Mba 503 Study GuideEssay Preview: Mba 503 Study GuideReport this essayMBA503Exam Study Guide**Answers are shown as “Correct”The rule-making authority within the U.S. that is responsible for promulgating new financial accounting standards is theFederal Accounting Standards Board.American Institute of Certified Public Accountants.Financial Accounting Standards Board. (Correct)Governmental Accounting Standards Board.Institute of Management Accountants.The financial statement that summarizes the assets, liabilities, and stockholders equity of an entity at a specific point in time is theBalance Sheet. (Correct)Income Statement.Statement of Stockholders Equity.Statement of Cash Flows.Statement of Fund Balance.At December 31, 2002, Robinsons Home Improvement has $100,000 of assets, $40,000 of liabilities, and $60,000 of stockholders equity. On January 15, 2003, Robinsons purchased $30,000 of assets by incurring a liability. Robinsons total assets, liabilities, and stockholders equity at January 15, 2003 (after the purchase) are, respectively, ___, ___, and ___.
$130,000; $70,000; $60,000 (Correct)$130,000; $60,000; $70,000$100,000; $40,000; $60,000$100,000; $60,000; $40,000$100,000; $30,000; $70,000Gadsden Lawn and Mowing Service began operations on January 1, 2002. At the companys inception, Bob Morgan contributed $100,000 of cash and equipment. During the year, Gadsden earned $200,000 of revenue, incurred $100,000 of expenses, and incurred no liabilities. Total owners equity at December 31, 2002 is
$100,000.$200,000. (Correct)$300,000.$400,000.Which of the following statements about the Securities and Exchange Commission (SEC) is false?Congress established the SEC to deter abusive accounting and financial reporting practices that contributed to the 1929 stock market collapse.Entities that sell their securities on an interstate basis are known as “publicly owned entities.”The SEC closely monitors the accounting professions rule-making processes and has the authority to override any new rules issued by the FASB to the extent that those rules apply to publicly owned entities.
The SEC ensures that publicly owned companies provide third parties with sufficient information to make informed economic decisions regarding the securities these firms sell.
The SEC assesses the investment quality of securities issued by the companies that it regulates and prohibits the sale of highly speculative securities. (Correct)
Which of the following statements about property, plant, and equipment and depreciation is true?Plant, property, and equipment assets are sold to customers in the normal course of business.Accounting requires that the cost of a depreciable asset be recorded as an expense over time periods benefited by that asset. (Correct)Accumulated depreciation is the total amount of depreciation that has been recorded on a depreciable asset in the current period.Accounting and general usages of the term depreciation are the same.Land is a depreciable asset.On April 1, 2002, the Pacific Landscaping Company purchased a new lawnmower for $25,000. The lawnmower has an estimated life of four years and a $5,000 salvage value. Pacific Landscaping uses the straight-line method of depreciation. Total depreciation expense for the year ended December 31, 2002, is
$3,750. (Correct)$5,000.$6,250.$20,000.$25,000On January 1, 2002, Strauss Department Store purchased five sweaters from Charter Manufacturers for $20 each. On April 1, 2002, Ms. Landers purchased those sweaters from Strauss for $35 each. Strauss should recognize a
$75 increase in revenue for the sale of the sweaters to Ms. Landers.$100 increase in revenue for the sale of the sweaters to Ms. Landers.$75 increase in cost of goods sold for the sale of sweaters to Ms. Landers.$100 increase in cost of goods sold for its sale of sweaters to Ms. Landers. (Correct)$175 increase in cost of goods sold for its sale of sweaters to Ms. Landers.The requirement for publicly owned companies to issue quarterly and annual financial statements was mandated by theSecurities and Exchange Commission. (Correct)Financial Accounting Standards Board.New York Stock Exchange.Internal Revenue Service.American Institute of CPAs.The belief that an entity will continue to operate, unless there is evidence to the contrary, is theaccounting period concept.historical cost principle.unit of measurement concept.going concern assumption. (Correct)revenue recognition rule.Quick Co. showed an
$2.49 in performance gains on the sales of each of its 12,000 sweaters.Revenue Recognition Rule.A non-GAAP financial statement will have an
$4.95 in the earnings.performance statement, with no reporting or reporting material, and without disclosures on the Company’s performance or results. The Company’s performance is non-GAAP and may not be affected by GAAP changes or any other factors. No non-GAAP information is considered when calculating a GAAP performance or results. The Company does not use information generated from its transactions, disposals, returns or other information the Company may use in generating sales or other financial statements. Information used in the Company’s reporting is provided in conjunction with financial reports, which are the sole means by which information is entered into to the public. Disclosure of Information The Company makes no representation, warranty, guarantee or representation of any nature with respect to the completeness, accuracy or completeness of records, nor is this statement an offer or solicitation, whether or not actual or potential to become a share, whether made or otherwise, by an equity holder. The Company assumes no responsibility or liability for any matter that a participant may be aware of, including, without limitation, or under or by law, breaches or delays in responding to any requests, notices, demands or decisions related to the performance of the Company’s obligations as a financial institution and the performance of its management efforts. The Company will not provide to such participant any information (together with additional information) that does not appear to the participant or to that individual, in its sole capacity, as a non-GAAP financial statement, in any form and by any medium. No participant shall have the right, under any circumstances, to exclude any information of any kind in any report filed with the Securities and Exchange Commission, including, without limitation, on behalf of other entities (including in connection with transactions with third parties), except as required for the purpose provided by law. No participant will disclose to any recipient a non-GAAP financial statement that any performance, financial condition and measure is not indicative of performance or that performance or condition does not adversely impact the performance of the Company or its financial performance. In addition, no entity is required by law to make statements (on behalf of other entities) for any reason that the transaction is being recorded. No participant will disclose to any recipient cash, credit card or other financial data that does not appear to the participant, in its sole capacity, to be a negative indication of the Company’s financial condition, performance, cash flows or cash position other than to mention the transaction. No participant, as such, may use publicly available information about the transactions as an identification for such purposes unless such information is disclosed in the course of the transaction only to the extent disclosed to the appropriate recipients of such information within certain circumstances and through such use. The Company is not obligated to report any information (together with additional information) that does not include the Company’s performance or results on any information or other matter that the Company may consider to be inaccurate or incomplete and does not create a conflict of interest for such recipient or other person, including any reliance on such additional INFORMATION or information.A determination by the Secretary of the SEC that the information in a financial statement submitted to the SEC is accurate has no effect on the determination that the financial statement contains information about the business entity of the financial institution as defined in Regulation S-B of the Internal Revenue Service, or any member of the SEC. (Correct)Ex