Midterm 30 September 2020, questions and answers

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2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 1/15 1 / 1 point If the earnings process has a critical event, it is often referred to as a point of delivery. constructive obligation. transfer of risks and rewards of ownership. discrete earnings process. Question 2 1 / 1 point On July 10, 20XX, ABC Corp sold its products to retailers on account for a selling price of $756,030 with a cost of goods sold of $604,760. The company grants the right to return products that do not sell in three months following delivery. Past experience indicates that the normal return rate is 16.46%. By October 11, 20XX, retailers returned systems to the company and were granted credits of $84,130. Using these numbers, calculate how much refund liability the company is estimating for all the sales made. $118,220 $121,331 $124,443 $127,554 $130,665 Hide Feedback The estimated refund liability can be computed using the estimated return rate and the sales and works out to be $124,443. 1 / 1 point In 20XX, ABC Corp reported net income of $8,081,010 and declared and paid preferred share dividends of $2,847,830. During 20XX, the company had a weighted average of

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 2/15 799,890 common shares outstanding. Calculate the company's 20XX earnings per share. $6.38 $6.54 $6.71 $6.87 $7.03 Hide Feedback Subtract the preferred dividends from the net income and then divide the result by the weighted average shares to get the EPS of $6.54. 1 / 1 point ABC Corp had 38,680 common shares outstanding on January 1, 20XX. On April 1 of the year, a total of 7,680 shares were repurchased. On August 31 of the year, a total of 11,610 new shares were issued. Calculate the number of shares outstanding at the end of the year on December 31, 20XX. 39,414 40,480 41,545 42,610 43,675 Hide Feedback Subtract the repurchased shares from the beginning share count and add the new shares issued to get $42,610. 1 / 1 point On January 1, 2020, Reggae Ltd. sold land that cost $180,000 for $ 240,000, receiving a note bearing interest at 10 percent. The note will be paid in three annual instalments of $96,510 starting December 31, 2020. Assuming that collection of the

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 3/15 note is very uncertain, how much revenue from this sale should Reggae recognize in 2020? $ 96,510 $ 18,000 $ 0 $ 24,000 Question 6 1 / 1 point ABC Corp follows IFRS and has the following amounts for the year ended December 31, 20XX: Gain on disposal of FV-NI investments (before tax) of $13,600; Loss from operation of discontinued division (net of tax) of $38,080; Income from operations (before tax) of $199,460; OCI unrealized holding gain (net of tax) of $10,850; Income tax on income from continuing operations of $57,110; Loss on disposal of discontinued division (net of tax) of $68,000. The OCI unrealized holding gain relates to investments that are not quoted in an active market. All accounts have normal balances - for example, income is CR and loss DR. Calculate the net income. $47,377 $48,623 $49,870 $51,117 $52,364 Hide Feedback First, calculate the income from continuing operations by adding the gain on disposal of FV-NI investments to the income from operations and deducting the income tax from continuing operations. The resulting answer will be $155,950. Then, adjust for discontinued operations by subtracting the losses from discontinued operations and their disposal to get the net income of $49,870. 1 / 1 point

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2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 4/15 On January 1, 20XX, ABC Corp had cash and common shares of $77,770 each. On that date, the company had no other asset, liability, or shareholders' equity balances. On January 2, 20XX, the company paid $51,800 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, the company received non-taxable cash dividends of $23,350 and had an unrealized holding gain of $32,390 (net of tax) on these securities. Determine the company's other comprehensive income for 20XX. $32,390 $33,200 $34,010 $34,819 $35,629 Hide Feedback Under FV-OCI, OCI will equal the unrealized holding gain of $32,390. 0 / 1 point Under the allowance method of recognizing uncollectible accounts, the entry to recognize the collection of a previously written off uncollectible account increases the allowance for doubtful accounts. increases net income. decreases the allowance for doubtful accounts. has no effect on the allowance for doubtful accounts. Question 9 1 / 1 point On July 10, 20XX, ABC Corp sold its products to retailers on account for a selling price of $843,430 with a cost of goods sold of $674,660. The company grants the right to return products that do not sell in three months following delivery.

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 5/15 Past experience indicates that the normal return rate is 17.66%. By October 11, 20XX, retailers returned systems to the company and were granted credits of $93,830. Using these numbers, how much total inventory (in cost) is the company estimating to receive as returns? $116,166 $119,145 $122,124 $125,102 $128,081 Hide Feedback The estimated inventory to be returned can be computed using the estimated return rate and the cost of goods sold and works out to be $119,145. 1 / 1 point ABC Corp prepares financial statements in accordance with ASPE. On January 1, 20XX, the company had retained earnings of $868,740. In 20XX, the company's net income was $280,380, and the company ended the year with a retained earnings balance on December 31, 20XX, of $1,070,510. How much cash dividends were declared during the year? $70,749 $72,714 $74,680 $76,645 $78,610 Hide Feedback The dividends declared can be computed from the equation: End RE = Beg RE + Net Income - Dividends, and will work out to be $78,610.

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 6/15 1 / 1 point ABC Corp's adjusted trial balance contained the following asset accounts on December 31, 20XX: Prepaid Rent, $23,220; Inventory, $52,720; Franchise Fees Receivable, $2,090; Franchises, $49,630; Patents, $34,780; and Trademarks, $10,560. Calculate the total amount of intangible assets on December 31, 20XX, using this information. $92,596 $94,970 $97,344 $99,719 $102,093 Hide Feedback The only intangible assets are the franchises, patents, and trademarks. In total, this would work out to be $94,970. 1 / 1 point Cupcake Corp. has sold goods at terms 2/10, n/30. If the discount is not taken, the amount receivable is $8,725. The entry to record the sale is a debit and credit of $8,550.50 to Accounts Receivable and Sales respectively. a debit and credit of $7,852.50 to Accounts Receivable and Sales respectively. debits of $8,550.50 and $174.50 to Accounts Receivable and "Forfeited Sales Discounts" respectively, and a credit to Sales for the total. a debit and credit of $8,725 to Accounts Receivable and Sales respectively. Question 13 1 / 1 point ABC Corp reported 20XX net income of $153,880. During the year, accounts receivable increased by $14,250, and accounts payable increased by $9,130. Depreciation expense was $44,860. Calculate the cash flow from operating activities for the year.

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2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 7/15 $179,099 $183,939 $188,780 $193,620 $198,461 Hide Feedback Add back depreciation expense to net income. Reduce the result by the increase in accounts receivable and add the increase in accounts payable to get the cash flow from operating activities of $193,620. 1 / 1 point ABC Corp follows IFRS and has the following amounts for the year ended December 31, 20XX: Gain on disposal of FV-NI investments (before tax) of $12,880; Loss from operation of discontinued division (net of tax) of $36,060; Income from operations (before tax) of $188,900; OCI unrealized holding gain (net of tax) of $10,290; Income tax on income from continuing operations of $54,090; Loss on disposal of discontinued division (net of tax) of $64,400. The OCI unrealized holding gain relates to investments that are not quoted in an active market. All accounts have normal balances - for example, income is CR and loss DR. Calculate the total comprehensive income. $54,644 $56,082 $57,520 $58,958 $60,396 Hide Feedback First, calculate the income from continuing operations by adding the gain on disposal of FV-NI investments to the income from operations and deducting the income tax from continuing

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 8/15 operations. The resulting answer will be $147,690. Then, adjust for discontinued operations by subtracting the losses from discontinued operations and their disposal to get the net income of $47,230. Finally, adjust for the unrealized holding in the OCI to get $57,520 as the comprehensive income. 1 / 1 point ABC Corp's adjusted trial balance contains the following asset accounts on December 31, 20XX: Cash, $2,710; Treasury Bills (with original maturity of three months), $3,630; Patents, $11,210; Accounts Receivable, $81,450; Prepaid Insurance, $4,690. Calculate the total current assets the company will report on its financial statements using this information. $92,480 $94,792 $97,104 $99,416 $101,728 Hide Feedback Patents are not current assets. The rest of the assets are and total up to $92,480. 1 / 1 point Rudolph Corporation reports the following information. Net income: $900,000; Dividends on common shares: $252,000; Dividends on preferred shares: $90,000; Weighted average common shares outstanding: 300,000. Rudolph should report earnings per share of $2.70. $3.00. $1.86. $2.16. Question 17 1 / 1 point ABC Corp reported 20XX net income of $155,110. During the year, accounts receivable decreased by $14,370, and accounts payable decreased by $9,200. Depreciation expense

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 9/15 was $45,220. Calculate the cash flow from operating activities for the year. $200,363 $205,500 $210,638 $215,775 $220,913 Hide Feedback Add back depreciation expense to net income. Reduce the result by the decrease in accounts payable and add the decrease in accounts receivable to get the cash flow from operating activities of $205,500. 1 / 1 point On July 10, 20XX, ABC Corp sold its products to retailers on account for a selling price of $581,230 with a cost of goods sold of $464,960. The company grants the right to return products that do not sell in three months following delivery. Past experience indicates that the normal return rate is 14.06%. By October 11, 20XX, retailers returned systems to the company and were granted credits of $64,730. Using these numbers, calculate the cost of the inventory actually returned by October 11. $50,487 $51,781 $53,076 $54,370 $55,665 Hide Feedback The cost of the inventory returns can be computed using the cost of goods sold % implied in the sales and cost of goods sold figures and multiplying the % by the dollar returns at retail prices. The COGS % will be 80.00%, which when multiplied by the dollar returns (at retail prices)

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2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 10/15 works out to be $51,781. 1 / 1 point Under ASPE, where there is a significant uncertainty with respect to the measurement of an item, do not record anything in the financial statements but disclose the measurement uncertainty in the notes to the financial statements. do not record anything in the financial statements. record the maximum amount in the financial statements. recognize the item in the financial statements and disclose the measurement uncertainty in the notes to the financial statements. Question 20 1 / 1 point ABC Corp had net sales in 20XX of $2,351,830. On December 31, 20XX, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable, $357,850 DEBIT; Allowance for doubtful accounts, $3,090 DEBIT. The company has examined the aging of the accounts receivable and has determined the Allowance for Doubtful Accounts should have a CREDIT balance of $42,970 at year end. How much Bad Debts Expense will be recorded for the year? $43,757 $44,909 $46,060 $47,212 $48,363 Hide Feedback The Bad Debts Expense will be recorded to bring the AFDA account to its required level and will equal $46,060. 1 / 1 point The concept of soft numbers reflects the fact that earnings numbers may not be sustainable.

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 11/15 sometimes significant measurement uncertainty exists. sometimes significant errors exist. financial statement numbers may be manipulated. Question 22 1 / 1 point On January 1, 20XX, ABC Corp had cash and common shares of $81,230 each. On that date, the company had no other asset, liability, or shareholders' equity balances. On January 2, 20XX, the company paid $54,100 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, the company received non-taxable cash dividends of $24,390 and had an unrealized holding gain of $33,830 (net of tax) on these securities. Determine the company's net income for 20XX. $21,951 $22,561 $23,171 $23,780 $24,390 Hide Feedback Under FV-OCI, net income will equal the non-taxable cash dividends of $24,390. 1 / 1 point ABC Corp follows IFRS and has the following amounts for the year ended December 31, 20XX: Gain on disposal of FV-NI investments (before tax) of $16,120; Loss from operation of discontinued division (net of tax) of $45,150; Income from operations (before tax) of $236,420; OCI unrealized holding gain (net of tax) of $12,810; Income tax on income from continuing operations of $67,680; Loss on disposal of discontinued division (net of tax) of $80,600. The OCI unrealized holding gain relates to investments that are not quoted in an active market. All accounts have normal

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 12/15 balances - for example, income is CR and loss DR. Calculate the income from continuing operations. $180,239 $184,860 $189,482 $194,103 $198,725 Hide Feedback Calculate the income from continuing operations by adding the gain on disposal of FV-NI investments to the income from operations and deducting the income tax from continuing operations. The resulting answer will be $184,860. 1 / 1 point Management accounting can be broadly defined as the area of accounting that communicates financial information primarily to external users and Canada Revenue Agency. to investors only. to parties both internal and external to the business enterprise. to parties internal to the business enterprise only. Question 25 1 / 1 point ABC Corp shows on its statement of financial position a patent. At the year end of October 31, 20X0, Patent (net) had a balance of $58,160, while at the year end of October 31, 20X1, Patent (net) had a balance of $35,240. The company recorded amortization on the patent in the amount of $5,260 for the 20X1 fiscal year, and the remaining change in the account resulted from recording a loss on impairment for the year ended October 31, 20X1. There were no purchases or sales of patents during the year. Calculate the loss on impairment of the patent for the year ended October 31, 20X1.

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2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 13/15 $16,777 $17,219 $17,660 $18,102 $18,543 Hide Feedback We can use the equation: Patent (end) = Patent (beg) + New additions (net of sales) - Amortization - Loss on impairment. This will give us the loss on impairment to be $17,660. 1 / 1 point The statement of financial position is useful for analyzing all of the following except liquidity. financial flexibility. solvency. profitability. Question 27 1 / 1 point ABC Corp sells $566,080 of receivables with a fair value of $584,910 to XYZ Inc in a securitization (i.e. factoring) transaction that meets the criteria for a sale. ABC Corp receives full fair value of the receivables but agrees to continue to service them on a recourse basis, estimating that the fair value of this service liability component to be $24,560. What is ABC's net loss on the sale of receivables? 5,444 5,587 5,730 5,873 6,017

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 14/15 Hide Feedback The sale of receivables creates a gain of $18,830, offset by the service liability for the bad debts to give a net loss of $5,730. 1 / 1 point The following accounts are in ABC Corp's December 31, 20XX trial balance: Prepaid Rent, $2,110; FV-OCI Investments, $81,820; Unearned Revenue, $9,260; Land Held for Speculation, $156,960; and Goodwill, $59,350. Calculate the total long-term investments the company has on its balance sheet on this date. $232,811 $238,780 $244,750 $250,719 $256,689 Hide Feedback The FV-OCI investments and the land held for speculation will form the long-term investments of the company for a total of $238,780. 0 / 1 point On January 1, 20XX, ABC Corp had cash and common shares of $63,930 each. On that date, the company had no other asset, liability, or shareholders' equity balances. On January 2, 20XX, the company paid $42,600 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, the company received non-taxable cash dividends of $19,190 and had an unrealized holding gain of $26,630 (net of tax) on these securities. Calculate the accumulated other comprehensive income at the end of 20XX. $24,633 $25,299

2/23/24, 9:27 PM Midterm 30 September 2020, questions and answers about:blank 15/15 $25,964 $26,630 $27,296 Hide Feedback Under FV-OCI, OCI will equal the unrealized holding gain for the year. Since there is no AOCI balance at the beginning of the year, the AOCI at the end of the year will equal the OCI for the year, which is $26,630. 0 / 1 point During February, ABC Corp sells $10,970 of gift cards. From reliable past experience, management estimates that 11.70% of the gift cards sold will not be redeemed. By the end of February, $4,330 have been redeemed by customers. Calculate the February revenue the company has earned on account of the gift card sales. $4,659 $4,781 $4,904 $5,026 $5,149 Hide Feedback For every dollar of gift card redemption, the company earns slightly more revenue, which can be computed as 1/(1 - unredeemed rate) and works out to be $1.1325. Thus, for the total gift cards redeemed, the actual earned revenue would be $4,904.

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