Introduction to Financial Accounting - 2084 Words

Introduction to Financial Accounting ACCT6331 –Prior Year Suggested Time: 90 minutes 1. When the amount of expenses recognized for the purpose of financial reporting exceeds the expenses recognized for the purpose of tax reporting, a company will have deferred tax assets. Please indicate if the above statement is true or false. a. true b. false 2. BJ Services is an oil and gas service firm. The company does not issue any preferred stocks or convertible securities. The company reports the following EPS data in its 2008 annual report (in thousands except per share data). Net income | $609,365 | Earnings per share: | | Basic | $2.08 | Diluted | $2.06 | Weighted average shares outstanding: | |†¦show more content†¦The sale results in a gain of $200,000 d. The sale results in a loss of $200,000 10. When investments are classified as available-for-sale, fair-value changes are recognized in the balance sheet as unrealized gains or losses (AOCI) that affect owners’ equity. Please indicate if the above statement is true or false. a. true b. false 11. Under the equity method accounting, the investment account is recorded at fair value but only if fair value exceeds original cost. Please indicate if the above statement is true or false. a. true b. false Answer: b, False Rationale: Fair-value accounting is not used for equity method investments. 12. Solomar Inc. has fiscal year ending on 12/31. Solomar purchased security A on 4/20/2007 for $450,000. As of 12/31/2007, the fair market value of security A has increased to $658,000. On 5/3/2008, Solomar sold security A for $700,000. How much is recorded as realized gain at the time of sale if the security is classified as available-for-sale security? a. $42,000 b. $208,000 c. $40,500 d. $250,000 13. Using the information provided in question #25, how much is recorded as realized gain at the time of sale if the security is classified as trading security? a. $42,000 b. $208,000 c. $40,500 d. $250,000 14. A company purchased available for sale securities on 1/1/2008 for $80,000. On 12/31/2008, the fair market value of the available for sale security increases by $45,000,Show MoreRelatedIntroduction to Financial Accounting4559 Words   |  19 PagesCHAPTER 1: INTRODUCTION TO FINANCIAL ACCOUNTING 1.1 USE, PREPARATION AND CONCEPTS * Use: The information derived from financial accounting is used by managers, investors, bankers, financial analysts and accountants, helping them to learn how to use information effectively and to do their jobs better. This information is essential to accountants for the services they provide. * Preparation: to be effective users of accounting information, people need to know something about how andRead MoreReflective Report for Introduction to Financial Accounting1527 Words   |  7 Pagessubject called introduction to finical accounting. 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