a period in which services are rendered
Financial Statement Element - Gains correct answers Increases in net assets from transactions of
an entity, other than those that result from revenues or investments by owners
Under which basic accounting principle do companies typically use historical cost and fair value
as base values?
A) Measurement
B) Revenue recognition
C) Expense recognition
D) Full disclosure correct answers A = Measurement
What are two similarities between generally accepted accounting principles (U.S. GAAP) and
International Financial Reporting Standards (IFRS)?
A) They use a monetary unit assumption.
B) They permit companies to apply fair value to property, plant, and equipment.
C) They base measurement principles on historical cost and fair value.
D) They permit reporting in Chinese yuan. correct answers A & C
, They use a monetary unit assumption & They base measurement principles on historical cost and
fair value.
Which two elements are reported on an income statement?
A) Salaries expense
B) Dividends paid
C) Cash
D) Gain on sale of equipment correct answers A & D = Salaries Expense and Gain on sale of
equipment
Which factor results in the dilution of earnings per share?
A) Increase in the price of common stock
B) Increase in net income
C) Issuance of additional shares of common stock
D) Payment of dividends to common shareholders correct answers C = Issuance of additional
shares of common stock
A company uses a multiple-step income statement format. The company has the following data
for the
year:
Cost of goods sold (COGS): $230,000
Legal services: $5,500
Insurance expense: $25,000
Sales office salaries: $45,500
Delivery expenses: $20,000
Sales revenue: $500,000
Depreciation of sales equipment: $10,500
Officers' salaries: $90,000
What is the total of the selling expenses? correct answers Answer: $76,000
Sales Office salaries + Delivery expenses + Deprec. on sales equipt. = Answer
Which description is accurate under International Financial Reporting Standards (IFRS) for the
nature-ofexpense method of expense classification?
A) Expenses must be presented functionally.
B) Expenses are grouped into subtotals.
C) Companies can report unallocated expenses.
D) Major business cost drivers are identified. correct answers C - Companies can report
unallocated expenses
What does liquidity represent on a balance sheet?
A) The amount of stockholders' equity in excess of liabilities
Answers.
Which two factors do investors consider when they analyze an entity's financial reports? correct
answers A) The company's ability to generate net cash inflows
B) Management's ability to protect and enhance invested capital
Which two statements convey the meaning of "generally accepted" within the context of
generally accepted accounting principles (GAAP)? correct answers An authoritative accounting
body has established principles in a specific area.
A standard behavior is universally practiced in a specific area.
NRV Ceiling (what's the formula) correct answers Net Sales - Cost to Complete for Sale = NRV
Ceiling
NPM = Normal Profit Margin (what's the formula) correct answers = NRV * NPM% = Profit
Margin
NRV Floor (what's the formula) correct answers Floor = NRV - Profit Margin
Estimated value of inventory formula correct answers = Beginning Inventory + Y2D Purchases -
COGS
COGS = Sales (100%) - Gross Profit % = %
=Beg Inv +Y2D Purchases - COGS%
Declining bal correct answers =100/yrs of life = ___ * = __%
Beg Balance * % =
What can investors assess by reviewing information in the balance sheet, income statement,
statement of owners' equity, and statement of cash flows? correct answers The amount, timing,
and uncertainty of cash flows
What role does the Securities and Exchange Commission (SEC) have in setting accounting
standards? correct answers ensure the reliability of financial statements issued by public
companies.
How many of the seven Financial Accounting Standards Board (FASB) members must support a
new accounting standard update? correct answers 4
Which two statements about the Statements of Financial Accounting Concepts developed by the
Financial Accounting Standards Board (FASB) are correct?
A) They were developed to create a conceptual framework for financial reporting.
B) They go through a different process from standards statements prior to issuance.
,C) They provide a basis for determining future accounting and reporting standards.
D) They establish generally accepted accounting principles (GAAP). correct answers A & C
They were developed to create a conceptual framework for financial reporting.
They provide a basis for determining future accounting and reporting standards
What is the purpose of generally accepted accounting principles (GAAP)? correct answers To
provide all authoritative literature or support related to a specific topic
What are two elements of the Financial Accounting Standards Board (FASB) Codification
framework?
A) Chapters
B) Sections
C) Classifications
D) Topics correct answers B & D
Sections & Topics
Financial Statement Element - Assets correct answers Probable future economic benefits
obtained as a result of past transactions or events
Financial Statement Element - Distributions to Owners correct answers Decreases in net assets of
an entity resulting from transferring assets, rendering services, or incurring liabilities by the
enterprise to owners
Financial Statement Element - Expenses correct answers Use of assets and/or incurrences of
liabilities during a period in which services are rendered
Financial Statement Element - Gains correct answers Increases in net assets from transactions of
an entity, other than those that result from revenues or investments by owners
Under which basic accounting principle do companies typically use historical cost and fair value
as base values?
A) Measurement
B) Revenue recognition
C) Expense recognition
D) Full disclosure correct answers A = Measurement
What are two similarities between generally accepted accounting principles (U.S. GAAP) and
International Financial Reporting Standards (IFRS)?
A) They use a monetary unit assumption.
B) They permit companies to apply fair value to property, plant, and equipment.
C) They base measurement principles on historical cost and fair value.
D) They permit reporting in Chinese yuan. correct answers A & C
, They use a monetary unit assumption & They base measurement principles on historical cost and
fair value.
Which two elements are reported on an income statement?
A) Salaries expense
B) Dividends paid
C) Cash
D) Gain on sale of equipment correct answers A & D = Salaries Expense and Gain on sale of
equipment
Which factor results in the dilution of earnings per share?
A) Increase in the price of common stock
B) Increase in net income
C) Issuance of additional shares of common stock
D) Payment of dividends to common shareholders correct answers C = Issuance of additional
shares of common stock
A company uses a multiple-step income statement format. The company has the following data
for the
year:
Cost of goods sold (COGS): $230,000
Legal services: $5,500
Insurance expense: $25,000
Sales office salaries: $45,500
Delivery expenses: $20,000
Sales revenue: $500,000
Depreciation of sales equipment: $10,500
Officers' salaries: $90,000
What is the total of the selling expenses? correct answers Answer: $76,000
Sales Office salaries + Delivery expenses + Deprec. on sales equipt. = Answer
Which description is accurate under International Financial Reporting Standards (IFRS) for the
nature-ofexpense method of expense classification?
A) Expenses must be presented functionally.
B) Expenses are grouped into subtotals.
C) Companies can report unallocated expenses.
D) Major business cost drivers are identified. correct answers C - Companies can report
unallocated expenses
What does liquidity represent on a balance sheet?
A) The amount of stockholders' equity in excess of liabilities
