Ch15Quiz

Topic: Operating Segments   Requirements: (Show Solutions) a. Identify the reportable segments under the quantitative thresholds of PFRS 8. b. Determine whether the reportable segments meet the limit on external revenues under PFRS 8. c. Determine the minimum amount of revenue that warrants disclosure of a major customer.

A reconciliation between the numbers disclosed in operating segments and consolidated numbers need not beprovided for: Question 16Answer a. Profit or loss b. Revenues c. Net assets d. Cost of goods sold

Which of the following is not necessarily true for an operating segment?a. An operating segment earns revenues and incurs expenses.b. The chief operating decision maker regularly reviews an operating segment to assess perfor­mance and make resource allocation decisions.c. Discrete financial information generated by the internal accounting system is available for an operating segment.d. An operating segment regularly generates a profit from its normal ongoing operations.

Which of the following is not required for segment reporting?     Reconciliation of reported segment items to consolidated financial statement items Identification of key members of the management team for each segment Explanation of basis for determining segments Description of the products and services that generate revenue for each segment

Am. 282.

1. Lower of cost or market is used to value inventories. Choices: a. Full disclosure principle b. Time period assumption c. Materiality constraint d. Cost Principle e. Revenue recognition principle f. Conservatism Constraint g. Matching principle h. Economic entity assumption i. Monetary unit j. Going concern k. Some other answers 2. Hard rock cafe is a wholly-owned subsidiary of Jollibee Foods corporation and hard rock cafe operating result and financial condition are included in the consolidated financial statements of pepsiCo. (Do not use full disclosure) Choices: a. Full disclosure principle b. Time period assumption c. Materiality constraint d. Cost Principle e. Revenue recognition principle f. Conservatism Constraint g. Matching principle h. Economic entity assumption i. Monetary unit j. Going concern k. Some other answers

Match the correct term with its definition.A. Cost principlei. if uncertainty in a potential financial estimate, a company should err on the side ofcaution and report the most conservative amount B. Full disclosureprinciple ii. also known as the historical cost principle, states that everything the company ownsor controls (assets) must be recorded at their value at the date of acquisition C. Separateentity concept iii. (also referred to as the matching principle) matches expenses with associatedrevenues in the period in which the revenues were generated D. Monetarymeasurementconcept iv. business must report any business activities that could affect what is reported onthe financial statements E. Conservatismv. system of using a monetary unit by which to value the transaction, such as the USdollar F. Revenuerecognitionprinciple vi. period of time in which you performed the service or gave the customer theproduct is the period in which revenue is recognized G. Expenserecognitionprinciple…

H1.

An analyst must be familiar with the determination of income. Income reported for a business entity depends on proper recognition of revenues and expenses. In certain cases, costs are recog- nized as expenses at the time of product sale; in other situations, guidelines are applied in capi- talizing costs and recognizing them as expenses in future periods. Required: a. Under what circumstances is it appropriate to capitalize a cost as an asset instead of expensing it?  Explain. b. Certain expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the rationale for recognizing expenses on such a basis.

Which is incorrect concerning the presentation of Income Statement? A. When items of income and expense are material, their nature and amount shall be disclosed separately.   B. An entity shall present extraordinary items separately on the face of the income statement or in the notes to F/S.   C. Natural presentation means that expenses are aggregated according to their nature like depreciation and employee benefits.   D. Cost of sales method classifies expenses according to their function such as cost of sales, cost of distribution and cost of administrative activities.   E. Both the natural presentation and functional presentation has their own merits for different types of entities, so the standard allows management to choose which they think is more relevant and reliable presentation.

Calculate the EBIT which should be used for the EV / EBIT multiple given the information below: Net revenues Cost of sales Gross Profit Selling, general and administrative expenses Amortization expense Restructuring costs Acquisition-related costs Asset impairment charges Gain on sales of assets Operating income Interest expense, net Loss on early extinguishment of debt Other expense, net Income (loss) before taxes (Benefit) provision for income taxes Net income (loss) Select one: 1,394,8 1,444.4 1,474.3 S 1,419.6 5,248.1 1,746.0 3,502.1 2,027.8 During fiscal 2050, the company sold assets relating to the Cutey brand for a total disposal price of $29.2. The Company allocated $4.2 of goodwill to the brand as part of the sale. The Company recorded a gain of $24.8 which has been reflected in Gain on sales of assets in the Consolidated Statement of Operations for the fiscal year ended June 30, 2050. 79.5 86.9 174.0 5.5 (24.8) 1,153.2 81.9 3.1 30.4 1,037.8 (40.4) 1,078.2

Using the Multiple-step Income Statement, match each definition with the section of the Multiple- step Income Statement: Income from a company's principal operating [ Choose ] activity; determined by subtracting cost of goods sold and operating expenses from net [Choose] sales. The excess of net sales over the cost of goods sold. Multiple-step income statement Other expenses and losses Various revenues, expenses, gains, and losses Other revenues and gains that are unrelated to a company's main line Income from operations Operating expenses Nonoperating activities of operations. Expenses incurred in the process of earning [ Choose ] sales revenue. A nonoperating-activities section of the [ Choose ] income statement that shows expenses and losses unrelated to the company's main line of operations A nonoperating-activities section of the [ Choose ] income statement that shows revenues and gains unrelated to the company's main line of operations. An income statement that shows several […

Which of the following statements is incorrect about materiality? O A. Materiality is a matter of relative size and importance O B. A rule is adopted that anything under 10 percent of income is immaterial O C. An item must make a difference or a company need not disclose it O D. An item is material if omitting it or misstating it could influence the judgment of an informed user

T1.

Listed below are the current Accounting Assumptions and Principles                                   Economic Entity Assumption   Monetary Unit Assumption   Historical Cost Principle             Going Concern Assumption   Revenue Recognition Principle   Full Disclosure Principle             Time Period Assumption   Matching Principle                                       Required:                     For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable.                     h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value.             Violation: (Yes/No)       Applicable Assumption/Principle:                 i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August.             Violation: (Yes/No)       Applicable…

Which of the following statements regarding a business segment is false? Multiple Choice A business segment's income for the period prior to the disposal and the gain or loss resulting from disposing of the segment's assets are reported separately. A business segment has assets, liabilities, and financial results of operations that can be separated from those of other parts of the company. A business segment is a part of a company that is separated by its products/services or by geographic location.

Which of the following statements is correct? Mutiple Choice The term single step income statement is sometimes used to describe a classified income statement If a business is to earn a net income, the gross profit on sales must be greater than operating expenses Salaries of office employees would be grouped with the setting expenses in the Operating Expenses section of the income statement Sales less Operating Expenses equals Gross Profit

E Which one of the following statements is correct? A B E Comparing results across geographic locations is easier since all countries now use a common set of accounting standards. Peer group analysis is easier when seasonal firms have different fiscal years. Adjustments have to be made when comparing the income statements of firms that use different methods of accounting for inventory. Peer group analysis is simplified when firms use varying methods of depreciation. Peer group analysis is easier when a firm is a conglomerate versus when it has only a single line of business.

Which of the following is not a limitation of the income statement? a. Comparability between companies may suffer because companies don't have enough leeway to choose between accounting methods. b. The use of different formats by companies within the same industry may hide differences in operating results. c. The use of functional classifications, instead of activity classifications, for operating expenses may not provide sufficient information for predicting future cash outflows. d. The matching of allocated historical costs against current revenues may not provide an accurate measure of a return on capital.