2009 F-4 Class Questions Preview

2009 F-4 Class Questions Preview - Financial Accounting &...

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Financial Accounting & Reporting 4 Class Questions 1 © 2009 DeVry Becker Educational Development Corp. All rights reserved. 1. CPA-00067 On Merf's April 30, 1993, balance sheet a note receivable was reported as a noncurrent asset and its accrued interest for eight months was reported as a current asset. Which of the following terms would fit Merf's note receivable? a. Both principal and interest amounts are payable on August 31, 1993, and August 31, 1994. b. Principal and interest are due December 31, 1993. c. Both principal and interest amounts are payable on December 31, 1993, and December 31, 1994. d. Principal is due August 31, 1994, and interest is due August 31, 1993, and August 31, 1994. CPA-00067 Explanation Choice "d" is correct, principal is due August 31, 1994 (more than one year after the balance sheet date of April 30, 1993, on which it was reported as a noncurrent asset), and interest is due August 31, 1993, (since the accrued interest for eight months was reported as a current asset due within one year of the balance sheet date), and interest is due August 31, 1994, for the one year from Sept. 1, 1993, to August 31, 1994. Choice "a" is incorrect. Noncurrent principal at April 30, 1993 must be due after April 30, 1994. Choice "b" is incorrect. Noncurrent principal at April 30, 1993 must be due after April 30, 1994, and current interest must be paid before April 30, 1994. Choice "c" is incorrect. Noncurrent principal at April 30, 1993 must be due after April 30, 1994, and current interest must be paid before April 30, 1994. 2. CPA-00061 Cook Co. had the following balances at December 31, 1992: Cash in checking account $350,000 Cash in money-market account 250,000 U.S. Treasury bill, purchased 12/1/92, maturing 2/28/93 800,000 U.S. Treasury bond, purchased 3/1/92, maturing 2/28/93 500,000 Cook's policy is to treat as cash equivalents all highly liquid investments with a maturity of three months or less when purchased. What amount should Cook report as cash and cash equivalents in its December 31, 1992, balance sheet? a. $600,000 b. $1,150,000 c. $1,400,000 d. $1,900,000 CPA-00061 Explanation Cash and cash equivalents Cash in checking account $ 350,000 Cash in money market account 250,000 U.S. treasury bill, purchased 12/1/92, maturing 2/28/93 (90 days) 800,000 U.S. treasury bond, purchased 3/1/92, maturing 2/28/93 (365 days from the date of issue is not a cash equivalent, even though it is due only 2 months from the balance sheet date.) Total cash and cash equivalents $1,400,000 Choice "c" is correct, $1,400,000 cash and cash equivalents.
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Financial Accounting & Reporting 4 Class Questions 2 © 2009 DeVry Becker Educational Development Corp. All rights reserved. 3.
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This note was uploaded on 02/19/2011 for the course BMGT 360 taught by Professor Spina during the Spring '07 term at Maryland.

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2009 F-4 Class Questions Preview - Financial Accounting &...

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