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Intermediate Accounting Exam 2 Review Questions and Answers 100% Solved
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Intermediate Accounting Exam 2 Review Questions and Answers 100% Solved
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Intermediate Accounting Exam 2Review Questions and Answers 100%
Solved
Ronin Corp. recognizes revenue over time related to a long-term contract. The contract price is
$5,000,000, total expected construction costs are $3,000,000, and actual costs incurred during
the first year are $300,000. Actual costs for year 2 are $900,000 and estimated cost to complete
is $1,800,000. The amount of previously recognized revenue is $500,000. Revenue recognized
for year 2 is: - ✔✔$1.5 million
300,000+900,000 = 1,200,000
($1.2 mill/3 mill) x (5 mill) - $500,000 =
A company believes its sales returns will be material. What is the journal entry required?
-Debit accounts receivable; credit allowance for sales returns.
-Debit allowance for sales returns; credit sales returns.
,-Debit allowance for sales returns; credit accounts receivable.
-Debit sales returns; credit allowance for sales returns. - ✔✔Debit sales returns; credit allowance
for sales returns.
Munchen Company prepays $89,000 for inventory to be delivered in two years. The applicable
interest rate is 6%. One year after the prepayment, Muchen should recognize: - ✔✔interest
revenue of $5,340
N=1
I/Y = 6
PV = 89,000
PMT = 0
FV = 94,340
94,340-89,000 = 5,340
The of recording sales revenue recognizes the discount not taken as a part of the sale.
-gross method
-net method
-trade method - ✔✔gross method
Examine the following journal entry. Debit Refund liability $10,000; credit Cash $10,000; debit
Inventory $6,000; and credit Inventory-estimated returns $6,000. What is the transaction that
required this entry?
-Adjustment for sales returns that occurred.
,-Returned inventory purchased to the supplier.
-Adjustment for delinquent account of customer.
-Sale of of goods on account to a customer. - ✔✔Adjustment for sales returns that occurred.
True or false: An annuity due is the same as an ordinary annuity. - ✔✔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 - ✔✔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. - ✔✔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. - ✔✔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 - ✔✔-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.) - ✔✔annuity due, ordinary annuity
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