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| Section | Weight | Objectives |
|---|---|---|
| Financial Reporting | 30% - 40% | - General Purpose Financial Reporting
|
| Select Transactions | 25% - 35% | - Accounting and Reporting Transactions
|
| Select Balance Sheet Accounts | 30% - 40% | - Assets, Liabilities and Equity
|
1. Which of the following factors determines whether an identified segment of an enterprise should be reported in the enterprise's financial statements under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information?
I. The segment's assets constitute more than 10% of the combined assets of all operating segments.
II. The segment's liabilities constitute more than 10% of the combined liabilities of all operating segments.
A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.
2. Mellow Co. depreciated a $12,000 asset over five years, using the straight-line method with no salvage value. At the beginning of the fifth year, it was determined that the asset will last another four years. What amount should Mellow report as depreciation expense for year 5?
A) $600
B) $2,400
C) $900
D) $1,500
3. The effect of a material transaction that is infrequent in occurrence but not unusual in nature should be presented separately as a component of income from continuing operations when the transaction results in a:
A) Option A
B) Option D
C) Option B
D) Option C
4. Advertising costs may be accrued or deferred to provide an appropriate expense in each period for:
A) Option A
B) Option D
C) Option B
D) Option C
5. Goddard has used the FIFO method of inventory valuation since it began operations in 1987. Goddard decided to change to the weighted-average method for determining inventory costs at the beginning of 1990. The following schedule shows year-end inventory balances under the FIFO and weighted-average methods:
What amount, before income taxes, should be reported in the 1990 retained earnings statement as the cumulative effect of the change in accounting principle?
A) $3,000 decrease.
B) $5,000 decrease.
C) $0.
D) $2,000 increase.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: A | Question # 3 Answer: A | Question # 4 Answer: C | Question # 5 Answer: B |

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