Quiz 2 Chapter 4 Sec 2 Solution

Quiz 2 Chapter 4 Sec 2 Solution - Accounting 381 Winter...

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Accounting 381 Winter 2010 Name ________________________________ Quiz 2: 15 points (1 point each) 1. Which of the following is an example of managing earnings down? a. Changing estimated bad debts from 3 percent to 2.5 percent of sales. b. Revising the estimated life of equipment from 10 years to 8 years. c. Not writing off obsolete inventory. d. Reducing research and development expenditures. 2. Prophet Corporation has an extraordinary loss of $200,000, an unusual gain of $140,000, and a tax rate of 40%. At what amount should Prophet report each item? Extraordinary loss Unusual gain a. $(200,000) $140,000 b. (200,000) 84,000 c. (120,000) 140,000 d. (120,000) 84,000 3. What might a manager do during the last quarter of a fiscal year if she wanted to improve current annual net income? a. Increase research and development activities. b. Relax credit policies for customers. c. Delay shipments to customers until after the end of the fiscal year. d. Delay purchases from suppliers until after the end of the fiscal year. 4. When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as a. a prior period adjustment. b.
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Quiz 2 Chapter 4 Sec 2 Solution - Accounting 381 Winter...

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