Acct 312 week 4 midterm exam answers

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ACCT 312 Week 4 Midterm Exam Answers

1. Question : Student Answer:

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Question 2. Question : Student Answer:

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Question 3. Question : Student Answer:

(TCO 1) Which event will result in a deferred tax liability?

Accelerated depreciation in the tax return Interest income on municipal bonds Subscriptions collected in advance Estimated warranty expense See Chapter 16.

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(TCO 1) Which of the following differences between financial accounting and tax accounting ordinarily creates a deferred tax asset?

Tax depreciation in excess of book depreciation The installment sales method for tax purposes Revenue collected in advance None of the above See Chapter 16.

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(TCO 2) Interest cost is calculated by multiplying the ABO by the expected return on the plan assets.

ABO by the discount rate.

PBO by the expected return on plan assets.

PBO by the discount rate.

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Question 4. Question : Student Answer:

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Question 5. Question : Student Answer:

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Question 6. Question : Student Answer:

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See Chapter 17.

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(TCO 3) Accounting for postretirement healthcare benefits is similar, in most respects, to accounting for payroll taxes. health insurance costs for current employees. pension benefits. sick pay and vacation pay.

See Chapter 17.

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(TCO 4) Retained earnings represents a company’s undistributed net assets. undistributed net income. extra paid-in capital. undistributed cash.

See Chapter 18.

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(TCO 4) Any dividend that is considered to be a liquidating dividend will reduce retained earnings. reduce paid-in capital. increase paid-in capital. reduce the common stock account.

See Chapter 17.

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Comments:

Question 7. Question : Student Answer:

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Question 8. Question :

Student Answer:

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Question 9. Question : Student Answer:

(TCO 5) Executive stock options should be reported as compensation expense using the intrinsic value method. using the fair value method. using either the fair value method or the intrinsic value method. only on rare occasions.

See Chapter 19.

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(TCO 5) Our company granted options for 2 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $35 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9 per option. If the options have a vesting period of 5 years, which would be the balance in Paid-in Capital – Stock Options 3 years after the grant date?

A credit of $10.8 million A credit of $18 million A debit of $70 million A debit of $3.6 million 2,000,000 × $9 × (3 ÷ 5) = $10,800,000 20 of 20

(TCO 6) Our company declared and paid cash dividends to its common shareholders in February of the current year. The dividend will be added to the numerator of the earnings per share fraction for the current year. will be added to the denominator of the earnings per share fraction for the current year. will be subtracted from the numerator of the earnings per share

fraction for the current year. has no effect on the earnings per share for the coming year.

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Question 10. Question : Student Answer:

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See Chapter 19.

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(TCO 6) Basic earnings per share is computed using the actual number of common shares outstanding at the end of the year. a weighted average of preferred and common shares. the number of common shares outstanding plus common stock equivalents. weighted-average common shares outstanding for the year.

See Chapter 19.

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