ACCT
312 Week 4 Midterm Exam Answers
ACCT 312 Week 4 Midterm Exam Answers
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1.
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Question :
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(TCO 1) Which event will result
in a deferred tax liability?
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Student Answer:
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Accelerated depreciation in the
tax return
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Interest income on municipal
bonds
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Subscriptions collected in
advance
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Estimated warranty expense
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Instructor Explanation:
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See Chapter 16.
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Points Received:
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20 of 20
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Comments:
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Question 2.
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Question :
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(TCO 1) Which of the following
differences between financial accounting and tax accounting ordinarily
creates a deferred tax asset?
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Student Answer:
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Tax depreciation in excess of
book depreciation
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The installment sales method for
tax purposes
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Revenue collected in advance
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None of the above
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Instructor Explanation:
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See Chapter 16.
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Points Received:
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20 of 20
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Comments:
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Question 3.
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Question :
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(TCO 2) Interest cost is
calculated by multiplying the
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Student Answer:
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ABO by the expected return on
the plan assets.
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ABO by the discount rate.
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PBO by the expected return on
plan assets.
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PBO by the discount rate.
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Instructor Explanation:
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See Chapter 17.
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Points Received:
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20 of 20
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Comments:
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Question 4.
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Question :
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(TCO 3) Accounting for
postretirement healthcare benefits is similar, in most respects, to
accounting for
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Student Answer:
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payroll taxes.
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health insurance costs for
current employees.
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pension benefits.
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sick pay and vacation pay.
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Instructor Explanation:
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See Chapter 17.
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Points Received:
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20 of 20
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Comments:
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Question 5.
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Question :
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(TCO 4) Retained earnings
represents a company’s
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Student Answer:
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undistributed net assets.
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undistributed net income.
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extra paid-in capital.
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undistributed cash.
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Instructor Explanation:
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See Chapter 18.
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Points Received:
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20 of 20
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Comments:
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Question 6.
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Question :
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(TCO 4) Any dividend that is
considered to be a liquidating dividend will
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Student Answer:
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reduce retained earnings.
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reduce paid-in capital.
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increase paid-in capital.
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reduce the common stock account.
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Instructor Explanation:
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See Chapter 17.
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Points Received:
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20 of 20
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Comments:
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Question 7.
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Question :
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(TCO 5) Executive stock options
should be reported as compensation expense
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Student Answer:
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using the intrinsic value
method.
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using the fair value method.
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using either the fair value
method or the intrinsic value method.
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only on rare occasions.
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Instructor Explanation:
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See Chapter 19.
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Points Received:
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20 of 20
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Comments:
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Question 8.
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Question :
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(TCO 5) Our company granted
options for 2 million shares of its $1 par common stock at the beginning of
the current year. The exercise price is $35 per share, which was also the
market value of the stock on the grant date. The fair value of the options
was estimated at $9 per option. If the options have a vesting period of 5
years, which would be the balance in Paid-in Capital – Stock Options 3
years after the grant date?
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Student Answer:
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A credit of $10.8 million
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A credit of $18 million
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A debit of $70 million
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A debit of $3.6 million
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Instructor Explanation:
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2,000,000 × $9 × (3 ÷ 5) =
$10,800,000
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Points Received:
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20 of 20
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Comments:
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Question 9.
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Question :
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(TCO 6) Our company declared and
paid cash dividends to its common shareholders in February of the current
year. The dividend
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Student Answer:
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will be added to the numerator
of the earnings per share fraction for the current year.
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will be added to the denominator
of the earnings per share fraction for the current year.
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will be subtracted from the
numerator of the earnings per share fraction for the current year.
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has no effect on the earnings
per share for the coming year.
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Instructor Explanation:
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See Chapter 19.
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Points Received:
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20 of 20
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Comments:
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Question 10.
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Question :
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(TCO 6) Basic earnings per share
is computed using
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Student Answer:
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the actual number of common
shares outstanding at the end of the year.
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a weighted average of preferred
and common shares.
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the number of common shares
outstanding plus common stock equivalents.
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weighted-average common shares
outstanding for the year.
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Instructor Explanation:
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See Chapter 19.
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Points Received:
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20 of 20
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Comments:
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