Question 56

Samilski Inc. has a balance of $75,000 in its accrued liabilities account and $115,000 in its unearned revenue account at year-end on December 31, 20X7. The unearned revenue relates to goods not yet delivered as at year-end; $20,000 of those goods were delivered the following month. As well, Samilski recognized $5,000 of loan interest costs for January 20X8 that are not payable until February 1, 20X8. Based only this information, which of the following represents the effects of the two transactions on Samilski’s accrued liabilities and unearned revenue balances on January 31, 20X8, respectively?

       Accrued liabilities balance Unearned revenue balance

A)    Increases                    Decreases

B)   Increases                    Increases

C)   Remains the same           Decreases

D)   Remains the same           Increases

Question 57

During periods of rising prices:

A)    LIFO COGS > Weighted Average COGS > FIFO COGS.

B)   LIFO COGS < Weighted Average COGS < FIFO COGS.

C)   LIFO COGS = Weighted Average COGS = FIFO COGS.

D)   LIFO COGS > Weighted Average COGS < FIFO COGS.

Question 58

Which of the following items is least likely to contain details about various accruals, adjustments, balances, and management assumptions?

A)    Supplementary schedules.

B)   Financial statement footnotes.

C)   Income statement.

D)   Discussion and analysis by management.

Question 59

Which of the following statements best describes the level of flexibility afforded in the cash flow statement classification of interest paid and dividends received (from investments) under U.S. GAAP as compared to IFRS?

       Interest paid        Dividends received

A)    More flexible than IFRS    Less flexible than IFRS

B)   Less flexible than IFRS    More flexible than IFRS

C)   Less flexible than IFRS    Less flexible than IFRS

D)   More flexible than IFRS    More flexible than IFRS

Question 60

Compared to using the first in, first out (FIFO) inventory method, using last in, first out (LIFO) in periods of rising prices and stable or increasing inventory quantities will result in taxes and operating cash flows (CFO) that are:

       Taxes  CFO

A)    lower   higher

B)   higher  higher

C)   lower    lower

D)   higher  lower

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答案和详解如下！

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Question 56

Samilski Inc. has a balance of $75,000 in its accrued liabilities account and $115,000 in its unearned revenue account at year-end on December 31, 20X7. The unearned revenue relates to goods not yet delivered as at year-end; $20,000 of those goods were delivered the following month. As well, Samilski recognized $5,000 of loan interest costs for January 20X8 that are not payable until February 1, 20X8. Based only this information, which of the following represents the effects of the two transactions on Samilski’s accrued liabilities and unearned revenue balances on January 31, 20X8, respectively?

       Accrued liabilities balance Unearned revenue balance

A)    Increases                    Decreases

B)   Increases                    Increases

C)   Remains the same           Decreases

D)   Remains the same           Increases

The correct answer was A)  Increases    Decreases

The loan interest costs of $5,000 would represent an expense during the month of January 20X8 as well as a payable at January 31, 20X8. Therefore, the accrued liabilities balance would increase by $5,000 to $80,000. However, as the goods are delivered (relating to the unearned revenue), Samilski is able to recognize revenue of $20,000 on the income statement and reduce the liability account (unearned revenue) accordingly.

This question tested from Session 8, Reading 33, LOS e

Question 57

During periods of rising prices:

A)    LIFO COGS > Weighted Average COGS > FIFO COGS.

B)   LIFO COGS < Weighted Average COGS < FIFO COGS.

C)   LIFO COGS = Weighted Average COGS = FIFO COGS.

D)   LIFO COGS > Weighted Average COGS < FIFO COGS.

The correct answer was A) LIFO COGS > Weighted Average COGS > FIFO COGS.

During periods of rising prices, the last units purchased are more expensive than the existing units. Under LIFO, the cost of the last units purchased is assigned to cost of goods sold. This higher cost of goods sold results in lower income, as compared to the FIFO method.

As the name suggests, the weighted average method is based on mathematical averages rather than timing of purchase/use. Thus, cost of goods sold using this method falls between that of LIFO and FIFO.

This question tested from Session 9, Reading 35, LOS a

Question 58

Which of the following items is least likely to contain details about various accruals, adjustments, balances, and management assumptions?

A)    Supplementary schedules.

B)   Financial statement footnotes.

C)   Income statement.

D)   Discussion and analysis by management.

The correct answer was C) Income statement.

The income statement reports the amounts for each of the major line items within the general categories of revenues and expenses. The various accruals, adjustments, and management assumptions are implicit in the reported amounts but are not specifically explained in the income statement.

Much of the detail contained in various accruals, adjustments, and management assumptions that go into the financial statements can be found in the footnotes to the statements and Management’s Discussion and Analysis. Supplementary schedules contain additional information, including a more detailed breakdown of certain large account balances.

This question tested from Session 7, Reading 29, LOS c

Question 59

Which of the following statements best describes the level of flexibility afforded in the cash flow statement classification of interest paid and dividends received (from investments) under U.S. GAAP as compared to IFRS?

       Interest paid        Dividends received

A)    More flexible than IFRS    Less flexible than IFRS

B)   Less flexible than IFRS    More flexible than IFRS

C)   Less flexible than IFRS    Less flexible than IFRS

D)   More flexible than IFRS    More flexible than IFRS

The correct answer was C)  Less flexible than IFRS    Less flexible than IFRS

IFRS allows more flexibility than U.S. GAAP in the classification of both interest and dividend cash flows. U.S. GAAP requires interest paid to be reported as CFO while IFRS allows it to be classified as either CFO or CFF. U.S. GAAP requires dividends received to be classified as CFO while IFRS allows them to be classified as either CFO or CFI.

This question tested from Session 10, Reading 43, LOS c

Question 60

Compared to using the first in, first out (FIFO) inventory method, using last in, first out (LIFO) in periods of rising prices and stable or increasing inventory quantities will result in taxes and operating cash flows (CFO) that are:

       Taxes  CFO

A)    lower   higher

B)   higher  higher

C)   lower    lower

D)   higher  lower

The correct answer was A)  lower          higher

With rising prices and stable or increasing inventory quantities, LIFO results in higher cost of goods sold and lower pretax income. Lower income results in lower taxes. Because taxes are an operating expense, lower taxes imply higher operating cash flow.

This question tested from Session 9, Reading 35, LOS a

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