Intermediate Accounting II
Chapter Exam Questions
Course Introduction
Intermediate Accounting II is a continuation of the foundational concepts covered in the first intermediate accounting course, delving deeper into the theory, application, and analysis of complex accounting standards. Topics include liabilities, equity, income taxes, pensions, leases, and cash flows, as well as advanced issues related to revenue recognition and financial statement presentation. The course emphasizes the preparation, interpretation, and critical analysis of financial statements in accordance with generally accepted accounting principles (GAAP), fostering the development of professional judgment and ethical reasoning in the accounting profession. Students will engage with real-world cases and problems to apply their knowledge in practical contexts.
Recommended Textbook
Intermediate Accounting Reporting and Analysis 1st Edition by James M. Wahlen
Available Study Resources on Quizplus 23 Chapters
2888 Verified Questions
2888 Flashcards
Source URL: https://quizplus.com/study-set/3936 Page 2
Chapter 1: The Demand for and Supply of Financial
Accounting Information
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/78487
Sample Questions
Q1) The balance sheet is a snapshot of a company's financial position at a particular date and time.
A)True
B)False
Answer: True
Q2) When making decisions, equity investors are interested in assessing
A) the company's ability to generate cash flows.
B) management's ability to increase the capital providers' investments.
C) the company's ability to pay dividends.
D) All of these choices
Answer: D
Q3) Which Principle of the AICPA Code of Professional Conduct is: As a member one should continually strive to improve competence, observe all ethical standards and provide services to the best of their ability?
A) The Public Interest
B) Responsibilities
C) Scope and Nature of Services
D) Due Care
Answer: D
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Financial Reporting: Its Conceptual Framework
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/78476
Sample Questions
Q1) Financial statements elements arranged in basic financial statements provide limited information for external users to ascertain the necessary information in which to base decisions upon. What are some other ways companies can disclose financial information to external users?
Answer: *Notes to Financial Statements
Accounting policies
Contingencies
Inventory Methods
*Supplementary information
Changing prices disclosures
Oil and Gas Reserves Information
*Other Means of Financial Reporting
Management discussion and analysis
Letters to Stockholders
*Other Information
Analyst Reports
Economic Statistics
News Articles about the company
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Review of a Companys Accounting System
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/78472
Sample Questions
Q1) The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue (credited); Depreciation Expense (debited); Unearned Rental Revenue (debited); and Prepaid Insurance (credited). Which account is likely to appear in Yellow Canoe's reversing entries?
A) Prepaid Insurance
B) Interest Revenue
C) Depreciation Expense
D) None of these choices
Answer: B
Q2) Under cash-basis accounting,
A) revenue is recorded when earned
B) revenue is recorded when cash is received
C) expenses are recorded when incurred
D) expenses are recorded when due
Answer: B
Q3) What is the order in which financial statements should be prepared?
Answer: income statement statement of shareholders' equity balance sheet cash flow statement
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Balance Sheet and the Statement of
Shareholders Equity
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/78471
Sample Questions
Q1) How would a common classification of a balance sheet look?
Q2) A friend of the family has just received her first set of financial statements from her accountant. When she finds out that you are an accounting major, she asks you, "Why aren't my employees listed as an asset on my company's balance sheet?"
Required:
Write an explanation describing the characteristics that an economic resource must possess in order to be considered an asset. Include in your discussion the primary reason why "human resources" are not recognized as assets.
Q3) Mark to Market is another name for fair value accounting which has becoming increasingly popular with U.S. GAAP for the valuation of gains and losses associated with assets and liabilities.
A)True
B)False
Q4) Which of the following account titles are not allowed under GAAP?
A) Revaluation reserves
B) Provisions
C) Capital
D) Revaluation reserves and provisions
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: The Income Statement and the Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/78470
Sample Questions
Q1) If a company does not have any discontinued operations or extraordinary items to list on its income statement, the labels should still be there with a zero balance noted.
A)True
B)False
Q2) In distinguishing between revenues and gains, which of the following statements is false?
A) More gains than revenues are beyond the entity's control.
B) Gains are associated more with peripheral, nonoperating activities than are revenues.
C) GAAP does not provide precise distinctions between revenues and gains.
D) Revenues are reported net (rather than gross) more often than gains.
Q3) Which of the following would appear after the heading of operating income?
A) cost of goods sold
B) other operating income items (gains or losses)
C) operating expenses
D) unusual and nonrecurring gains or losses
Q4) Systematic and rational allocation is used to recognize revenue.
A)True
B)False
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Cash and Receivables
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/78469
Sample Questions
Q1) A company records the transfer of accounts receivable as a sale if
A) the transferee obtains the right to exchange
B) the transferred assets have been isolated from the transferor
C) the transferor can repurchase the transferred assets before their maturity
D) all of the above conditions are met
Q2) Compensating balance agreements that do not legally restrict the amount of funds shown on the balance sheet should be reported in the
A) current asset section
B) long-term investment section
C) other asset section
D) notes of the financial statements
Q3) Which of the following is not a basic form of financing agreement to obtain cash from accounts receivable?
A) assigning
B) pledging
C) deferring
D) factoring
Q4) What is the difference between Receivables, Trade Receivables, and Nontrade Receivables?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Inventories: Cost Measurement and Flow
Assumptions
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/78468
Sample Questions
Q1) Refer to Exhibit 7-5. The ending inventory at December 31, 2014, using the dollar-value LIFO method would be
A) $400,000
B) $402,000
C) $406,000
D) $424,000
Q2) Management's choice to use LIFO or FIFO can make a financial analyst's efforts to compare companies difficult. The financial analyst's job is made easier because of the A) requirement that the financial statements and tax return must use the same inventory valuation methodology
B) fact that most companies in an industry use the specific identification method
C) use of the weighed average method
D) disclosure of the LIFO reserve
Q3) In a period of rising prices what are the differences between LIFO and FIFO?
Q4) What three difficulties does dollar-value LIFO overcome compared to applying simple LIFO?
Q5) What are the differences between the perpetual and periodic inventory systems?
Q6) What is the LIFO conformity rule?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Inventories: Special Valuation Issues
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/78467
Sample Questions
Q1) Which of the following variations of the retail inventory method would generally result in the lowest cost-to-retail ratio in a period of rising prices?
A) FIFO
B) LIFO
C) average cost
D) lower of average cost or market
Q2) Which one of the following statements is not true concerning the retail inventory method?
A) In arriving at a cost-to-retail ratio, sales discounts are deducted from goods available for sale to determine ending inventory at retail.
B) Employee discounts are subtracted from goods available for sale to compute ending inventory at retail.
C) Abnormal inventory spoilage would be subtracted at both cost and retail in the determination of goods available for sale.
D) Purchase returns and allowances must be subtracted from both the cost and retail value of the purchases.
Q3) .....
Q4) ......
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/78466
Sample Questions
Q1) Lucas Company provides a bonus compensation plan under which key employees receive bonuses equal to 10% of Lucas's income after deducting income taxes but before deducting the bonus. If income before income tax and the bonus is $400,000 and the income tax rate is 30%, the bonuses should total
A) $27,160
B) $28,866
C) $36,400
D) $40,000
Q2) Current liabilities based on a contractual amount is known based upon reasonable certainty. Provide 5 examples of liabilities based on contractual amounts.
Q3) What are FASB's broad guidelines for reporting assets, liabilities, and equity on the balance sheet?
Q4) Identify 5 liabilities that are based upon contingent obligations.
Q5) Bonus agreements can be structured in various ways, a typical bonus calculation could be income before or after taxes and before or after the bonus.
A)True
B)False
Q6) How are current liabilities valued?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Property, Plant, and Equipment: Acquisition and Subsequent Investments
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/78486
Sample Questions
Q1) Which of the following is NOT an alternative term for property, plant, and equipment used in the normal operation of business?
A) fixed assets
B) operational assets
C) plant assets
D) capital investments
Q2) A plant site donated by a city to Pluto Company, which plans to open a new factory, should be recorded on Pluto's books at
A) the nominal cost of taking title to it
B) its fair market value
C) zero value, but footnoted
D) the value assigned to it by the company's directors
Q3) The costs of drilling an unsuccessful well are expensed under
A) the successful-efforts method
B) the full-cost method
C) both the successful-efforts method and the full-cost method
D) neither the successful-efforts method nor the full-cost method
Q4) What is a nonmonetary exchange? How is it recorded on the books?
Q5) What is the full-cost method of capitalization?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Depreciation, Depletion, Impairment, and Disposal
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/78485
Sample Questions
Q1) Which one of the following statements is an advantage of the group and composite methods of depreciation?
A) Faulty estimates are concealed for long periods.
B) Gains are deferred beyond the period in which they actually occurred.
C) Record keeping is simplified.
D) Losses are not recognized in the period in which they occur.
Q2) Under the MACRS principles the tax life winds up being shorter in most cases compared to an assets economic life.
A)True
B)False
Q3) On January 1, 2014, Paradise Hotels and Spa's purchased a machine. Residual value was estimated to be $13,000 after a 15-year life. Using sum-of-the-years'-digits depreciation, the company recorded $8,500 depreciation expense in 2016. Required:
Compute the cost of the machine.
Q4) Companies can apply composite depreciation to a grouping of dissimilar assets. What procedures must be followed?
Q5) ....
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Intangibles
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/78484
Sample Questions
Q1) A patent is amortized over its expected useful life or 20 years. The expected useful life can be impacted by all of the following except
A) a unsuccessful lawsuit against a competitor
B) the federal government renewing the original patent
C) technical innovations by a competitor
D) product improvements by the patent holder
Q2) Based on GAAP, most software development costs are likely to be
A) expensed as R&D costs
B) allocated to inventory and expensed to cost of goods sold when the software is sold
C) capitalized and amortized over a 40-year period
D) capitalized and amortized over a relatively short period, such as five years
Q3) The following items are included in research and development costs EXCEPT
A) legal work in connection with patent application
B) design of prototype models
C) evaluation of a product
D) research aimed at discovery of new knowledge
Q4) List 3 activities that can be included in R&D.
Q5) What characteristics do Intangible and tangible noncurrent assets have in common?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Investments and Long-Term Receivables
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/78483
Sample Questions
Q1) A company is required to disclose for Held-to-Maturity debt securities the aggregate fair value and the change in the net unrealized holding gains or loss to be included in the income statement.
A)True
B)False
Q2) For available-for-sale securities, a decline in value due to a temporary decline in market value below cost is
A) disclosed in the financial statements by means of a footnote
B) disclosed as a reduction from stockholders' equity on the balance sheet
C) disclosed as a loss on the income statement
D) not disclosed because the decline in value is only temporary
Q3) A realized gain or loss on the sale of an available-for-sale security is determined by comparing
A) the carrying value of the security with the proceeds from the sale
B) the original cost of the security with the proceeds from the sale
C) the market value at the latest balance sheet date with the proceeds from the sale
D) the original cost with the security's carrying value
Q4) List 3 investments in debt securities and 3 investments in equity securities.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Financing Liabilities: Bonds and Notes Payable
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/78482
Sample Questions
Q1) Refer to Exhibit 14-5. Assuming Hawk uses the effective interest method and reversing entries, the entry to record the payment of interest on April 1, 2015, would include a
A) debit to Interest Expense for $4,498
B) credit to Premium on Bonds Payable for $502
C) credit to Bonds Payable for $10,000
D) credit to Cash for $8,000
Q2) Bonds payable with a conversion privilege are accounted for as A) common stock only
B) debt and common stock
C) debt only
D) debt and additional paid-in capital
Q3) Refer to Exhibit 14-10. The implied interest rate is A) 6%
B) 7%
C) 8%
D) greater than 8%
Q4) How is the issue price for a bond determined? What three alternatives are available when selling a bond?
Q5) What dilemma do serial bonds cause for accountants?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Contributed Capital
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/78481
Sample Questions
Q1) Refer to Exhibit 15-8. What is the compensation expense related to the SARs for the year ending December 31, 2014?
A) $13,333
B) $16,667
C) $26,667
D) $40,000
Q2) Define the following terms:
Treasury Stock
Authorized capital stock
Subscribed capital stock
Outstanding capital stock
Issued capital stock
Q3) Dividends in arrears pertain to
A) non cumulative preferred stock
B) non-participating preferred stock
C) cumulative preferred stock
D) convertible preferred stock
Q4) What rights is a shareholder of capital stock entitled?
Q5) What is a stock subscription?
Q6) List four transactions that comprise a corporation's contributed capital.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Retained Earnings and Earnings Per Share
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/78480
Sample Questions
Q1) As of December 31, 2015, the Russell Corporation has 10,000 shares of 10% preferred stock issued and outstanding with a total par value of $250,000. In addition, as of this date, Russell has 75,000 shares of common stock issued and outstanding with a total par value of $750,000. Dividends for 2013 and 2014 have not been paid. As of December 31, 2015, the Russell Corporation declared total cash dividends of $290,000 to be paid to both the preferred stockholders and the common stockholders.
Required:
How much cash will be distributed to both the preferred stockholders and the common stockholders, respectively, on December 31, 2015, under each of the following independent situations?
Q2) When calculating earnings per share, dividends declared on noncumulative preferred stock, but not paid, should be
A) added to net income in the earnings per share numerator
B) accrued in the earnings per share numerator when paid
C) deducted from net income in the earnings per share numerator
D) deferred from the earnings per share numerator until paid
Q3) What three items rarely affect retained earnings?
Q4) Other Comprehensive Income or loss might include what four items?
Q5) List 4 factors that management may consider prior to declaring a dividend.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Advanced Issues in Revenue Recognition
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/78479
Sample Questions
Q1) What three factors decide when to recognize revenue?
Q2) The percentage-of-completion method of revenue recognition is more
A) reliable
B) accurate
C) relevant
D) verifiable
Q3) Jones sells computer software to Wyatt that requires significant construction. When recognizing revenue, Jones
A) allocates the associated discounts to all the customization efforts, including upgrades
B) can use percentage of completion to recognize revenue
C) can recognize revenue upon delivery of the software
D) must use the fair value of the software delivered in determining realizable revenue
Q4) Refer to Exhibit 17-2. What amount of gross profit was recognized in 2016?
A) $ 29,375
B) $ 50,000
C) $117,500
D) $150,000
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/78478
Sample Questions
Q1) In applying intraperiod income tax allocation to discontinued operations, extraordinary items, retrospective adjustments, and prior period adjustments, what tax rate should be used?
A) expected future income tax rate
B) average income tax rate
C) marginal (incremental) income tax rate
D) normal income tax rate
Q2) Bourne Company received rent in advance of $9,000 on December 31, 2014, which was taxable when received for income tax purposes. The company's effective tax rate was 30%, and this was the only temporary difference. Which of the following should be reported on the December 31, 2014 balance sheet?
A) $9,000 as a current deferred tax liability
B) $2,700 as a current deferred tax liability
C) $2,700 as a current deferred tax asset
D) $9,000 as a current deferred tax asset
Q3) What two objectives did FASB identify for accounting for income taxes?
Q4) In order to implement FASB's objectives what four principles must a corporation apply to account for its income taxes?
Q5) What is intraperiod tax allocation?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Accounting for Postretirement Benefits
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/78477
Sample Questions
Q1) In 2014, the Rachel Company initiated a defined benefit pension plan. It recorded $240,000 as pension expense and paid $280,000 to a funding agency. As a result, Rachel will report
A) pension assets of $280,000 and pension liabilities of $240,000
B) an accrued liability of $50,000
C) service cost of $280,000 and unfunded prior service cost of $40,000
D) prepaid pension cost of $40,000
E) None of these choices
Q2) Which of the following statements is true concerning prior service cost?
A) Prior service costs are the costs of retroactive benefits.
B) Prior service cost is reported as a liability at the date of the plan amendment.
C) Prior service cost is reported as a negative element of other comprehensive income at the date of the plan amendment.
D) All of the choices
Q3) Attribution period starts on the
A) hiring date
B) vesting date
C) termination date
D) retirement date
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Accounting for Leases
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/78475
Sample Questions
Q1) The lease term includes the fixed non-cancelable term of the lease plus
A) any periods covered by an ordinary renewal options preceding the exercise date of a bargain purchase option
B) any periods covered by a bargain renewal option
C) any periods for which failure to renew the lease imposes a significant penalty on the lessee
D) all of these
Q2) Motor City, Inc. leased some equipment from Des Moines Company on January 1, 2014. Annual December 31 payments of $15,000 were required. The present value of these payments, discounted at 9% for nine years, is $89,929 (rounded). The lease is a direct financing lease.
Required:
Prepare all December 31, 2014, entries for Des Moines.
Q3) A capital lease is a lease where by risks and benefits of ownership is in economic substance a purchase by the lessee and a sale or financing arrangement by the lessor.
A)True
B)False
Q4) What three classifications can lessor's categorize their leases?
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/78474
Sample Questions
Q1) Because the statement of cash flows only reflects the cash flows from operating, investing, and financing activities, certain noncash transactions are omitted from the body of the statement.
Required:
Identify the type of activities that are not included in the body of the statement of cash flows, describe the types of transactions involved, and indicate where these items are disclosed on the statement.
Q2) On the statement of cash flows prepared using the direct method, cash from customers would be sales plus
A) an increase in accounts receivable
B) an increase in accounts payable
C) a decrease in accounts receivable
D) a decrease in accounts payable
Q3) In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income?
A) increase in accrued pension cost
B) loss on the sale of an available-for-sale investment
C) proceeds from the sale of plant assets
D) amortization expense on a patent
To view all questions and flashcards with answers, click on the resource link above.
Page 23
Chapter 22: Accounting for Changes and Errors
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/78473
Sample Questions
Q1) Refer to Exhibit 22-4. What is the effect of the above errors on 2014 net income?
A) Net income is understated by $65,000.
B) Net income is overstated by $92,000.
C) Net income is overstated by $58,000.
D) Net income is overstated by $65,000.
Q2) What must be disclosed when making a retrospective adjustment?
Q3) 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 statements
C) note disclosure and supplementary schedules
D) adjustment to retained earnings and note disclosure
Q4) Change in an accounting principle is accounted for
A) prospectively
B) by a prior period adjustment
C) by a retrospective application of a new accounting principle
D) by constructive application of a new accounting principle
Q5) When is a retrospective adjustment considered impractical to make?
Q6) What is a change in reporting entity and how is an adjustment handled?
Page 24
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Time Value of Money Module
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/78465
Sample Questions
Q1) Present value measurements involve estimation of future cash flows, the timing, amount, and the risk of those cash flows which create a relevant accounting measurement.
A)True
B)False
Q2) FASB's Statement of Financial Accounting Concepts No. 7 does not address recognition issues and therefore does not address when fair value should be based on present value, but it does provide general principles governing the use of present value and the objectives of present value accounting measurements.
A)True
B)False
Q3) Compounding is the conversion of future cash flow amounts to their present value.
A)True B)False
Q4) The formula to compute the future value of a single sum is: FV = PV x (1i)<sup>n</sup>.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 25