Which of the following describes the lease term test?

If the lease term is 75% or more of the economic life- finance lease.

In a finance lease, the lessee records

amortization expense and interest expense.

Which of the following best describes current practice in accounting for leases?

All long-term leases are capitalized.

Revenue of a segment includes

sales to unaffiliated customers and intersegment sales.

When should an average amount be used for the numerator or denominator?

When a ratio consists of an income statement item and a balance sheet item

The payout ratio is calculated by dividing

cash dividends by net income less preferred dividends.

Which of the events would generally require disclosure, but no adjustment of the financial statements?

Issue of a large amount of capital stock

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Adv. Acct 1 - Test 3 Review

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Answers

1
Which of the following describes the lease term test?
If the asset has an alternative use during the lease term- finance lease.
Bargain purchase option during the lease term- finance lease.
If the lease term is 75% or more of the economic life- finance lease.
If the lease term is 90% or more of the economic life-finance lease.
2
In a finance lease, the lessee records
amortization expense only.
interest expense only.
lease expense only.
amortization expense and interest expense.
3
Which of the following best describes current practice in accounting for leases?
All long-term leases are capitalized.
Leases are not capitalized.
All leases are capitalized.
Leases similar to installment purchases are capitalized.
4
Which type of accounting change should always be accounted for in current and future periods?
Change in reporting entity
Change in accounting estimate
Change in accounting principle
Correction of an error
5
Which type of accounting change should always be accounted for in current and future periods?
Change in accounting principle
Change in accounting estimate
Change in reporting entity
Correction of an error
6
Revenue of a segment includes
only sales to unaffiliated customers.
sales to unaffiliated customers and interest revenue.
sales to unaffiliated customers and other revenue and gains.
sales to unaffiliated customers and intersegment sales.
7
Which of the following is not one of the lease classification tests?
Collectibility
Purchase option
Transfer of ownership
Lease term
8
When should an average amount be used for the numerator or denominator?
When the numerator is an income statement item or items
When a ratio consists of an income statement item and a balance sheet item
When the denominator is a balance sheet item or items
When the numerator is a balance sheet item or items
9
A single lease expense is recognized on the income statement for
neither a finance lease or an operating lease.
an operating lease.
a finance lease.
both a finance lease and an operating lease.
10
The payout ratio is calculated by dividing
cash dividends by net income less preferred dividends.
dividends per share by earnings per share
cash dividends by market price per share.
cash dividends by net income plus preferred dividends.
11
Which of the following should be disclosed in a Summary of Significant Accounting Policies?
Claims of equity holders
Types of executory contracts
Amount for cumulative effect of change in accounting principle
Depreciation method followed
12
In an operating lease, the lessee records
lease expense
interest expense
amortization expense and lease expense.
amortization expense
13
Which of the events would generally require disclosure, but no adjustment of the financial statements?
Issue of a large amount of capital stock
Retirement of the company president
Settlement of litigation that existed prior to the balance sheet date.
Employee strikes
14
Which of the following ratios measures long-term solvency?
Acid-test ratio
Debt to total assets
Current ratio
Accounts receivable turnover
15
The numerator of the accounts receivable turnover should include
total sales.
net sales.
total credit sales.
net credit sales.

Adv. Acct 1 - Test 3 Review Flashcards | StudBud