302_Exam_3_Sample_Questions_Kieso

302_Exam_3_Sample_Questions_Kieso - These are a sample of...

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Unformatted text preview: These are a sample of previous exam questions. CAUTION: These are a sample and they are not all inclusive of the subjects to be covered in the related exams. 1. Which of the following statements characterizes defined contribution plans? A They are more complex in construction than defined benefit plans. B The employer's obligation is satisfied by making the appropriate amount of periodic contribution. C The investment risk is borne by the employer. D Contributions are made in equal amounts by employer and employees. 2. What is measured by the accumulated benefit obligation? A The pension expense, computed by the plan formula applied to years of service to date, assuming future salary levels. B The pension expense, computed by the plan formula applied to years of service to date, using existing salary levels. C The pension obligation, computed by the plan formula applied to years of service to date, assuming future salary levels. D The pension obligation, computed by the plan formula applied to years of service to date, using existing salary levels. The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): The applicable tax rate is 40%. There are no other temporary or permanent differences. 3. Franklin's taxable income ($ in millions) is: A. $ 40. B. $160. C. $165 D. $110. 4. Franklin's balance sheet at the end of its first year would report: A. A deferred tax liability of $16 among current liabilities. B. A deferred tax asset of $16 among noncurrent assets. C. A deferred tax liability of $16 among noncurrent liabilities. D. A deferred tax asset of $16 among current assets. 5. Franklin's net income ($ in millions) is: A. $134. B. $119.4. C. $124. D. $118. Answers 1. B 2. D 3. C 4. C The deferred tax liability of $16 ($40 40%) would be reported under noncurrent liabilities because the future taxable amount is related to depreciable assets, which are classified as noncurrent. 5. D Cash Flows Financial information for Roberts Company at December 31, 2008, and for the year then ended, are presented below: Balance Sheet December 31, 2008 2007 Cash $ 31,000 $ 15,000 Accounts receivable 28,500 30,000 Allowance for doubtful accounts (2,000) (1,500) Inventory 15,000 10,000 Prepaid insurance 1,400 2,400 Property, plant, and equipment 81,000 80,000 Accumulated depreciation (16,000) (20,000) Land 81,100 40,100 Total assets $ 220,000 $ 156,000 Accounts payable $ 11,000 $ 10,000 Wages payable 1,000 2,000 Interest payable 1,000 - Notes payable, long-term 46,000 20,000 Common stock, no par 136,000 100,000 Retained earnings 25,000 24,000 Total liabilities and stockholders' equity $ 220,000 $ 156,000 Income Statement Sales revenue $ 80,000 Cost of goods sold (35,000) Depreciation expense (5,000) Bad debt expense (1,000) Insurance expense (1,000) Interest expense (2,000)...
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302_Exam_3_Sample_Questions_Kieso - These are a sample of...

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