TO THE INSTRUCTOR
This Test Bank is intended to accompany Intermediate Accounting, 16th Edition, by James D.
Stice, Earl K. Stice, and K. Fred Skousen. The Test Bank includes examination questions and
problems appropriate for instructors to use in testing
Chapter 19Derivatives, Contingencies, Business Segments, and Interim Reports
1. Uncertainty about the future market value of an asset is referred to as
a. price risk.
b. credit risk.
c. interest rate risk.
d. exchange rate risk.
Chapter 18Earnings Per Share
1. Earnings per share disclosures are required only for
a. companies with complex capital structures.
b. companies that change their capital structures during the reporting period.
c. public companies.
Chapter 12Debt Financing
1. For a liability to exist,
a. a past transaction or event must have occurred.
b. the exact amount must be known.
c. the identity of the party owed must be known.
d. an obligation to pay cash in the future must ex
Chapter 20Accounting Changes and Error Corrections
1. Which of the following accounting treatments is proper for a change in reporting entity?
a. Restatement of all financial statements presented
b. Restatement of current period financial
Chapter 13Equity Financing
1. Which of the following shareholder rights is most commonly enhanced in an issue of preferred stock?
a. The right to vote for the board of directors.
b. The right to maintain one's proportional interest in the
Chapter 14Investments in Debt and Equity Securities
1. Which securities are purchased with the intent of selling them in the near future?
a. Marketable equity securities
b. Available-for-sale securities
c. Trading securities
Chapter 21Statement of Cash Flows Revisited
1. Under the direct method, cash paid to suppliers can be computed as cost of goods sold for the period:
a. plus an increase in inventory and minus an increase in accounts payable.
b. plus a decr
1. Generally accepted accounting principles require that certain lease agreements be accounted for as pur chases. The theoretical basis for this treatment is that a lease of this type
a. effectively conveys all of the bene
Chapter 17Employee Compensation-Payroll, Pensions, & Other Comp. Issues
1. Which of the following accounting principles best describes the rationale for reporting a liability for
earned but unused compensated absences?
a. Historical cost
Chapter 16Income Taxes
1. Which of the following creates a permanent difference between financial income and taxable income?
a. Interest received on municipal bonds
b. Completed contract method of recognizing construction revenue
Chapter 22Analysis of Financial Statements
1. A useful tool in financial statement analysis is the common-size financial statement. What does this
tool enable the financial analyst to do?
a. Evaluate financial statements of companies withi