ACC 401 WEEK 10 QUIZ

ACC 401 WEEK 10 QUIZ

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ACC 401 Week 10 Quiz,
ACC 401 Week 10 Quiz – Strayer

Chapter 14

Reporting for Segments and for Interim Financial Periods

1. A component of an enterprise that may earn revenues and incur expenses, and about which management evaluates separate financial information in deciding how to allocate resources and assess performance is a(n)

a. identifiable segment.

b. operating segment.

c. reportable segment.

d. industry segment.

2. An entity is permitted to aggregate operating segments if the segments are similar regarding the

a. nature of the production processes.

b. types or class of customers.

c. methods used to distribute products or provide services.

d. all of these.

3. Which of the following is not a segment asset of an operating segment?

a. Assets used jointly by more than one segment.

b. Assets directly associated with a segment.

c. Assets maintained for general corporate purposes.

d. Assets used exclusively by a segment.

4. SFAS No. 131 requires the disclosure of information on an enterprise's operations in different industries for

1. each annual period presented.

2. each interim period presented.

3. the current period only.

a. 1

b. 2

c. 3

d. both 1 and 2

5. Which of the following is not required to be disclosed by SFAS No. 131?

a. Information concerning the enterprise's products.

b. Information related to an enterprise's foreign operations.

c. Information related to an enterprise's major suppliers.

d. All of the above are required disclosures.

6. To determine whether a substantial portion of a firm's operations are explained by its segment information, the combined revenue from sales to unaffiliated customers of all reportable segments must constitute at least

a. 10% of the combined revenue of all operating segments.

b. 75% of the combined revenue of all operating segments.

c. 10% of the combined revenue from sales to unaffiliated customers of all operating segments.

d. 75% of the combined revenue from sales to unaffiliated customers of all operating segments.

7. A segment is considered to be significant if its

1. reported profit is at least 10% of the combined profit of all operating segments.

2. reported profit (loss) is at least 10% of the combined reported profit of all operating segments not reporting a loss.

3. reported profit (loss) is at least 10% of the combined reported loss of all operating segments that reported a loss.

a. 1

b. 2

c. 3

d. both 2 and 3

8. Which of the following disclosures is not required to be presented for a firm's reportable segments?

a. Information about segment assets

b. Information about the bases for measurement

c. Reconciliation of segment amounts and consolidated amounts for revenue, profit or loss, assets, and other significant items.

d. All of these must be presented.

9. Current authoritative pronouncements require the disclosure of segment information when certain criteria are met. Which of the following reflects the type of firm and type of financial statement for which this disclosure is required?

a. Annual financial statements for publicly held companies.

b. Annual financial statements for both publicly held and nonpublicly held companies.

c. Annual and interim financial statements for publicly held companies.

d. Annual and interim financial statements for both publicly held and nonpublicly held companies.

10. An enterprise determines that it must report segment data in annual reports for the year ended December 31, 2011. Which of the following would not be an acceptable way of reporting segment information?

a. Within the body of the financial statements, with appropriate explanatory disclosures in the footnotes

b. Entirely in the footnotes to the financial statements.

c. As a special report issued separately from the financial statements.

d. In a separate schedule that is included as an integral part of the financial statements.

11. Selected data for a segment of a business enterprise are to be separately reported in accordance with SFAS No. 131 when the revenues of the segment is 10% or more of the combined

a. net income of all segments reporting profits.

b. external and internal revenue of all reportable segments.

c. external revenue of all reportable segments.

d. revenues of all segments reporting profits.

12. Long Corporation's revenues for the year ended December 31, 2011, were as follows

Consolidated revenue per income statement $800,000

Intersegment sales 105,000

Intersegment transfers 35,000

Combined revenues of all operating segments $940,000

Long has a reportable segment if that segment's revenues exceed

a. $80,000.

b. $90,500.

c. $94,000.

d. $14,000.

13. Revenue test

(dollars in thousands)

Wholesale Retail Finance

Segment Segment Segment

Sales to unaffiliated customers $3,600 $1,500 $-0-

Sales – intersegment 400 240 -0-

Loan interest income – intersegment -0- 120 900

Loan interest income – unaffiliated -0- 240 80

Income from equity method investees -0- 280 -0-

Determine the amount of revenue for each of the three segments that would be used to identify the reportable industry segments in accordance with the revenues test specified by SFAS 131.

Wholesale Retail Finance

a. $3,600 $1,500 $ -0-

b. 4,000 1,740 -0-

c. 4,000 1,980 980

d. 4,000 2,380 980

14. Which of the following is not part of the information about foreign operations that is required to be disclosed?

a. Revenues from external customers

b. Operating profit or loss, net income, or some other common measure of profitability

c. Capital expenditures

d. Long-lived assets

15. Eaton, Inc., discloses supplemental industry segment information. The following data are available for 2011.

Traceable

Segment Sales operating expenses

A $420,000 $255,000

B 480,000 300,000

C 300,000 165,000

$1,200,000 $720,000

Additional 2011 expenses, not included above, are as follows:

Indirect operating expenses $240,000

General corporate expenses 180,000

Appropriate common expenses are allocated to segments based on the ratio of a segment's sales to total sales. What should be the operating profit for Segment C for 2011?

a. $135,000

b. $ 75,000

c. $ 105,000

d. $ 30,000

16. Gant Company has four manufacturing divisions, each of which has been determined to be a reportable segment. Common operating costs are appropriately allocated on the basis of each division's sales in relation to Gant’s aggregate sales. Gant’s Delta division accounted for 40% of Gant's total sales in 2011. For the year ended December 31, 2011, Delta had sales of $5,000,000 and traceable costs of $3,600,000. In 2011, Gant incurred operating costs of $350,000 that were not directly traceable to any of the divisions. In addition, Gant incurred interest expense of $360,000 in 2011. In reporting supplementary segment information, how much should be shown as Delta's operating profit for 2011?

a. $1,400,000

b. $1,256,000

c. $1,260,000

d. $1,116,000

17. For external reporting purposes, it is appropriate to use estimated gross profit rates to determine the ending inventory value for

Interim Annual

Reporting Reporting

a. No No

b. No Yes

c. Yes No

d. Yes Yes

18. Inventory losses from market declines that are expected to be temporary

a. should be recognized in the interim period in which the decline occurs.

b. should be recognized in the last (fourth) quarter of the year in which the decline occurs.

c. should not be recognized.

d. none of these.

19. Gains and losses that arise in an interim period should be

a. recognized in the interim period in which they arise.

b. recognized in the last quarter of the year in which they arise.

c. allocated equally among the remaining interim periods.

d. deferred and included only in the annual income statement.

20. If a cumulative effect type accounting change is made during the first interim period of a year

a. no cumulative effect of the change should be included in net income of the period of change.

b. the cumulative effect of the change on retained earnings at the beginning of the year should be included in net income of the first interim period.

c. the cumulative effect of the change should be allocated to the current and remaining interim periods of the year.

d. none of these.

21. Which of the following does not have to be disclosed in interim reports?

a. Seasonal costs or expenses.

b. Significant changes in estimates.

c. Disposal of a segment of a business.

d. All of these must be disclosed.

22. For interim financial reporting, the effective tax rate should reflect

Anticipated Extraordinary

Tax Credits Items

a. Yes Yes

b. Yes No

c. No Yes

d. No No

23. Companies using the LIFO method may encounter a liquidation of base period inventories at an interim date that is expected to be replaced by the end of the year. In these cases, cost of goods sold should be charged with the

a. cost of the most recent purchases.

b. average cost of the liquidated LIFO base.

expected replacement cost of the liquidated LIFO base.
none of these.

24. In considering interim financial reporting, how did the Accounting Principles Board conclude that each reporting should be viewed?

a. As a "special" type of reporting that need not follow generally accepted accounting principles.

b. As useful only if activity is evenly spread throughout the year so that estimates are unnecessary.

c. As reporting for a basic accounting period.

d. As reporting for an integral part of an annual period.

25. When a company issues interim financial statements, extraordinary items should be

a. allocated to the current and remaining interim periods of the current year on a pro rata basis.

b. deferred and included only in the annual income statement.

c. included in the determination of net income in the interim period in which they occur.

d. charged or credited directly to retained earnings so that comparisons of interim results of operations will not be distorted.

26. If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed?

a. An allocated portion in each of the last three quarters

b. An allocated portion in each quarter of the year

c. In full in the first quarter

d. In full in the second quarter

27. During the second quarter of 2011, Dodge Company sold a piece of equipment at a gain of $90,000. What portion of the gain should Dodge report in its income statement for the second quarter of 2011?

a. $90,000

b. $45,000

c. $30,000

d. $ -0-

28. In January 2011, Abel Company paid $200,000 in property taxes on its plant for the calendar year 2011. Also in January 2011, Abel estimated that its year-end bonuses to executives for 2011 would be $800,000. What is the amount of expenses related to these two items that should be reflected in Abel's quarterly income statement for the three months ended June 30, 2011 (second quarter)?

a. $ -0-

b. $250,000

c. $ 50,000

d. $200,000

29. For interim financial reporting, a company's income tax provision for the second quarter of 2011 should be determined using the

a. statutory tax rate for 2011.

b. effective tax rate expected to be applicable for the full year of 2011 as estimated at the end of the first quarter of 2011.

c. effective tax rate expected to be applicable for the full year of 2011 as estimated at the end of the second quarter of 2011.

d. effective tax rate expected to be applicable for the second quarter of 2011.

30. Which of the following reporting practices is permissible for interim financial reporting?

a. Use of the gross profit method for interim inventory pricing.

b. Use of the direct costing method for determining manufacturing inventories.

c. Deferral of unplanned variances under a standard cost system until year-end.

d. Deferral of inventory market declines until year-end.

31. Which of the following statements most accurately describes interim period tax expense?

a. The best estimate of the annual tax rate times the ordinary income (loss) for the quarter.

b. The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim periods.

c. Average tax rate for each quarter, including the current quarter, times the current income (loss).

d. The previous year's actual effective tax rate times the current quarter's income.

32. The computation of a company's third quarter provision for income taxes should be based upon earnings

a. for the quarter at an expected annual effective income tax rate.

b. for the quarter at the statutory rate.

c. to date at an expected annual effective income tax rate less prior quarters' provisions.

to date at the statutory rate less prior quarters' provisions.

33. Finney, a calendar year company, has the following income before income tax provision and estimated effective annual income tax rates for the first three quarters of 2011:

Income Before Estimated Effective

Income Tax Annual Tax Rate

Quarter Provision at the End of Quarter

First $120,000 25%

Second 160,000 25%

Third 200,000 30%

Finney's income tax provision in its interim income statement for the third quarter should be

a. $74,000.

b. $60,000.

c. $50,000.

d. $144,000.

34. An inventory loss from a market price decline occurred in the first quarter. The loss was not expected to be restored in the fiscal year. However, in the third quarter the inventory had a market price recovery that exceeded the market decline that occurred in the first quarter. For interim reporting, the dollar amount of net inventory should

a. decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery.

b. decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.

c. not be affected in the first quarter and increase in the third quarter by the amount of the market price recovery that exceeded the amount of the market price decline.

d. not be affected in either the first quarter or the third quarter.

35. Advertising costs may be accrued or deferred to provide an appropriate expense in each period for

Interim Annual

Reporting Reporting

a. Yes No

b. Yes Yes

c. No No

d. No Yes