acc 545 final exam answers – all possible questions
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ACC 545 Final Exam Answers – All Possible Questions http://www.projbid.com/downloads/acc-545-final-exam-answers/1) A company changes from percentage-of-completion to completed-contract, which is the method used for tax purposes. The entry to record this change should include a A. debit to Retained Earnings in the amount of the difference on prior years, net of tax.B. debit to Loss on Long-Term Contracts in the amount of the difference on prior years, net of tax.C. credit to Deferred Tax Liability.D. debit to Construction in Process. 2) Which of the following is accounted for as a change in accounting principle? A. A change from expensing immaterial expenditures to deferring and amortizing them as they become materialB. A change from the cash basis of accounting to the accrual basis of accountingC. A change in inventory valuation from average cost to FIFOD. A change in the estimated useful life of plant assets 3) A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a A. debit to Deferred Tax Asset.B. debit to Retained Earnings in the amount of the difference on prior years.C. credit to Deferred Tax Liability.D. credit to Accumulated Depreciation. 4) Presenting consolidated financial statements this year when statements of individual companies were presented last year is A. an accounting change that should be reported by restating the financial statements of all prior periods presented.B. an accounting change that should be reported prospectively.C. NOT an accounting change.D. a correction of an error. 5) During 2008, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. The following lists include gross profit figures under both methods for the past 3 years: Completed-ContractPercentage-of-Completion2006$ 475,000$ 800,0002007625,000950,0002008 700,000 1,050,000$1,800,000$2,800,000Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of what? A. $390,000 on the 2008 income statementB. $600,000 on the 2008 income statementC. $390,000 on the 2008 retained earnings statementD. $600,000 on the 2008 retained earnings statement6) On January 1, 2005, Baden Co. purchased a machine, which was its only depreciable asset, for $300,000. The machine has a 5-year life, and no salvage value. Sum-of-the-years’-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2008, for financial statement reporting, Baden decided to change to the straight-line method for depreciation of the machine. Assume that Baden can justify the change. Baden’s income before depreciation, before income taxes, and before the cumulative effect of the accounting change, if any, for the year ended December 31, 2008, is $250,000. The income tax rate for 2008, and for 2005 through 2007, is 30%. What amount should Baden report as net income for the year ended December 31, 2008? A. $91,000B. $60,000C. $175,000D. $154,0007) The deferred tax expense is the A. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.B. increase in balance of deferred tax asset minus the increase in balance of deferred tax liability.C. decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability.D. increase in balance of deferred tax asset plus the increase in balance of deferred tax liability.8) A company records an unrealized loss on short-term securities. This might result in what type of difference and in what type of deferred income tax? TyTRANSCRIPT
ACC 545 Final Exam Answers All Possible Questions http://www.projbid.com/downloads/acc-545-final-exam-answers/1) A company changes rom percentage!o!completion to complete"!contract# which is the metho" use" or tax purposes$ %he entry to recor" this change shoul" inclu"e a A.debit to Retained Earnings in the amount of the difference on prior ears! net of tax.".debit to #oss on #ong-$erm %ontracts in the amount of the difference on prior ears! net of tax.%.credit to &eferred $ax #iabilit.&.debit to %onstruction in 'rocess. &) 'hich o the ollowing is accounte" or as a change in accounting principle( A.A change from expensing immaterial expenditures to deferring and amorti(ing them as the become material".A change from the cash basis of accounting to the accrual basis of accounting%.A change in in)entor )aluation from a)erage cost to *+*,&.A change in the estimated useful life of plant assets )) A company changes rom straight!line to an accelerate" metho" o calculating "epreciation# which will be similar to the metho" use" or tax purposes$ %he entry to recor"this change shoul" inclu"e a A.debit to &eferred $ax Asset.".debit to Retained Earnings in the amount of the difference on prior ears.%.credit to &eferred $ax #iabilit.&.credit to Accumulated &epreciation. 4) Presenting consoli"ate" inancial statements this year when statements o in"i*i"ual companies were presente" last year is A.an accounting change that should be reported b restating the financial statements of all prior periods presented.".an accounting change that should be reported prospecti)el.%.-,$ an accounting change.&.a correction of an error. 5) +uring &,,-# a construction company change" rom the complete"!contract metho" to the percentage!o!completion metho" or accounting purposes but not or tax purposes$ %he ollowing lists inclu"e gross proit igures un"er both metho"s or the past ) years. Complete"!ContractPercentage!o!Completion&,,/0415#,,,0-,,#,,,&,,1/&5#,,,25,#,,,&,,-1,,#,,, 1#,5,#,,,01#-,,#,,,0-,,#,,,Assuming an income tax rate o 4,3 or all years# the aect o this accounting change on prior perio"s shoul" be reporte" by a cre"it o what( A$0)2,#,,, on the &,,- income statement4$0/,,#,,, on the &,,- income statementC$0)2,#,,, on the &,,- retaine" earnings statement+$0/,,#,,, on the &,,- retaine" earnings statement/) 5n 6anuary 1# &,,5# 4a"en Co$ purchase" a machine# which was its only "epreciable asset# or 0),,#,,,$ %he machine has a 5!year lie# an" no sal*age *alue$ 7um!o!the!years8!"igits "epreciation has been use" or inancial statement reporting an" the electi*e straight!line metho" or income tax reporting$ Eecti*e 6anuary 1# &,,-# or inancial statement reporting# 4a"en "eci"e" to change to the straight!line metho" or "epreciation o the machine$ Assume that 4a"en can 9ustiy the change$ "aden.s income before depreciation! before income taxes! and before the cumulati)e effect of theaccounting change! if an! for the ear ended &ecember /0! 1223! is 4152!222. $he income tax rate for 1223! and for 1225 through 1225! is /26. 7hat amount should "aden report as net income for the ear ended &ecember /0! 12238 A$021#,,,4$0/,#,,,C$0115#,,,+$0154#,,,1) %he "eerre" tax expense is the A$increase in balance o "eerre" tax liability minus the increase in balance o "eerre" tax asset$4$increase in balance o "eerre" tax asset minus the increase in balance o "eerre" tax liability$C$"ecrease in balance o "eerre" tax asset minus the increase in balance o "eerre" tax liability$+$increase in balance o "eerre" tax asset plus the increase in balance o "eerre" tax liability$-) A company recor"s an unreali:e" loss on short!term securities$ %his might result in whattype o "ierence an" in what type o "eerre" income tax( %ype o +ierence+eerre" %ax5ption 1%emporary;iability5ption &%emporaryAsset5ption )Permanent;iability5ption 4PermanentAsset A$5ption &4$5ption 1C$5ption 4+$5ption )2) A company uses the e the month!en" ban@ statement shows a balance o 0)/#,,,# outstan"ing chec@s are 01,,,# a "eposit o 04#,,, was in transit at month en"# an" a chec@ or 05,, was erroneously charge" by the ban@ against the account# what is the correct balance in the ban@ account at month en"( A$0&-#5,,4$0&1#5,,C$04)#5,,+$0&,#5,,1)) > a short!term obligation is exclu"e" rom current liabilities because o reinancing# theootnote to the inancial statements "escribing this e*ent shoul" inclu"e all o the ollowing inormation EACEP%. A$the terms o the new obligation incurre" or to be incurre"$4$the number o inancing institutions that reuse" to reinance the "ebt# i any$C$the terms o any e