1 the primary measurement basis currently used to value

Question

1. The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

a. current market price if the assets currently held by an enterprise were sold on the open market.
b. current market price if the assets held by an enterprise were purchased on the open market.
c. present value of the cash flows the assets are expected to generate over their remaining useful lives.
d. market price of the assets held by an enterprise at the date the assets were acquired (although some assets may be valued at their current selling price or net realizable value).

2. Financial disclosure statements are strictest in

a. the United Kingdom.
b. Germany.
c. the United States.
d. France.

3. Which of the following qualitative characteristics of financial information requires that information NOTbe biased in favor of one group of users to the detriment of others?

a. Relevance
b. Reliability
c. Verifiability
d. Neutrality

4. Which of the following is true?

a. Form 10-K is required under the FASB Conceptual Framework.
b. Form 10-Q is a quarterly report of significant events required by the SEC.
c. Form 8-K is a quarterly report of significant events required by the SEC.
d. Form 8-K is the annual report submitted by small businesses to the SEC.

5. The accrual basis of accounting is based primarily on

a. conservatism and revenue realization.
b. conservatism and matching.
c. consistency and matching.
d. revenue realization and matching.

6. In an effort to improve the conceptual framework, the FASB, in conjunction with the IASB has been moving towards more __________ standards.

a. rules approach
b. principles approach
c. broad approach
d. international approach

7. According to the FASB's conceptual framework, the process of reporting an item in the financial statements of an entity is

a. realization.
b. recognition.
c. matching.
d. allocation.

8. Which of the following statements concerning the objectives of financial reporting is correct?

a. The objectives are intended to be specific in nature.
b. The objectives are directed primarily toward the needs of internal users of accounting information.
c. The objectives were the end result of the FASB's conceptual framework project.
d. The objectives encompass not only financial statement disclosures, but other information as well.

9. Which of the following is NOT a purpose of the conceptual framework of accounting?

a. To provide definitions of key terms and fundamental concepts
b. To provide specific guidelines for resolving situations not covered by existing accounting standards
c. To assist accountants and others in selecting among alternative accounting and reporting methods
d. To assist the FASB in the standard-setting process

10. What accounting concept justifies the use of accruals and deferrals?

a. Going-concern assumption
b. Corporate form of organization
c. Consistency characteristic
d. Arm's-length transactions

11. A conceptual framework of accounting should

a. lead to uniformity of financial statements among companies within the same industry.
b. eliminate alternative accounting principles and methods.
c. guide the AICPA in developing generally accepted auditing standards.
d. define the basic objectives, terms, and concepts of accounting.

12. Generally accepted accounting principles

a. are accounting adaptations based on the laws of economic science.
b. derive their credibility and authority from legal rulings and court precedents.
c. derive their credibility and authority from the federal government through the financial reporting section of the SEC.
d. derive their credibility and authority from general recognition and acceptance by the accounting profession.

13. The cost of capital is defined as the

a. simple average of the interest rates of all debt outstanding.
b. simple average of the cost of debt and equity.
c. weighted average of the interest rates of all debt outstanding.
d. weighted average of the cost of debt and equity.

14. "Purchased in-process research and development" is typically associated with

a. creative acquisition accounting.
b. cookie jar reserves.
c. proforma earnings amounts.
d. big bath accounting.

15. Most companies that engage in earnings management typically do NOTgo beyond which of the following activities on the earnings management continuum?

a. Strategic matching
b. Change in methods or estimates with full disclosure
c. Change in methods or estimates with little or no disclosure
d. Non-GAAP accounting

16. Earnings management through strategic matching is best exemplified by

a. changing the useful life of a depreciable asset.
b. timing transactions such that large one-time gains and losses occur in the same quarter.
c. changing the interest rate used in accounting for leases without describing the change in the notes to the financial statements.
d. capitalizing as assets expenditures that have no future economic benefit.

17. Recording as an asset expenditures that have no future economic benefit is an example of

a. strategic matching.
b. change in methods or estimates with full disclosure.
c. a fictitious transaction.
d. non-GAAP accounting.

18. Excluding some revenues, expenses, gains, losses from the earnings figure calculated using generally accepted accounting principles is an example of

a. income smoothing.
b. "big bath" accounting.
c. a "cookie jar" reserve.
d. proforma earnings.

19. Excessive earnings management typically begins as a result of

a. a regulatory investigation.
b. pressure to meet the expectations of stakeholders.
c. a downturn in business.
d. a violation of generally accepted accounting principles.

20. The GAAP Oval best represents the

a. fact that only one true earnings number exists.
b. flexibility managers have within GAAP to report one earnings number from among many possibilities.
c. philosophy that earnings management within limits is ethical.
d. fact that GAAP is not subject to interpretation.

21. Which of the following regarding the weighted-average cost of capital is true?

a. The tax effect of preferred stock dividends should be included in the calculation of weighted-average cost of capital.
b. The tax effect of common stock dividends should be included in the calculation of weighted-average cost of capital.
c. The tax effect of debt should be included in the calculation of the weighted-average cost of capital.
d. Taxes do not affect the weighted-average cost of capital.

22. Which of the following is NOT correct?

a. The after-tax cost of debt for a firm with losses is equal to the interest rate on the debt.
b. Firms always pay dividends on their common stock issues because of the ease with which common shareholders can assume control of the firm.
c. Flotation costs for preferred stock are higher than for debt.
d. Most debt is placed privately and thus there is no flotation cost.

23. Which of the following is NOTa function of a financial analyst?

a. Providing buy recommendations on a company's stock
b. Providing sell recommendations on a company's stock
c. Generating forecasts of company earnings
d. Serving as an investment banker for a company for which the analyst is providing research coverage

24. Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets:

	Sales
Asset	Price	Cost	Gain/Loss
X	$20,000	$80,000	$10,000
Y	35,000	$150,000	$(28,000)

Purchases of fixed assets during 2014 amounted to $340,000. The Accumulated Depreciation account increased $40,000 during 2014. How much was depreciation expense for 2014?

a. $175,000
b. $187,000
c. $197,000
d. $215,000

25. Sapphire Company reported the following information for the year 2014: Sales revenue of $280,000; cost of goods sold of $100,000; selling expenses of $40,000; administrative expenses of $35,000; depreciation of $25,000; interest expense of $8,000; and income tax expense of $28,000. All sales were made for cash and all expenses (other than depreciation and bond premium amortization of $2,000) were paid in cash. All current assets and current liabilities remained unchanged. How much cash was provided by operations for Sapphire Company during 2014?

a. $44,000
b. $69,000
c. $67,000
d. $71,000

26. During 2014, Stewart Company reported revenues on an accrual basis of $70,000. Accounts receivable decreased during the year from $35,000 at the beginning to $24,500 at the end. How much cash was provided by collections from customers during the year?

a. $45,500
b. $59,500
c. $70,000
d. $80,500

27. Which of the following is classified as a cash inflow from financing activities?

a. Cash received from re-issuance of treasury stock held by the company
b. Cash received from the sale of stock held as a long-term investment
c. Cash received as dividends on stock held as a long-term investment
d. Cash received from the sale of land

28. A cash dividend that is declared during an accounting period, to be paid in the next accounting period, may be presented in the statement of cash flows in which of the following ways?

a. A use of cash from operating activities
b. A noncash transaction presented in a separate schedule
c. A use of cash from financing activities
d. A use of cash from investing activities

29. Which of the following is nota source of cash?

a. Sale of equipment below book value at a loss
b. Issuance of bonds payable below par value at a discount
c. Collection of a long-term note receivable from a customer
d. Declaration of a cash dividend to be paid in the next accounting period

30. Which of the following is a noncash transaction that should be disclosed in a schedule accompanying the statement of cash flows?

a. Sale of an investment for cash
b. Purchase of a machine for cash
c. Issuance of common stock in exchange for land
d. Declaration and payment of a cash dividend on common stock

31. Stanner Company's 2014 income statement reported cost of goods sold as $135,000. Additional information is as follows:

December 31, 2014 December 31, 2013

Inventory .............. $30,000 $22,500

Accounts Payable ....... 13,000 19,500

If Stanner uses the direct method, what amount should Stanner report as cash paid to suppliers in its 2014 statement of cash flows?

a. $121,000
b. $134,000
c. $149,000
d. $136,000

Use the following information to answer questions 32, 33, and 34:

Dingo Boot Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2014:

Cash receipts from the issuance of common stock ....	$400,000
Cash receipts from customers .......................	200,000
Cash receipts from dividends on long-term investments	30,000
Cash receipts from repayment of loan made to another company	220,000
Cash payments for wages and other operating expenses	120,000
Cash payments for insurance ........................	10,000
Cash payments for dividends ........................	20,000
Cash payments for taxes ............................	40,000
Cash payment to purchaseland ......................	80,000

32. See information regarding Dingo Boot Company above. The net cash provided by (used in) operating activities is

a. $60,000.
b. $40,000.
c. $30,000.
d. $(20,000).

33. See information regarding Ding Boot Company above. The net cash provided by (used in) investing activities is

a. $220,000.
b. $140,000.
c. $60,000.
d. $(80,000).

34. See information regarding Dingo Boot Company above. The net cash provided by (used in) all activities is

a. $580,000.
b. $410,000.
c. $380,000.
d. $(60,000).

35, During 2014, Larson Corp. acquired buildings for $325,000, paying $75,000 cash and signing a 10% mortgage note payable in 10 years for the balance. How should the transaction be shown in the cash flow statement for Larson in 2014?

a. As a $325,000 reduction in cash flows from investing activities and a $250,000 increase in cash flows from financing activities
b. As a $325,000 reduction in cash flows from investing activities
c. As a $75,000 reduction in cash flows from investing activities
d. As a $250,000 increase in cash flows from financing activities

36. Almondine Company sold a computer for $50,000. The computer's original cost was $250,000, and the accumulated depreciation at the date of sale was $180,000. The sale of the computer should appear on Almondine's annual statement of cash flows (indirect method) as

a. a reduction in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $50,000.
b. an increase in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $50,000.
c. a reduction in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $70,000.
d. an increase in cash flows from operating activities of $20,000 and an increase in cash flows from investing activities of $70,000.

37. The following information is available from Dodger Corporation's accounting records for the year ended December 31, 2014:

Cash paid to suppliers and employees ..............	$1,020,000
Cash dividends paid ..............................	60,000
Cash received from customers ......................	1,740,000
Rent received .....................................	20,000
Taxes paid ........................................	220,000

Net cash flow provided by operating activities for 2014 was

a. $520,000.

b. $500,000.

c. $460,000.

d. $440,000.

38. Thomson Company's income statement for the year ended December 31, 2014, reported net income of $360,000. The financial statements also disclosed the following information:

Amortization .......................................	$ 20,000
Depreciation .......................................	60,000
Increase in accounts receivable ....................	140,000
Increase in inventory ..............................	48,000
Decrease in accounts payable .......................	76,000
Increase in salaries payable .......................	28,000
Dividends paid .....................................	120,000
Purchase of equipment ..............................	150,000
Increase in long-term note payable .................	300,000

Net cash provided by operating activities for 2014 should be reported as

a. $84,000.
b. $204,000.
c. $234,000.
d. $324,000.

39. Daisy Corporation reported net income of $420,000 for 2014. Changes occurred in several balance sheet accounts as follows:

Equipment ...............................	$35,000 increase
Accumulateddepreciation ................	56,000 increase
Note payable ............................	42,000 increase

Additional information:
• During 2014, Daisy sold equipment costing $35,000, with accumulated depreciation of $16,800, for a gain of $7,000.
• In December 2014, Daisy purchased equipment costing $70,000 with $28,000 cash and a 12% note payable of $42,000.
• Depreciation expense for the year was $72,800.

In Daisy's 2014 statement of cash flows, net cash provided by operating activities should be

a. $476,000.
b. $485,800.
c. $492,800.
d. $499,800.

40. Which of the following is true?

a. The FASB requires dividends paid to be classified as an operating activity.
b. The FASB requires interest paid to be classified as a financing activity.
c. The FASB allows dividends paid to be classified as an operating activity or as a financing activity.
d. The IASC allows dividends paid to be classified as an operating activity or as a financing activity.

41. An example of direct matching of an expense with revenues would be

a. depreciation expense.
b. office salaries expense.
c. direct labor costs incurred to produce inventory sold during a period.
d. advertising expense.

42. Which of the following categories of expenses is subject to immediate recognition on the income statement?

a. Repairs and maintenance expense incurred on production equipment of a manufacturer
b. The salary of the company president
c. The salary of the production foreman
d. Utilities expense for the production line of a manufacturer

43. The revenue principle states that revenue should be recognized at a point when

a. an exchange transaction involving goods and services has occurred and the earnings process is essentially complete.
b. an order for shipment of a definite amount of merchandise has been received.
c. a contract between buyer and seller has been signed by both parties.
d. the seller has shipped merchandise to a customer under the terms that the customer need not pay for the merchandise until it is sold.

44. International Accounting Standard 8 requires

a. a restatement of prior years' income for a change in accounting principle.
b. the reporting of the cumulative effect of a change in accounting principle as part of net income in the year of the change.
c. the reporting of the cumulative effect of a change in accounting principle as a direct adjustment to beginning retained earnings in the year of the change.
d. the amortization of the cumulative effect of a change in accounting principle over the future periods expected to be affected by the change.

45. Which of the following accounting changes requires the restatement of financial statements presented for prior years?

a. A change in depreciation method from the straight-line method to the double-declining-balance method
b. A change from the LIFO to the FIFO inventory valuation method
c. A change from the FIFO to the LIFO inventory valuation method
d. A change in the useful life used in the depreciation calculations for a company's manufacturing equipment

46. Starship Corporation incurred the following losses during 2014:

• Loss of $100,000 was incurred in the abandonment of equipment.
• Accounts receivable of $30,000 were written off as uncollectible.
• Several factories were shut down during a strike at a cost of $240,000.
• Loss of $150,000 was sustained as a result of flood damage, an unusual and infrequent occurrence.

Ignoring income taxes, what amount of loss should Starship report as extraordinary on its annual income statement?

a. $100,000
b. $520,000
c. $270,000
d. $150,000

47. Barrister Corporation separates operating expenses in two categories: (1) selling, and (2) general and administrative. The adjusted trial balance at December 31, 2014, included the following expenses and loss accounts:

Interest ...........................................	$140,000
Advertising ........................................	300,000
Freight-Out ........................................	160,000
Product Development ................................	240,000
Loss on Sale of Long-Term Investment ...............	60,000
Officers' Salaries .................................	450,000
Rent for Office Space ..............................	440,000
Sales Salaries and Commissions .....................	280,000

One-half of the rented premises is occupied by the sales department. Barrister's total selling expenses for 2014 are

a. $720,000.
b. $740,000.
c. $800,000.
d. $960,000.

48. Astro Incorporated's financial statements for the years 2014 and 2015 contained the following errors:

	2014	2015
Ending Inventory	$6,000 understated	$9,000 overstated
Depreciation Expense	$12,000 overstated	$7,500 overstated

Assuming that none of the errors were detected or corrected, and that no additional errors were made in 2016, by what amount will current assets at December 31, 2016, be overstated or understated?

a. $0
b. $3,000 overstated
c. $9,000 understated
d. $9,000 overstated

49. The financial statements of Bollinger Corporation for 2014 and 2015 contained the following errors:

	2014	2015
Ending Inventory	$14,000 overstated	$20,000 understated
Rent Expense	$4,800 understated	$6,600 overstated

Assuming that none of the errors were detected or corrected, by what amount will 2015 operating income be overstated or understated?

a. $40,600 understated
b. $35,800 understated
c. $27,800 understated
d. $13,400 overstated

50. The financial statements of Mannassass Corporation for 2014 and 2015 contained the following errors:

	2014	2015
Ending Inventory	$14,000 overstated	$20,000 understated
Rent Expense	$4,800 understated	$6,600 overstated

Assuming that none of the errors were detected or corrected, by what amount will 2014 operating income be overstated or understated?

a. $9,200 overstated
b. $9,200 understated
c. $18,800 understated
d. $18,800 overstated

51. On June 30, 2014, Sonata Company's operating facilities in Nebraska were destroyed by a flood. The loss of $700,000 was not covered by insurance. Sonata's tax rate for 2014 is 40 percent. In Sonata's income statement for the year ended September 30, 2014, this event should be reported as an extraordinary loss of

a. $0.
b. $280,000.
c. $420,000.
d. $700,000.

52. Stratosphere Manufacturing Company sold plant assets at a gain of $205,000 less related taxes of $62,500. Assuming the gain is not considered unusual or infrequent, Stratosphere's income statement for the period should report

a. a prior period adjustment net of applicable taxes, $142,500.
b. an extraordinary item net of applicable taxes, $142,500.
c. a gain of $205,000 and an increase in income tax expense of $62,500.
d. operating income net of applicable taxes, $142,500.

53. Seaworthy Company's gross sales in 2014 were $3,930,000. Assuming sales returns and allowances were $74,000, sales discounts were $35,000, and freight-out was $28,000, what were Seaworthy's net sales in 2014?

a. $3,793,000
b. $3,821,000
c. $3,856,000
d. $3,930,000

54. The changes in account balances of the Dunedin Corporation during 2014 are presented below:

	Increase
Assets .............................................	$133,500
Liabilities ........................................	40,500
Common Stock .......................................	90,000
Additional Paid-In Capital .........................	9,000

Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500, the net income for 2014 should be

a. $6,000.
b. $13,500.
c. $19,500.
d. $25,500.

55. Saginaw Inc. decided on August 1, 2014, to dispose of a component of its business. The component was sold on November 30, 2014. Saginaw's income for 2014 included income of $250,000 from operating the discontinued segment from January 1 to the sale date. Saginaw incurred a loss on the November 30 sale of $220,000. Ignoring income taxes, what amount should be reported in the 2014 income statement as the net income or loss under "Discontinued Operations"?

a. $220,000 loss
b. $30,000 loss
c. $30,000 income
d. $250,000 income

56. The following amounts are from Silverton Co.'s 2014 income statement:

Sales	$340,000
Sales returns and allowances	5,000
Cost of goods sold	132,000
Utilities expense	66,000
Interest revenue	1,000
Income tax on operations	28,000
Extraordinary loss due to earthquake, net of tax	5,000
Interest expense	4,000
Salaries expense	46,000
Loss on sale of investments	3,000

What amount would Silverton show for income from continuing operations on a multiple-step format income statement?

a. $52,000
b. $68,000
c. $57,000
d. $96,000

57. Most forecasting exercises begin with a forecast of

a. cash.
b. total assets.
c. net income.
d. sales.

58. Which of the following events would be considered an extraordinary item?

a. An airline experienced a significant loss due to a strike by employees of the company who provide its aircraft maintenance.
b. A food cannery was faced with a large loss of inventory of canned soups due to government condemnation because of possible botulism contamination; the company had never experienced a similar situation in its history.
c. A company, located on an island which has experienced severe flooding three times in the past 25 years, was subjected to a heavy loss of physical plant due to flooding.
d. A medical corporation was required to pay damages equal to three times its average net income to a patient. The corporation had experienced suits of this nature in the past, but the amount of the losses had never exceeded 5 percent of the corporation's average net income.

59. In relation to a set of 2015 basic financial statements, a subsequent event is one that

a. occurs before the 2015 financial statements are issued.
b. involves uncertainty as to possible gain or loss that will ultimately be resolved in 2016 or later.
c. occurs after the 2015 financial statements are issued.
d. requires an appropriate adjusting entry to be made as of the end of 2015.

60. An operating cycle

a. is twelve months or less in length.
b. is the average time required for a company to collect its receivables.
c. is used to determine current assets when the operating cycle is longer than one year.
d. starts with inventory and ends with cash.

61. The disclosure of accounting policies

a. may describe policies that are peculiar to the reporting company's industry.
b. should not appear in the notes to the financial statements.
c. should not describe unusual or innovative applications of GAAP.
d. is encouraged but not required.

62. Treasury stock should be reported

a. as a current asset only if it will be sold within the next year or the operating cycle, whichever is longer.
b. as a current asset only if it will be sold within the next year or the operating cycle, whichever is shorter.
c. in the Investments and Funds section of the balance sheet.
d. as a deduction from total stockholders' equity on the balance sheet.

63. Information from Osborne Company's balance sheet is as follows: Current assets:

Current assets:
Cash ..............................................	$ 1,200,000
Investment securities .............................	3,750,000
Accounts receivable ...............................	28,800,000
Inventories .......................................	33,150,000
Prepaid expenses ..................................	600,000
Total current assets ..............................	$67,500,000
Current liabilities:
Notes payable ......................................	$   750,000
Accounts payable ..................................	9,750,000
Accrued expenses ..................................	6,250,000
Income taxes payable ..............................	250,000
Payments due within one year on long-term debt ....	1,750,000
Total current liabilities .........................	$18,750,000

What is Osborne's acid-test (quick) ratio?

a. 0.26 to 1
b. 0.30 to 1
c. 1.80 to 1
d. 3.60 to 1

Use the following information to answer questions 64 and 65:

Laramie Corporation was organized on January 3, 2015. Laramie was authorized to issue 50,000 shares of common stock with a par value of $10 per share. On January 4, Laramie issued 30,000 shares of common stock at $25 per share. On July 15, Laramie issued an additional 10,000 shares at $20 per share. Laramie reported income of $33,000 during 2015. In addition, Laramie declared a dividend of $.50 per share on December 31, 2015.

64. See Laramie Corporation information above. The amount reported on Laramie Corporation's December 31, 2015, balance sheet as additional paid-in capital was

a. $400,000.
b. $550,000.
c. $563,000.
d. $950,000.

65. See Laramie Corporation information above. The amount reported on Laramie Corporation's December 31, 2015, balance sheet as stockholders' equity was

a. $400,000.
b. $550,000.
c. $950,000.
d. $963,000.

66. Information from Brian Company's balance sheet is as follows:

Current assets:
Cash .............................................	$ 1,200,000
Investment securities ............................	3,750,000
Accounts receivable ...............................	28,800,000
Inventories .......................................	33,150,000
Prepaid expenses ..................................	600,000
Total current assets ..............................	$67,500,000
Current liabilities:
Notes payable .....................................	$   750,000
Accounts payable ..................................	9,750,000
Accrued expenses ..................................	6,250,000
Income taxes payable ..............................	250,000
Payments due within one year on long-term debt ....	1,750,000
Total current liabilities .........................	$18,750,000

What is Brian's current ratio?

a. 0.26 to 1
b. 0.30 to 1
c. 1.80 to 1
d. 3.60 to 1

67. The accounts and balances shown below were gathered from Primer Corporation's trial balance on December 31, 2014. All adjusting entries have been made.

Wages Payable	$ 25,600
Cash	17,700
Mortgage Payable	151,600
Dividends Payable	14,000
Prepaid Rent	13,600
Inventory	81,800
Sinking Fund Assets	52,400
Short-Term Investments	15,200
Premium on Bonds Payable	4,600
Stock Investment in Subsidiary	102,400
Taxes Payable	22,800
Accounts Payable	24,800
Accounts Receivable	36,600

The amount that should be reported as current assets on Primer Corporation's balance sheet is
a. $151,300.
b. $164,900.
c. $217,300.
d. $267,300.

68. The following data were taken from the financial statements of Howard Corporation for the year ended December 31, 2014:

Net sales	$120,000
Net income	30,000
Total assets, January 1, 2014	400,000
Total assets, December 31, 2014	600,000

What was Howard's rate of return on assets for 2014?
a. 5 percent
b. 6 percent
c. 20 percent
d. 24 percent

69. Hondo Co. has total debt of $252,000 and stockholders' equity of $420,000. Hondo is seeking capital to fund an expansion. Hondo is planning to issue an additional $180,000 in common stock, and is negotiating with a bank to borrow additional funds. The bank requires a maximum debt ratio of .75. What is the maximum additional amount Hondo will be able to borrow after the common stock is issued?
a. $639,000
b. $852,000
c. $1,236,000
d. $1,548,000

70. Which of the following generally is considered a limitation of the balance sheet?

a. The balance sheet reflects the current value of a business.
b. The balance sheet reflects the instability of the dollar.
c. Balance sheet formats and classifications do not vary to reflect industry differences.
d. Due to measurement problems, some enterprise resources and obligations are not reported on the balance sheet.

71. How should a contingent liability be reported in the financial statements when it is "reasonably possible" the company will have to pay the liability at a future date?

a. As a deferred liability
b. As an accrued liability
c. As a disclosure only
d. As an account payable with an additional disclosure explaining the nature of the transaction

72. Pending litigation would generally be considered a(n)

a. nonmonetary liability.
b. contingent liability.
c. estimated liability.
d. current liability.

73. Which of the following characteristics may result in the classification of a liability being changed from current to noncurrent?

a. Violation of a subjective acceleration clause
b. Violation of an objective acceleration clause
c. A demand provision for payment
d. Refinancing after the balance sheet date

74. In order for a liability to exist,

a. there must be a past transaction or event.
b. the exact amount must be known.
c. the identity of the party to whom the liability is owed must be known.
d. there must be an obligation to pay cash in the future.

75. In 2014, Dallas Company had sales of $600,000; cost of sales of $430,000; interest expense of $12,000; a gain on the sale of a component of $52,000; and an extraordinary loss of $25,000. For its income statement, Dallas uses the single-step format and the all-inclusive concept. What was Dallas's reported pretax income from continuing operations?

a. $150,000
b. $170,000
c. $158,000
d. $118,000