6 Interest and dividend income on non-strategic investmentsa. are expensed using impairmentb.C.dare considered operating line items on the income statementare considered non-operating line items on the income statementare recorded "after taxes"7 One of the challenges of the cost-to-cost method of recognizing revenuea. the difficulty of establishing allowancesb.C.has been existence of historic inflation over the last few yearsis the absence of good recordsdis that this process "cost-to-cost" is illegal8 If the price/value of an asset such as a bond includes accrued interest, we are most likely da.a clean priceba dirty pricebook valueC.dan asset identified as "available for sale"

The objective of the question is to identify the correct options for the given accounting scenarios.

Answered: 6 Interest and dividend income on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What is the effect of omission of accrued income in assets at the end of the year of error? O NO effect O Overstated O Understated O Cannot be determined from the given information
The concept of materiality: a Treats as material only those items that are greater than 2% or 3% of net income. b Justifies ignoring the matching principle in certain circumstances. c Affects only items reported in the income statement. d Results in financial statements that are less useful to decision makers because many details have been omitted.
Which statement is incorrect? a. Under the transactions approach, net income is computed as the excess of income over expenses b. Under the capital maintenance approach, net income is computed as the excess of ending capital over beginning capital, excluding the effect of investments and withdrawals by owners. c. Unusual and infrequent items of expenses should be presented in in the income statement as a component of income from continuing operation. d. The single statement of comprehensive income shows a detailed presentation of all income and expenses, regardless of whether these income and expenses are recognized or not in the profit or loss. e. None of the above Statement 1: In the statement of changes in equity, the effect of the correction of a prior period error is presented separately for each component of equity. Statement 2: Preference share dividend appear under the retained earnings section of the statement of changes in equity. a. True, True b. False,…
27-Which one of the following is an example for 'Deferrals'? a. Provision for doubtful debt b. Depreciation c. Unearned revenue d. Outstanding expenses
In year 2022, collection of interest income is credited to Interest Expense. What is the effect of the error in year 2022 revenue and expenses? a.Revenue - understated; expenses - overstated b.Revenue - overstated; expenses - overstated c.Revenue - understated; expenses - understated d.Revenue - overstated; expenses - understated
What is the accounting treatment for discontinued operations? A : It is reported at its gross amount as an "other revenue or gain" or "other expense or loss". B : It is reported as an "other revenue or gain" or "other expense and loss", net of tax. C : It only needs to be disclosed in the footnotes of the financial statements. D : It may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).
When investments measured at amortized cost are reclassified to FVOCI, the gain or loss recognized in profit or loss is equal to * a. zero b. the amount realized to date c. the amount from beginning of period to reclassification date d.the amount from acquisition date to reclassification date e.none of the above
Revenue Expenditures are Select one: a. None of the these b. No direct effect on profit c.Expenses are shown in Balance Sheet d. Short-life and must always be replaced to generate revenue for an accounting period
In year 2022, collection of interest income is credited to Interest Expense. What is the effect of the error in year 2022 revenue and expenses? a. Revenue - understated; expenses - understated b. Revenue - overstated; expenses - overstated c. Revenue - understated; expenses - overstated d. Revenue - overstated; expenses - understated
Difference between source and use of funds? A decrease in Accounts Payable is a ( SOURCE / USE) of funds. A decrease in inventory is a ( SOURCE / USE) of funds. A purchase of Fixed Assets is a ( SOURCE / USE) of funds.
This kind of errors happens in the event of not knowing the accounting rules properly or not knowing the difference between the capital expenditure and revenue expenditure. a. Error of Commission b. Errors of Complete Omission c. Errors of Principle d. Errors of Transposition

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