Intermediate Accounting

Intermediate Accounting

Title: Intermediate Accounting

Author: J. David Spiceland

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Chapter 5 Quiz 1. Under the realization principle, revenue should not be recognized until the earnings process is deemed virtually complete and: A. Revenue is realized. B. Any receivable is collected. C. Collection is reasonably certain. D. Collection is absolutely assured. 2. Merchandise sold FOB shipping point indicates that: A. The seller pays the freight. B. The buyer holds title after the merchandise leaves...

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5 Chapter Quiz 1. Under the realization principle, revenue should not be recognized until the earnings process is deemed virtually complete and: A. Revenue is realized. B. Any receivable is collected. C. Collection is reasonably certain. D. Collection is absolutely assured. 2. Merchandise sold FOB shipping point indicates that: A. The seller pays the freight. B. The buyer holds title after the merchandise leaves the seller's location. C. The common carrier holds title until the merchandise is delivered. D. The sale is not consummated until the merchandise reaches the point to which it is being shipped. 3. Merchandise sold FOB destination indicates that: A. The seller holds title until the merchandise is received at the buyer's location. B. The buyer is responsible for delivery of the merchandise to the destination. C. The full order is back ordered to its destination. D. The buyer pays the freight to the destination. 4. Which of the following was not a criterion for revenue recognition in SAB 101? A. Cash has been collected. B. Collectiblity is reasonably assured. C. Persuasive evidence of an arrangement exists. D. The seller's price to the buyer is fixed or determinable. On December 15, 2009, Rigsby Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal annual installments payable on December 15, 2010, and December 15, 2011. Ignore interest charges. Rigsby has a December 31 year-end. 5. In 2009, Rigsby would recognize realized gross profit of: A. $500,000. B. $ 0. C. $900,000. D. $100,000. 6. In 2010, Rigsby would recognize realized gross profit of: A. $ 0. B. $450,000. C. $300,000. D. $400,000. 7. In its December 31, 2009, balance sheet, Rigsby would report: A. Realized gross profit of $100,000. B. Deferred gross profit of $100,000. C. Installment receivables (net) of $3,200,000. D. Installment receivables (net) of $4,000,000. 8. At December 31, 2010, Rigsby would report in its balance sheet: A. Realized gross profit of $500,000. B. Deferred gross profit of $400,000. C. Realized gross profit of $400,000. D. Cost of installment sales $1,600,000. Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise will be in salable condition. Therefore, Reliable uses the cost recovery method. Merchandise costing $30,000 was sold for $55,000 in 2008. Collections on this sale were $20,000 in 2008, $15,000 in 2009, and $20,000 in 2010. 9. In 2008, Reliable would recognize gross profit of: A. $ 0. B. $25,000. C. $ 8,090. D. $ 8,333. 10. In 2009, Reliable would recognize gross profit of: A. $ 0. B. $ 6,000. C. $ 5,000. D. $10,000. 11. In 2010, Reliable would recognize gross profit of: A. $ 0. B. $ 6,000. C. $ 8,000. D. $20,000. 12. In its 2008 year-end balance sheet, Reliable would report installment receivables (net) of: A. $20,000. B. $35,000. C. $25,909. D. $10,000. 13. In its 2009 year-end balance sheet, Reliable would report installment receivables (net) of: A. $ 0. B. $20,000. C. $ 4,000. D. $15,000. Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers buy the work there). Sweeney recently transferred a painting to a local barbershop. 15. After Sweeney has transferred a painting to a barbershop, the painting: A. Should be counted in Sweeney's inventory until the barbershop sells it. B. Should be counted in the barbershop's inventory, as they now possess it. C. Should be counted in either Sweeney's or the barbershop's inventory, depending which on incurred the cost of preparing the painting for display. D. None of these. 16. Sweeney most likely should recognize revenue when: A. He paints the painting, as the painting is accreting. B. When he transfers a painting to a barbershop. C. When the barbershop sells the painting. D. When the barbershop's right of return expires. 17. When using the completed contract method of accounting for long-term contracts: A. Estimated losses on the overall contract are recognized before the contract is completed. B. Expenses are recorded each period, but revenue is only recognized when the contract is completed. C. Use of this method is not permitted under generally accepted accounting principles. D. Neither gains nor losses are recognized until the contract is completed. 18. When using the percentage-of-completion method of accounting for long-term contracts, the percentage of completion used to recognize gross profit in the first year usually is determined by measuring: A. Costs incurred in the first year, divided by estimated remaining costs to complete the project. B. Costs incurred in first year, divided by estimated total costs of the completed project. C. Costs incurred in first year, divided by estimated gross profit. D. None of these is correct. Arizona Desert Homes (ADH) constructed a new subdivision during 2008 and 2009 under contract with Cactus Development Co. Relevant data are summarized below: ADH uses the percentage-of-completion method to recognize revenue. 19. What would be the journal entry made in 2008 to record revenue? A. B. C. D. The Racquet Store (RS) sells franchise agreements in which they charge an up-front fee of $50,000 for assistance in setting up a store, and then a monthly fee of $1,000 for national advertising and administrative assistance. Steffi Hingis signs a franchise agreement with RS. 20. Assume that Steffi paid the $50,000 in cash when she signed the agreement. RS can recognize revenue associated with the $50,000 A. when Steffi signs the agreement and pays the cash. B. as soon as they have assisted Steffi in setting up the store. C. gradually as they provide advertising and administration services. D. none of these. 21. In the DuPont formula, return on assets equals: A. Gross margin on sales Inventory turnover. B. Profit margin on sales Inventory turnover. C. Gross margin on sales Asset turnover. D. Profit margin on sales Asset turnover. Excerpts from Dowling Company's December 31, 2009 and 2008, financial statements and key ratios are presented below (all numbers are in millions): 22. Dowling's 2009 profit margin is: A. 17.4%. B. 18.5%. C. 18.0%. D. 16.5%. Excerpts from Hulkster Company's December 31, 2009 and 2008, financial statements are presented below: 23. Hulkster's 2009 receivables turnover is: A. 2.85. B. 4.70. C. 5.00. D. 10.63. 24. Hulkster's 2009 inventory turnover is: A. 3.62. B. 3.96. C. 4.07. D. 6.03. 25. Hulkster's 2009 asset turnover is: A. 3.73. B. 2.79. C. 2.24. D. 0.46. 26. Hulkster's 2009 average collection period is: A. 73 days. B. 104 days. C. 109 days. D. 128 days. 27. Hulkster's 2009 average days in inventory is: A. 60.5 days. B. 92.2 days. C. 100.8 days. D. 89.7 days. 28. Hulkster's 2009 profit margin is: A. 17.1%. B. 13.5%. C. 7.6%. D. 4.5%. 29. Hulkster's 2009 return on assets is: A. 7.1%. B. 7.8%. C. 13.5%. D. 44.7%. 30. Hulkster's 2009 return on shareholder's equity is: A. 17.1%. B. 14.0%. C. 12.6%. D. 7.1%. 31. Dowling's 2009 average collection period is: A. 50 days. B. 63 days. C. 57 days. D. 51 days. 32. Dowling's return on equity for 2009 is: A. 22%. B. 24.3%. C. 17.4%. D. 9%. 33. Dowling's average total assets for 2009 is: A. 32. B. 210. C. 115. D. 194. 34. Dowling's average inventory balance for 2009 is: A. 11. B. 12. C. 11.5. D. 12.5.

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Boğaziçi University - FEAS - 311.01
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DQ/Real world Business Analysis Discussion My chosen business is Jasper Net Caf I have chosen this business as it is my program project, for a new business. Jasper Net Caf will provide a unique place for communication and entertainment. Jasper Net Caf is