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acc 4356 exam 2 mc questions with complete solutions
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acc 4356 exam 2 mc questions with complete solutions
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acc 4356 exam 2 mc questions with complete solutionsA bank's estimated bad debt expense associated with its loan
receivables is the: Correct Answer loan loss provision
A bond that is considered unsecured is referred to as a: Correct
Answer debenture
A borrower that violates one or more loan covenants but makes
all interest and principal payments timely: Correct Answer is in
technical default
A company must disclose the median pay of employees and the
CEO pay ratio consistent with the: Correct Answer Dodd-
Frank Act
A compensation committee should be comprised of: Correct
Answer members of the Board of Directors who are outside
(non-management) directors.
A component that is valuation-relevant, but is not expected to
persist into the future is a: Correct Answer transitory earnings
component
A covenant that specifies a required minimum level of net worth
and working capital is a/an: Correct Answer financial covenant
A major problem facing financial analysts who compare long-
lived assets on balance sheets of various companies is that
different companies often use different: Correct Answer
estimated lives
,A periodic system of inventory: Correct Answer reduces record
keeping
A perpetual inventory system: Correct Answer keeps a running
record of the amount of inventory on hand
A qualitative assessment of the business, its customers and
suppliers, and management's character and capability is known
as: Correct Answer due diligence.
According to the 2012 AICPA survey of 2011 annual reports,
the most favored method of depreciation for financial reporting
purposes is: Correct Answer straight-line
According to the SEC, any breach of a loan covenant that
existed at the balance sheet date that has not subsequently been
cured should: Correct Answer be disclosed in the notes to the
financial statements
According to U.S. GAAP, technological feasibility is established
when an entity has completed all of the following activities
necessary to establish that a product can be produced, except:
Correct Answer Measuring
Accounting for long-term credit sales transactions utilizing notes
receivable Correct Answer makes it difficult to assess the
degree to which a company's overall earnings are due to
profitable credit sales versus profitable customer financing
, Accounts receivables initially are recognized at Correct Answer
amortized cost
Affirmative covenants generally would not include which of the
following stipulations? Correct Answer Limits on the
borrower's total indebtedness
Amortizable intangible assets include all of the following
except: Correct Answer goodwill
An adjustment to income due to a non-recurring item is regarded
as Correct Answer abnormal earnings
An analyst notes that ABC Inc.'s allowance for credit losses as a
percentage of year-end accounts receivable has changed. Which
of the following would not be a plausible explanation for the
change Correct Answer The company has stopped making
sales on credit
An expenditure that increases a long-lived asset's useful life
should be: Correct Answer capitalized
An impairment loss is reported on the income statement as
Correct Answer part of income from continuing operations
An impairment loss is the difference between the carrying value
of the asset and the Correct Answer fair value of an asset
Analysts must recognize that the use of the specific
identification method to value inventory has a serious deficiency
because it: Correct Answer allows manipulation of net income
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