Chapter 2

Question 1

Where is accumulated comprehensive income located

Answer 1

The equity section of the balance sheet

Question 2

What is the difference between IFRS and GAAP for current liabilities to be financed with long term debit within the subsequent year?

Answer 2

IFRS = current liability
GAAP = non current liability

Question 3

List 5 transactions not included in net income.

Answer 3

(1) transactions with owners
(2) error corrections
(3) items reported initially in other comprehensive income
(4) transfers to and from appropriated retained earnings
(5) effects on prior periods of accounting changes.

Question 4

Calculate COGS

Answer 4

Beginning FG inventory
\+ Purchases or COGM
= Goods available for sale
– Ending FG inventory
= Cost of goods sold

Question 5

Calculate COGM

Answer 5

Beginning work in process
+ Sum of periodic manufacturing costs
– Ending work-in-process
= Cost of goods manufactured

or

Ending FG inventory
+ Cost of goods sold
– Beginning FG inventory
= Cost of goods manufactured

Question 6

Material items that are unusual in nature, infrequent in occurrence, or both are reported

Answer 6

as a separate component of income from continuing operations

Question 7

When an entity reports a discontinued operation

Answer 7

it must be presented in a separate section after income from continuing operations.

Question 8

Material items that are unusual in nature, infrequent in occurrence, or both are reported net of taxes?

Answer 8

False

Question 9

Other comprehensive income consists of what?

Answer 9

1. gains and losses on available-for-sale securities
2. Gains and losses on derivatives
3. amounts associated with recognition of the funded status of post retirement defined benefit plans
4. Certain foreign currency items

Question 10

The changes in retained earnings can result from the following adjustments

Answer 10

1. Net income (loss) for the period;
   2 Any prior-period adjustments, net of tax
2. Dividends declared; and
3. Certain other rare items, e.g., reissuance of treasury stock under the cost method

Question 11

List the other basis of accounting

Answer 11

1. The cash basis
2. A basis used for tax purposes
3. A basis used to comply with the requirements of a regulator

Question 12

Deferred Assets and Deferred Liabilities are Current or Non Current on the Balance Sheet?

Answer 12

Non Current

Question 13

Direct Costs of issuing Common Stock are what on the balance sheet

Answer 13

Additional paid in Capital

Question 14

Appropriation for Contingencies are what on the balance sheet?

Answer 14

Separate line item in retained earnings