Show Option a is the valid point. Explanation: Option a: It is a statement that a company prepares to know its profitability during the year. Statement of operations is another name for the income statement. Thus, option a is correct. Option b: P&L statement. only records revenue and expenses, either revenue expenditure or revenue receipt are reported in it. It also includes cash expenses or income and non-cash receipts and expenditures as well. Thus this option is incorrect. Option c: P/L statement records sales for a particular period of time, not for a particular point in time. It records transactions over a period irrespective of the involvement of cash. It doesn't matter whether the cash is received or not, paid or not, it will be recorded in it. Thus, this option is incorrect. Option d: P/L statement shows the financial position of the corporation for a particular period of time, not for a particular point in time. It records transactions over a period. Thus, this option is incorrect. Answer: The correct choice is option c: Intangible assets do not have physical existence. Explanation: As per the IFRS, intangible assets refer to those assets that can not be touched or identifiable assets that do not have any physical substance. It includes copyrights, goodwill, trademarks, patents, etc. Wrong options: Option a: This option is not true as the intangible assets have economic value or substance. Option b: This option is not true as the intangible assets usually occur in the fixed assets section, not in the current assets section. Option d: This option is not true as the intangible assets usually occur in the fixed assets section, not in the Stockholders' Equity section. Enter the letter corresponding to the response which best completes each of the following statements or questions.  The essential characteristics of a liability do not include: Of the following, which usually would not be classified as a current liability? Which of the following results in an accrued liability? Sales taxes collected on recent sales: Yes Sales taxes collected on recent sales: No Sales taxes collected on recent sales: No Sales taxes collected on recent sales: Yes On November 1, Epic Distributors borrowed $24 million cash to fund an expansion of its facilities. The loan was made by WW BancCorp under a short-term line of credit. Epic issued a 9-month, 12% promissory note. Interest was payable at maturity. Epic's fiscal period is the calendar year. In Epic's adjusting entry for the note on December 31, interest expense will be: On October 1, 2006, Parton Industries borrowed $12 million cash to provide working capital. The loan was made by Second Bank under a short-term line of credit. Parton issued an 8-month, "noninterest-bearing note." 8% is the bank's stated "discount rate." Parton's fiscal period is the calendar year. In Parton's 2006 income statement interest expense for the note will be: Commercial paper has become an increasingly popular way for companies to raise funds. Which of the following is not true regarding commercial paper? On November 1, Shearer Shoes borrowed $18 million cash and issued a 6-month, "noninterest-bearing note." The loan was made by Third Commercial Bank whose stated "discount rate" is 9%. Shearer's effective interest rate on this loan is: Liabilities payable within one year can be excluded from current liabilities only if: Reunion BBQ has $4,000,000 of notes payable due on March 11, 2007, which Reunion intends to refinance. On January 5, 2007, Reunion signed a line of credit agreement to borrow up to $3,500,000 cash on a two-year renewable basis. On the December 31, 2006, balance sheet, Reunion should classify: Which of the following statements concerning lines of credit is untrue? On January 1, 2006, Yukon Company agreed to grant its employees two weeks vacation each year, with the provision that vacations earned in a particular year could be taken the following year. For the year ended December 31, 2006, all twelve of Yukon's employees earned $1,200 per week each. Eight of these vacation weeks were not taken during 2006. In Yukon's 2006 income statement, how much expense should be reported for compensated absences? An enterprise should accrue a liability for compensation of employees' unpaid vacations if certain conditions exist. Each of the following is a condition for accrual except: In its 2006 financial statements, an enterprise should accrue a liability for a loss contingency involving a possible cash payment if certain conditions exist. Each of the following is a condition for accrual except: Which of the following loss contingencies generally do not require accrual? Warren Advertising becomes aware of a lawsuit after the end of the fiscal year, but prior to the issuance of financial statements. A loss should be accrued and a liability should be reported if the amount can be reasonably estimated and: A loss contingency should be accrued when the amount of loss is known and the occurrence of the loss is: During 2006 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows:
At December 31, 2007, Green Thumb should report as a warranty liability of: There is a possibility of a safety hazard for a manufactured product. As yet, no claim has been made for damages, though there is a reasonable possibility that a claim will be made. If a claim is made, it is probable that damages will be paid and the amount of the loss can be reasonably estimated. This possible loss must be: Gain contingencies usually are recognized in the income statement when: What statements are liabilities reported?A company reports its liabilities on its balance sheet. According to the accounting equation, the total amount of the liabilities must be equal to the difference between the total amount of the assets and the total amount of the equity. Liabilities must be reported according to the accepted accounting principles.
Which of the following statements is true about the balance sheet statement?The correct answer is d.
A balance sheet is a statement that provides information regarding the assets and liabilities of a company. Internally generated assets are not recorded in the balance sheet under US GAAP. It shows the ending balance as of a particular date.
Which of the following is not one of the elements of financial reporting?Explanation Cash flows are reported but they are not an element. The elements are assets, liabilities, income (revenues), expenses and equity.
Which of the following are included in liabilities?Current liabilities. Accounts payable, i.e. payments you owe your suppliers.. Principal and interest on a bank loan that is due within the next year.. Salaries and wages payable in the next year.. Notes payable that are due within one year.. Income taxes payable.. Mortgages payable.. Payroll taxes.. |
Which of the following statements is not true regarding the reporting of liabilities?
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