Q&A Hero

Q: If the cross price elasticity of demand between two goods is negative, then the two goods areA) substitutes. B) complements. C) unrelated. D) independent.

Q: Balance sheet information for Sphinx Company at January 1, 2011, is summarized as follows: Current assets $230,000 Liabilities $300,000 Plant assets 450,000 Capital stock $10 par 200,000 Retained earnings 180,000 $680,000 $680,000 Sphinx's assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000. On January 2, 2011, Pyramid Corporation issues 20,000 shares of its $10 par value common stock for all of Sphinx's net assets and Sphinx is dissolved. Market quotations for the two stocks on this date are: Pyramid common: $28.00 Sphinx common: $19.50 Pyramid pays the following fees and costs in connection with the combination: Finder's fee $10,000 Legal and accounting fees 6,000 Required: 1. Calculate Pyramid's investment cost of Sphinx Corporation. 2. Calculate any goodwill from the business combination.

Q: Unearned revenues are: A.Revenues that have been earned and received in cash. B.Revenues that have been earned but not yet collected in cash. C.Liabilities created when a customer pays in advance for products or services before the revenue is earned. D.Recorded as an asset in the accounting records. E.Increases to owners' capital.

Q: When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximatelyA) 2.20. B) 4.00. C) 1.82. D) 0.36.

Q: On January 2, 2010 Carolina Clothing issued 100,000 new shares of its $5 par value common stock valued at $19 a share for all of Dakota Dressing Company's outstanding common shares in an acquisition. Carolina paid $15,000 for registering and issuing securities and $10,000 for other direct costs of the business combination. The fair value and book value of Dakota's identifiable assets and liabilities were the same. Assume Dakota Company is dissolved on the date of the acquisition. Summarized balance sheet information for both companies just before the acquisition on January 2, 2010 is as follows: Carolina Dakota Cash $150,000 $120,000 Inventories 320,000 400,000 Other current assets 500,000 500,000 Land 350,000 250,000 Plant assets-net 4,000,000 1,500,000 Total Assets $5,320,000 $2,770,00 Accounts payable $1,000,000 $300,000 Notes payable 1,300,000 660,000 Capital stock, $5 par 2,000,000 500,000 Additional paid-in capital 1,000,000 100,000 Retained Earnings 20,000 1,210,000 Total Liabilities & Equities $5,320,000 $2,770,000 Required: Prepare a balance sheet for Carolina Clothing immediately after the business combination.

Q: Which of the following statements is correct? A.When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. B.Promises of future payment are called accounts receivable. C.Increases and decreases in cash are always recorded in the owner's capital account. D.An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. E.Accrued liabilities include accounts receivable.

Q: Why is the optimal quantity of pollution not less than the point at which the marginal benefit equals the marginal cost?A) The point of intersection occurs at a low level of pollution. B) There are no external costs below that level.C) Below that point firms will have to reduce the quantity that they are currently producing and lower the price.D) Below that point the value that people place on less pollution is less than the cost of reducing the pollution.

Q: Samantha's Sporting Goods had net assets consisting of the following: Book Value Fair Value Cash 150,000 150,000 Inventory 820,000 960,000 Building and Fixtures 330,000 310,000 Liabilities (90,000) (88,000) Pedic Incorporated purchased Samantha's Sporting Goods, and immediately dissolved Samantha's as a separate legal entity. Requirement 1: If Samantha's was purchased for $1,000,000 cash, prepare the entry recorded by Pedic. Requirement 2: If Samantha's was purchased for $1,500,000 cash, prepare the entry recorded by Pedic.

Q: The account used to record the transfers of assets from a business to its owner is: A.A revenue account. B.The owner's withdrawals account. C.The owner's capital account. D.An expense account. E.A liability account.

Q: Which income maintenance program was started to support the nationʹs farmers?A) Supplemental Security Income B) Food StampsC) Earned Income Tax Credit Program D) AFDC

Q: Pali Corporation exchanges 200,000 shares of newly issued $10 par value common stock with a fair market value of $40 per share for all the outstanding $5 par value common stock of Shingle Incorporated, which continues on as a legal entity. Fair value approximated book value for all assets and liabilities of Shingle. Pali paid the following costs and expenses related to the business combination: Registering and issuing securities 19,000 Accounting and legal fees 150,000 Salaries of Pali's employees whose time was dedicated to the merger 86,000 Cost of closing duplicate facilities 223,000 Required: Prepare the journal entries relating to the above acquisition and payments incurred by Pali, assuming all costs were paid in cash.

Q: An account used to record the owner's investments in the business is called a(n): A.Withdrawals account. B.Capital account. C.Revenue account. D.Expense account. E.Liability account.

Q: A bilateral monopoly meansA) that a monopsonistic employer bargains with two unions.B) that a monopsonistic employer bargains with both an industrial and a craft union. C) that a monopsonistic employer bargains with a monopoly.D) that an industrial union bargains with a two -firm oligopoly.

Q: On January 2, 2011, Pilates Inc. paid $700,000 for all of the outstanding common stock of Spinning Company, and dissolved Spinning Company. The carrying values for Spinning Company's assets and liabilities are recorded below. Cash $200,000 Accounts Receivable 220,000 Copyrights (purchased) 400,000 Goodwill 120,000 Liabilities (180,000) Net assets $760,000 On January 2, 2011, Spinning anticipated collecting $185,000 of the recorded Accounts Receivable. Pilates entered into the acquisition because Spinning had Copyrights that Pilates wished to own, and also unrecorded patents with a fair value of $100,000. Required: Calculate the amount of goodwill that will be recorded on Pilate's balance sheet as of the date of acquisition. Then record the journal entry Pilates would record on their books to record the acquisition.

Q: A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n): A.Journal. B.Posting. C.Trial balance. D.Account. E.Chart of accounts.

Q: On January 2, 2011, Pilates Inc. paid $900,000 for all of the outstanding common stock of Spinning Company, and dissolved Spinning Company. The carrying values for Spinning Company's assets and liabilities are recorded below. Cash $200,000 Accounts Receivable 220,000 Copyrights (purchased) 400,000 Goodwill 120,000 Liabilities (180,000) Net assets $760,000 On January 2, 2011, Spinning anticipated collecting $185,000 of the recorded Accounts Receivable. Pilates entered into the acquisition because Spinning had Copyrights that Pilates wished to own, and also unrecorded patents with a fair value of $100,000. Required: Calculate the amount of goodwill that will be recorded on Pilate's balance sheet as of the date of acquisition.

Q: The president of the United States can obtain a court injunction that will stop a strike for an80-day ʺcooling-offʺperiod if the strike is expected to imperil national safety or health. This power is granted in theA) Wagner Act. B) Landrum-Griffin Act. C) National Industrial Recovery Act. D) Taft-Hartley Act.

Q: Various types of documents and other papers that companies use when they conduct their business: A.Are called source documents. B.Can include sales tickets. C.Are the source of information for recording accounting entries. D.Can be in electronic form. E.All of these.

Q: The balance sheets of Palisade Company and Salisbury Corporation were as follows on December 31, 2010: Palisade Salisbury Current Assets $260,000 $120,000 Equipment-net 440,000 480,000 Buildings-net 600,000 200,000 Land 100,000 200,000 Total Assets $1,400,000 $1,000,000 Current Liabilities 100,000 120,000 Common Stock, $5 par 1,000,000 400,000 Additional paid-in Capital 100,000 280,000 Retained Earnings 200,000 200,000 Total Liabilities and Stockholders' equity $1,400,000 $1,000,000 On January 1, 2011 Palisade issued 30,000 of its shares with a market value of $40 per share in exchange for all of Salisbury's shares, and Salisbury was dissolved. Palisade paid $20,000 to register and issue the new common shares. It cost Palisade $50,000 in direct combination costs. Book values equal market values except that Salisbury's land is worth $250,000. Required: Prepare a Palisade balance sheet after the business combination on January 1, 2011.

Q: If laborers become more efficient over time, and if the Ajax Company would want to expand production, they wouldA) substitute capital for labor. B) hire more laborers.C) hire fewer laborers. D) produce less product.

Q: Source documents: A.Include the ledger. B.Are the sources of accounting information. C.Must be in electronic form. D.Are based on accounting entries. E.Include the chart of accounts.

Q: Bigga Corporation purchased the net assets of Petit, Inc. on January 2, 2011 for $380,000 cash and also paid $15,000 in direct acquisition costs. Petit, Inc. was dissolved on the date of the acquisition. Petit's balance sheet on January 2, 2011 was as follows: Accounts receivable-net $90,000 Current liabilities $75,000 Inventory 220,000 Long term debt 80,000 Land 30,000 Common stock ($1 par) 10,000 Building-net 20,000 Addtl. paid-in capital 215,000 Equipment-net 40,000 Retained earnings 20,000 Total assets $400,000 Total liab. & equity $400,000 Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Petit has patent rights with a fair value of $20,000. Required: Prepare Bigga's general journal entry for the cash purchase of Petit's net assets.

Q: When a regulator is concerned about pleasing different groups in order to keep employed, this is known as theA) share-the-gains, share-the-pains theory. B) regulatory hypothesis.C) capture hypothesis. D) creative theory.

Q: Source documents include all of the following except: A.Sales tickets. B.Ledgers. C.Checks. D.Purchase orders. E.Bank statements.

Q: Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. The game with the dominant strategy is also calledA) the prisonersʹ dilemma. B) Tweedle Dee-Tweedle Dum. C) Pure Coordination Game. D) Tit-for-Tat.

Q: Saveed Corporation purchased the net assets of Penny Inc. on January 2, 2011 for $1,690,000 cash and also paid $15,000 in direct acquisition costs. Penny dissolved as of the date of the acquisition. Penny's balance sheet on January 2, 2011 was as follows: Accounts receivable-net $190,000 Current liabilities $235,000 Inventory 480,000 Long term debt 650,000 Land 10,000 Common stock ($1 par) 25,000 Building-net 630,000 Paid-in capital 150,000 Equipment-net 240,000 Retained earnings 590,000 Total assets $1,650,000 Total liab. & equity $1,650,000 Fair values agree with book values except for inventory, land, and equipment, which have fair values of $640,000, $140,000 and $230,000, respectively. Penny has customer contracts valued at $20,000. Required: Prepare Saveed's general journal entry for the cash purchase of Penny's net assets.

Q: A sales invoice: A.Is a type of source document. B.Is used by sellers to record the sale. C.Is used by buyers to record purchases. D.Gives rise to an entry in the accounting process. E.All of these.

Q: On January 2, 2011 Palta Company issued 80,000 new shares of its $5 par value common stock valued at $12 a share for all of Sudina Corporation's outstanding common shares. Palta paid $5,000 for the direct combination costs of the accountants. Palta paid $18,000 to register and issue shares. The fair value and book value of Sudina's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2011 is as follows: Palta Sudina Cash $75,000 $60,000 Inventories 160,000 200,000 Other current assets 200,000 250,000 Land 175,000 125,000 Plant assets-net 1,500,000 750,000 Total Assets $2,110,000 $1,385,00 Accounts payable $100,000 $155,000 Notes payable 700,000 330,000 Capital stock, $2 par 600,000 250,000 Additional paid-in capital 450,000 50,000 Retained Earnings 260,000 600,000 Total Liabilities & Equity $2,110,000 $1,385,000 Required: 1. Prepare Palta's general journal entry for the acquisition of Sudina assuming that Sudina survives as a separate legal entity. 2. Prepare Palta's general journal entry for the acquisition of Sudina assuming that Sudina will dissolve as a separate legal entity.

Q: Which of the following is most likely to be sold in an oligopoly market?A) Pizza B) Cell phone serviceC) Electricity D) Computer software

Q: The accounting process begins with: A.Analysis of business transactions and source documents. B.Preparing financial statements and other reports. C.Summarizing the recorded effect of business transactions. D.Presentation of financial information to decision-makers. E.Preparation of the trial balance.

Q: Considering the relevant market structures, which is an INCORRECT statement?A) In a perfectly competitive situation, there is an extremely large number of firms. B) In pure monopoly, there is only one firm.C) In monopolistic competition, there is a large number of firms.D) In any market situation, the number of firms is not very important.

Q: At December 31, 2011, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophocles Company. In addition, Pandora agreed to pay the owners of Sophocles an additional $200,000 if a specific contract achieved the profit levels that were targeted by the owners of Sophocles in their sale agreement. The fair value of this amount, with an agreed likelihood of occurrence and discounted to present value, is $160,000. In addition, Pandora paid $10,000 in stock issue costs, $40,000 in legal fees, and $48,000 to employees who were dedicated to this acquisition for the last three months of the year. Summarized balance sheet and fair value information for Sophocles immediately prior to the acquisition follows. Book Value Fair Value Cash $100,000 $100,000 Accounts Receivable 280,000 250,000 Inventory 520,000 640,000 Buildings and Equipment (net) 750,000 870,000 Trademarks and Tradenames 0 500,000 Total Assets $1,650,000 Accounts Payable $200,000 $190,000 Notes Payable 900,000 900,000 Retained Earnings 550,000 Total Liabilities and Equity $1,650,000 Required: 1. Prepare Pandora's general journal entry for the acquisition of Sophocles assuming that Pandora's stock was trading at $35 at the date of acquisition and Sophocles dissolves as a separate legal entity. 2. Prepare Pandora's general journal entry for the acquisition of Sophocles assuming that Pandora's stock was trading at $35 at the date of acquisition and Sophocles continues as a separate legal entity. 3. Prepare Pandora's general journal entry for the acquisition of Sophocles assuming that Pandora's stock was trading at $25 at the date of acquisition and Sophocles dissolves as a separate legal entity. 4. Prepare Pandora's general journal entry for the acquisition of Sophocles assuming that Pandora's stock was trading at $25 at the date of acquisition and Sophocles survives as a separate legal entity.

Q: The balance sheet reports the financial position of a company at a point in time.

Q: A monopolist maximizes profits by findingA) the rate of output where marginal revenue equals marginal cost. B) the rate of output where price equals marginal cost.C) the price where price exceeds marginal revenue by that largest amount. D) the price where average revenue and marginal cost are equal.

Q: On January 2, 2011 Piron Corporation issued 100,000 new shares of its $5 par value common stock valued at $19 a share for all of Seana Corporation's outstanding common shares. Piron paid $15,000 to register and issue shares. Piron also paid $20,000 for the direct combination costs of the accountants. The fair value and book value of Seana's identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2011 is as follows: Piron Seana Cash $150,000 $120,000 Inventories 320,000 400,000 Other current assets 500,000 500,000 Land 350,000 250,000 Plant assets-net 4,000,000 1,500,000 Total Assets $5,320,000 $2,770,000 Accounts payable $1,000,000 $300,000 Notes payable 1,300,000 660,000 Capital stock, $5 par 2,000,000 500,000 Additional paid-in capital 1,000,000 100,000 Retained Earnings 20,000 1,210,000 Total Liabilities & Equities $5,320,000 $2,770,000 Required: 1. Prepare Piron's general journal entry for the acquisition of Seana, assuming that Seana survives as a separate legal entity. 2. Prepare Piron's general journal entry for the acquisition of Seana, assuming that Seana will dissolve as a separate legal entity.

Q: An income statement reports the revenues earned less expenses incurred by a business over a period of time.

Q: A perfectly competitive firm will not earn an economic profit in the long run, because A) it is a ʺprice-maker.ʺ B) it faces a perfectly inelastic demand curve. C) there are no barriers to entry into the industry. D) it produces differentiated products.

Q: Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2011. Parrot borrowed $2,000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly. The fair value and book value of Sparrow's recorded assets and liabilities as of the date of acquisition are listed below. In addition, Sparrow had a patent that had a fair value of $50,000. Book Value Fair Value Cash $120,000 $120,000 Inventories 220,000 250,000 Other current assets 630,000 600,000 Land 270,000 320,000 Plant assets-net 4,650,000 4,600,000 Total Assets $5,890,000 Accounts payable $1,200,000 $1,200,000 Notes payable 2,100,000 2,100,000 Capital stock, $5 par 700,000 Additional paid-in capital 1,400,000 Retained Earnings 490,000 Total Liabilities & Equities $5,890,000 Required: 1. Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow survives as a separate legal entity. 2. Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow will dissolve as a separate legal entity.

Q: Revenue is properly recognized: A.When the customer's order is received. B.Only if the transaction creates an account receivable. C.At the end of the accounting period. D.Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E.When cash from a sale is received.

Q: When considering an acquisition, which of the following is NOT a method by which one company may gain control of another company? A) Purchase of the majority of outstanding voting stock of the acquired company. B) Purchase of all assets and liabilities of another company. C) Purchase the assets, but not necessarily the liabilities, of another company previously in bankruptcy. D) All of the above methods result in a company gaining control over another company.

Q: The vertical distance between the horizontal axis and any point on a perfect competitorʹs demand curve measuresA) total cost.B) total revenues.C) product price, marginal revenue, and average revenue.D) supply curve for the product.

Q: Which of the following accounting principles would require that all goods and services purchased be recorded at cost? A.Going-concern principle. B.Continuing-concern principle. C.Cost principle. D.Business entity principle. E.Consideration principle.

Q: In reference to international accounting for goodwill, U.S. companies have complained that past U.S. accounting rules for goodwill placed them at a disadvantage in competing against foreign companies for merger partners. Why? A) Previous rules required immediate write off of goodwill which resulted in a one-time expense that was not required under international rules. B) Previous rules required amortization of goodwill which resulted in an ongoing expense that was not required under international rules. C) Previous rules did not permit the recording of goodwill, thus resulting in a lower asset base than international counterparts would recognize. D) All of the above are correct.

Q: Total OutputTotal Costs0$101182213234245266297338389441051In the above table, the marginal cost of the ninth unit isA) $4.00. B) $5.00. C) $6.00. D) $7.00.

Q: If a business is not being sold or closed, the amounts reported in the accounts for assets used in operations are based on costs. This practice is best justified by the: A.Cost principle. B.Going-concern principle. C.Objectivity principle. D.Business entity principle. E.Both A and B.

Q: Goodwill arising from a business combination is A) charged to Retained Earnings after the acquisition is completed. B) amortized over 40 years or its useful life, whichever is longer. C) amortized over 40 years or its useful life, whichever is shorter. D) never amortized.

Q: Information that is not available to the general public about what is happening in a corporation isA) opportunity benefit. B) limited liability.C) economic rent. D) inside information.

Q: According to generally accepted accounting principles, a company's balance sheet should show the company's assets at: A.The cash equivalent value of what was given up or received. B.The current market value of the asset received in all cases. C.The cash paid only, even if something other than cash was given in the exchange. D.The best estimate of a certified internal auditor. E.The objective value to external users.

Q: In reference to the FASB disclosure requirements about a business combination in the period in which the combination occurs, which of the following is correct? A) Firms are not required to disclose the name of the acquired company. B) Firms are not required to disclose the business purpose for a combination. C) Firms are required to disclose the nature, terms and fair value of consideration transferred in a business combination. D) All of the above are correct.

Q: Proprietorships areA) the most common form of business organization in the country. B) responsible for most of the profits in the country.C) generally large relative to other business organizations. D) easy to form but difficult to dissolve.

Q: A partnership: A.Is also called a sole proprietorship. B.Has unlimited liability. C.Has to have a written agreement in order to be legal. D.Is a legal organization separate from its owners. E.Has owners called shareholders.

Q: Along an indifference curve, as the consumer reduces the quantity of Good A in favor of moreGood B the marginal rate of substitution of Good A for Good B willA) fall. B) rise.C) stay the same. D) fall and eventually turn negative.

Q: According to FASB Statement No. 141, liabilities assumed in an acquisition will be valued at the ________. A) estimated fair value B) historical book value C) current replacement cost D) present value using market interest rates

Q: A limited partnership: A.Includes a general partner with unlimited liability. B.Is subject to double taxation. C.Has owners called stockholders. D.Is the same as a corporation. E.May only have two partners.

Q: The law of diminishing marginal utility implies that the marginal utility for a particular productA) remains constant, regardless of how much of the product is consumed.B) remains constant as long as the product is still considered useful. C) decreases as more of the product is consumed.D) increases as more of the product is consumed.

Q: Use the following information to answer the question(s) below.Polka Corporation exchanges 100,000 shares of newly issued $1 par value common stock with a fair market value of $20 per share for all of the outstanding $5 par value common stock of Spot Inc. and Spot is then dissolved. Polka paid the following costs and expenses related to the business combination:Costs of special shareholders' meetingto vote on the merger $12,000Registering and issuing securities 10,000Accounting and legal fees 18,000Salaries of Polka's employees assignedto the implementation of the merger 27,000Cost of closing duplicate facilities 13,000Pepper Company paid $2,500,000 for the net assets of Salt Corporation and Salt was then dissolved. Salt had no liabilities. The fair values of Salt's assets were $3,750,000. Salt's only non-current assets were land and buildings with book values of $100,000 and $520,000, respectively, and fair values of $180,000 and $730,000, respectively. At what value will the buildings be recorded by Pepper?A) $730,000B) $520,000C) $210,000D) $0

Q: Marian Mosely is the owner of Mosely Accounting Services. Which accounting principle requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services? A.Monetary unit principle B.Going-concern principle C.Cost principle D.Business entity principle E.None of these. Since Marian is a sole proprietor, she is not required to separate her personal financial information from the financial information of Mosely Accounting Services.

Q: Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand isA) zero. B) positive.C) negative. D) either positive or negative.

Q: On December 15, 2007, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2008. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2008 and not 2007? A.Monetary unit principle B.Going-concern principle C.Cost principle D.Business entity principle E.Revenue recognition principle

Q: If the price of good A increases from $15 to $20 per unit and quantity demanded falls from 1500 to 1000 units, then by using the method of average values, we can calculate the absolute price elasticity of demand to beA) 2.6. B) 0.75. C) 1.4. D) 2.4.

Q: The Maximum Experience Company acquired a building for $500,000. Maximum Experience had the building appraised, and found that the building was easily worth $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would require Maximum Experience use to record the building on its records at $500,000? A.Monetary unit principle B.Going-concern principle C.Cost principle D.Business entity principle E.Revenue recognition principle

Q: Which of the following statements is true about the optimal quantity of pollution? A) It equals zero. B) Pollution abatement should continue up to the point where marginal cost equals the average total cost. C) Trade-offs exist between producing a cleaner environment and producing other goods and services. D) Firms should be allowed to determine the profit -maximizing amount of pollution abatement.

Q: The International Accounting Standards Board (IASB) A.Hopes to create harmony among accounting practices of different countries B.Is the government group that establishes reporting requirements for companies that issue stock to the public. C.Has the authority to impose its standards on companies. D.Is the only source of generally accepted accounting principles (GAAP). E.Only applies to companies that are members of the European Union.

Q: The government program that provides aid to families in need is A) TANF. B) Social Security program. C) Supplemental Security Income program. D) Earned Income Tax Credit.

Q: With respect to goodwill, an impairment A) will be amortized over the remaining useful life. B) is a two-step process which analyzes each business reporting unit of the entity. C) is a one-step process considering the entire firm. D) occurs when asset values are adjusted to fair value in a purchase.

Q: The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the: A.Revenue recognition principle. B.Going-concern principle. C.Objectivity principle. D.Business entity principle. E.Cost principle.

Q: Under the provisions of FASB Statement No. 141R, in a business combination, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? A) A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price. B) The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is classified as a deferred credit. C) The difference is allocated first to reduce proportionately (according to market value) non-current assets, and any negative remainder is classified as an extraordinary gain. D) The difference is allocated first to reduce proportionately (according to market value) non-current, depreciable assets to zero, and any negative remainder is classified as a deferred credit.

Q: Which of the following is FALSE regarding bilateral monopoly?A) Bilateral monopoly is a market structure consisting of a monopolist and a monopsonist.B) Bilateral monopoly is defined as a market structure in which a single buyer faces a single seller.C) An example of bilateral monopoly is a state education employer facing a single teachersʹ union in the labor market.D) The price outcome is easily determined.

Q: The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the: A.Going-concern principle. B.Cost principle. C.Revenue recognition principle. D.Objectivity principle. E.Business entity principle

Q: According to FASB Statement 141R, which one of the following items may not be accounted for as an intangible asset apart from goodwill? A) A production backlog B) A talented employee workforce C) Noncontractual customer relationships D) Employment contracts

Q: A union is striking a steel company, and then, to put more pressure on the steel company, also promotes a boycott against an auto company that buys steel from the steel company. This latter action isA) a sympathy strike, and is illegal under the Taft -Hartley Act.B) a secondary boycott, and is legal under the Landrum -Griffin Act. C) a secondary boycott, and is illegal under the Taft -Hartley Act.D) a sympathy strike, and is legal under the Wagner Act.

Q: The objectivity principle: A.Means that information is supported by independent, unbiased evidence. B.Means that information can be based on what the preparer thinks is true. C.Means that financial statements should contain information that is optimistic. D.Means that a business may not reorganize revenue until cash is received. E.All of these.

Q: In a business combination, which of the following will occur? A) All identifiable assets and liabilities are recorded at fair value at the date of acquisition. B) All identifiable assets and liabilities are recorded at book value at the date of acquisition. C) Goodwill is recorded if the fair value of the net assets acquired exceeds the book value of the net assets acquired. D) None of the above is correct.

Q: If workers in an industry become less productive, we would expect theA) supply of workers to increase. B) supply of workers to decrease.C) demand for workers to decrease. D) demand for workers to increase.

Q: Generally accepted accounting principles: A.Are based on long used accounting practices. B.Are basic assumptions, concepts, and guidelines in preparing financial statements. C.Are detailed rules used in reporting on business transactions and events. D.Arise from the rulings of authoritative bodies. E.All of these.

Q: Durer Inc. acquired Sea Corporation in a business combination and Sea Corp went out of existence. Sea Corp developed a patent listed as an asset on Sea Corp's books at the patent office filing cost. In recording the combination, A) fair value is not assigned to the patent because the research and development costs have been expensed by Sea Corp. B) Sea Corp's prior expenses to develop the patent are recorded as an asset by Durer at purchase. C) the patent is recorded as an asset at fair market value. D) the patent's market value increases goodwill.

Q: When the fox is guarding the henhouse, that is an example of theA) share-the-gains, share-the-pains theory. B) regulatory hypothesis.C) capture hypothesis.D) creative theory.

Q: The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the: A.Accounting equation. B.Cost principle. C.Going-concern principle. D.Realization principle. E.Business entity principle.

Q: Picasso Co. issued 5,000 shares of its $1 par common stock, valued at $100,000, to acquire shares of Seurat Company in an all-stock transaction. Picasso paid the investment bankers $35,000 and will treat the investment banker fee as A) an expense for the current year. B) a prior period adjustment to Retained Earnings. C) additional goodwill on the consolidated balance sheet. D) a reduction to additional paid-in capital.

Q: Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. The game with the dominant strategy is also called:A) Battle of the Sexes. B) the prisonersʹ dilemma.C) Tit-for-Tat. D) Tweedle Dee-Tweedle Dum.