AICPA Financial Accounting and Reporting 4

Question 1

A sale-leaseback transaction in which the seller-lessee retains control of the asset is accounted for as:

Accepted Answer

A completed sale with a new operating lease

Answer

A failed sale requiring the proceeds to be recognized as a loan

Answer

A completed sale with a new finance lease

Answer

A simple operating lease with no sale recognition

Question 2

Under the direct method of presenting the statement of cash flows, which item appears in operating activities?

Accepted Answer

Cash collected from customers

Answer

Proceeds from issuance of long-term debt

Answer

Dividends paid to shareholders

Answer

Purchases of property, plant, and equipment

Question 3

When a company changes from FIFO to LIFO inventory costing, this is accounted for as a:

Accepted Answer

Change in accounting principle requiring retrospective restatement

Answer

Change in accounting estimate applied prospectively

Answer

Correction of an error requiring prior period adjustment

Answer

Change in accounting principle with a cumulative effect adjustment in current income

Question 4

Which of the following would be included in a company's balance sheet as a component of stockholders' equity?

Accepted Answer

Treasury stock at cost (debit balance)

Answer

Bonds payable due in 5 years

Answer

Deferred revenue from customer prepayments

Answer

Operating lease right-of-use assets

Question 5

Under ASC 815, a derivative instrument designated as a fair value hedge is used to hedge against:

Accepted Answer

Changes in the fair value of a recognized asset or liability

Answer

Variability in future cash flows from a forecasted transaction

Answer

Net investment in a foreign operation

Answer

Interest rate risk on variable-rate debt

Question 6

A company receives a $120,000 payment for a 12-month service contract on October 1. Under accrual accounting, how much revenue is recognized in the current calendar year?

Accepted Answer

$30,000

Answer

$120,000

Answer

$90,000

Answer

$60,000

Question 7

Which financial statement reconciles the beginning and ending balances of stockholders' equity?

Accepted Answer

Statement of changes in stockholders' equity

Answer

Statement of cash flows

Answer

Statement of comprehensive income

Answer

Balance sheet comparative schedule