ACC 356 Exam 3 Questions And Answers With Real Study Quiz
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Course
ACC 356
Institution
ACC 356
ACC 356 Exam 3 Questions And Answers With Real Study Quiz
In order to be recognized in the financial statements, the asset, liability or change in equity must have a ? ANS relevant attribute that can be quantified in monetary units with sufficient reliability.
Measurability must be considered ...
ACC 356 Exam 3 Questions And Answers With Real
Study Quiz
In order to be recognized in the financial statements, the asset, liability or change in equity must have a ? ANS
relevant attribute that can be quantified in monetary units with sufficient reliability.
Measurability must be considered together with both ANS relevance and reliability
What are the five different attributes of assets (and liabilities) that are used in present practice? ANS Historical
Cost
Current Cost
Current Market Value
Net Realizable Value
PV of future CFs
What is recorded at historical cost? ANS - ASSETS- PP&E and most inventories are reported at their historical,
which is the amount of cash, or equivalent, paid to acquire an asset, commonly adjusted for amortization or other
allocations.
-LIABILITIES- involving obligations to provide goods or services to customers are generally reported at historical
proceeds, which is the amount of cash, or its equivalent when the obligation was incurred.
What is recorded at current cost? ANS Some inventories are reported at their current (replacement) cost, which
is the amount of cash, or its equivalent, that would have to be paid if the same or an equivalent asset were acquired
currently.
What is recorded at current market value? ANS -ASSETS- Some investments in marketable securities are
reported at their current market value, which is the amount of cash, or its equivalent, that could be obtained by
selling an asset in orderly liquidation. Current market value is also generally used for assets expected to be sold at
prices lower than previous carrying amounts.
, -LIABILITIES- Some liabilities that involve marketable commodities and securities, for example, the obliga- tions
of writers of options or sellers of common shares who do not own the underlying commodities or securities, are
reported at current market value.
What is recorded at net realizable (settlement) value? ANS -ASSETS- Short-term receivables and some
inventories are reported at their net realizable value, which is the nondis- counted amount of cash, or its equivalent,
into which an asset is expected to be converted in due course of business less direct costs.
-LIABILITIES- Liabilities that involve known or estimated amounts of money payable at unknown future dates, for
example, trade payables or warranty obligations, generally are reported at their net settlement value, which is the
nondiscounted amounts of cash, or its equivalent, expected to be paid to liquidate an obligation in the due course of
business, including direct costs, if any, necessary to make that payment.
What is recorded at PV? ANS Long-term receivables are reported at their present value (discounted at the
implicit or histori- cal rate), which is the present or discounted value of future cash inflows into which an asset is ex-
pected to be converted in due course of business less present values of cash outflows necessary to obtain those
inflows.
Long-term payables are similarly reported at their present value (dis- counted at the implicit or historical rate),
which is the present or discounted value of future cash out- flows expected to be required to satisfy the liabil- ity in
due course of business.
The different measurement attributes of items currently reported on financial statements often have? ANS the
same amounts particularly at initial recognition.
What is the most frequent measurement attribute that is used for the acquisition of goods or services? ANS
"historical cost system"
Although the "historical cost system" is convenient and describes well present practice for some major classes of
assets (most inventories, property, plant, and equipment, and intangibles), it describes less well present practice for a
number of other classes of assets and liabilities—for example, trade receivables, notes payable, and warranty
obligations. ANS TRUE
The Board may select to use the appropriate attribute in different cases. ANS TRUE
Initial recognition of assets acquired and liabilities incurred generally involves measurement based on
____________________. ANS current exchange prices at the date of recognition.
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