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Intermediate Accounting

Accountants are lifelong students. The weekly quizzes are open
to everyone in the wonderful field of accounting, business
and the study of accounting. Good luck!

This week's quiz brought to you by:
Jennifer A. Bagwell, MTA, CPA - Instructor, School of Accountancy
Ohio University
Athens, Ohio



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1 - Which of the following is the correct definition for a temporary tax difference for financial accounting purposes?
A difference between book and tax that will not reverse itself over time.
The difference between sales tax and income tax.
A difference between book and tax that will reverse itself over time.
There is no such thing as a temporary tax difference.

2 - Interest expense may qualify for capitalization in which of the following circumstances?
Never.
In the case of a self-constructed asset to be used in the operations of the business.
For a loan issued to an officer of a corporation.
If the loan is greater than 10 years.

3 - For a defined benefit pension plan, pension expense is a calculation that includes:
Amortization of prior service costs
Interest cost
Current year service cost
All of the above

4 - For a defined benefit pension plan, the funded status of the plan is reported on the balance sheet.
TRUE
FALSE
no answer
no answer

5 - 123, Inc. changes their inventory method from LIFO to FIFO. The company has a justifiable reason for this change. According to FASB standards, how should this change be treated in the financial statements in the year in which the change is made?
Retrospectively
Prospectively
A company is not allowed to change inventory methods
FASB standards do not give guidance on this subject

6 - A change in depreciation method is considered what type of accounting change?
Change in estimate
Change in method
Change in entity
None of the above

7 - A change in estimate is treated:
Retrospectively
Prospectively
Either retrospectively or prospectively, the company can decide
I need more information to determine the answer to this question

8 - XYZ Company purchased inventory from BLAH Company on December 26, 2006. The inventory arrived at XYZ Company on January 3, 2007. The shipping terms of the contract stated that the purchase was made FOB shipping. Which company will include this inventory on their balance sheet for December 31, 2006?
XYZ Company
BLAH Company
Both companies
Not enough information to determine

9 - J Company owns securities that are classified as Trading securities for financial reporting purposes. The total cost of these shares (purchased on February 2, 2007) was $65,000. On December 31, 2007, the value of these shares decreased to $52,000. At what amount should J Company report these trading securities on its December 31, 2007 balance sheet?
$0
$65,000
$52,000
Not enough information to determine

10 - Which of the following is one of the criteria to determine if a lease is a capital lease?
If the lease term is less than 2 years
The lease term is at least 90% of the useful life of the asset
The present value of the minimum lease payments is less than 75% of the fair market value of the asset
The present value of the minimum lease payments is at least 90% of the fair market value of the asset

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