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Exam 3: Accrual Accounting

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Question 61

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The following entry was recorded by Hollow Inc.: What is the effect on Hollow's financial statements?

A) A cash inflow from financing activities of $70,000.
B) Net assets increased by $10,000.
C) An increase of $10,000 in using the indirect method of determining cash flows from operating activities.
D) Retained earnings decreased by $10,000.

E) A) and D)
F) C) and D)

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Question 62

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Determine the missing amounts in the statement of financial position provided below:

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Question 63

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The following information was provided from the records of Konstruct Inc,which began operations in the current year: What were the company's expenses for the year?

Prepare a single-step income statement using the following data for Leila Inc.for the year ended December 31,2018.

Which statement is not correct about expenses in the income statement?

For the following types of accounting changes,identify the relevant criteria for each accounting change by selecting "yes," "no," or "N/A" (not applicable).

Which statement is correct?

For each of the following scenarios,determine the effects (if any)of the accounting change (correction of error,change in accounting policy,or change in estimate)on the relevant asset or liability,equity,and comprehensive income in the year of change and the prior year.Use the following table for your response. A.Company A increases the allowance for doubtful accounts (ADA).Using the old estimate,ADA would have been $71,000.The new estimate is $74,000. B.Company B omitted to record an invoice for a $7,000 sale made on credit at the end of the previous year and incorrectly recorded the sale in the current year.The related inventory sold has been accounted for. C.Company C changes its revenue recognition policy to a more conservative one.The result is a decrease in prior year revenue of $4,200 and a decrease in current-year revenue of $6,300 relative to the amounts under the old policy.

Dexter Corp.received cash for a service that is to be performed in the next accounting period.How should this transaction be accounted for?

The method of depreciation was changed from the double-declining-balance method to the straight-line method in fiscal 2019.A machine was purchased on January 1,2017,at a cost of $150,000.The machine has an estimated useful life of 10 years and a residual value of $9,000.What is the appropriate accounting?

The following event occurred after the company's year-end but before the completion of the audit.For this subsequent event,determine whether the event: • requires an adjustment to the year-end financial statements, • requires note disclosure,or • requires neither adjustment to recognized amounts nor disclosure. A major client unexpectedly goes bankrupt and it is determined that you will get only 30% of the value of their account receivable as full and final settlement.(Justify your recommendation. )

General Limited's income statement reported the following for last year: Which of the following statements is correct about the income statement?

Which of the following is an example of an error that should be corrected?

IFRS requires certain line items to be presented in the statement of comprehensive income (rather than just disclosed in the notes).Identify whether the following items are required in the statement of comprehensive income.

Under the IFRS Conceptual Framework,what general information is useful for the decision making needs of lenders and investors?

Identify whether each of the following items of operating expense is described according to its function.

Assume that a company has a fiscal year of July 1,2018-June 30,2019.August 15,2019,was the end of the period for gathering information pertaining to the financial statements.The financial statements were authorized for issue on August 24,2019. What is the cut off point for the "measurement" of transactions and events in this reporting period?

Which statement is correct about the statement of comprehensive income?

Which statement is correct?

Explain why a change in accounting policy requires the adjustment of both prior and future periods,whereas a change in estimate requires only adjustment of current and future periods.