Reference no: EM133172410

Questions -

Q1. Larsen Co..reported net income of $135,000 for the year ended December 31, 2021. January 1 balances in accounts receivable and accounts payable were $29,000 and $26,000, respectively. Year-end balances in these accounts were $30,000 and $24,000, respectively. Assuming that all relevant information has been presented, Larsen's cash flows from operating activities would be:

A) $134,000.

B) $132,000.

C) $136,000.

D) $138,000.

Q2. During its 2021 fiscal year, Ryan Corporation reported before-tax income of $620,000. This amount does not include the following two items, both of which are considered to be material in amount:

Unusual gain $ 200,000

Loss on discontinued operations (300,000)

The company's income tax rate is 25%.

Ryan Corporation prepares its financial statements applying U.S. GAAP. In its 2021 income statement, Jacobsen would report income from continuing operations of:

A) $391,500.

B) $465,000.

C) $615,000.

D) $620,000. -2-

Q3. A change in accounting principle that is implemented using the modified retrospective approach includes:

A) implementing the change in the current period only and not adjusting for the cumulative effects on prior periods.

B) applying the new standard to the adoption period only, and recording the cumulative adjustment for prior periods to the current period's beginning balance of retained earnings.

C) restating financial statements of all periods presented as if the new standard had been used in those periods.

D) not accounting for the change in the current period or prior periods.

Q4. Which of the following is not an indicator that revenue can be recognized over time?

A) The seller is enhancing an asset that the buyer controls as the service is performed.

B) The customer consumes the benefit of the seller's work as the seller performs the service.

C) The seller is creating an asset that has an alternative use to the seller, and the seller can receive payment for its progress even if the customer cancels the contract.

D) None of these answer choices are correct.

Q5. Semen Manufacturing agrees to manufacture bumper cars for Aces Amusement Parks. Under the terms of the contract, Aces will pay Semen a total of $60,000, and Aces can cancel the contract if it so chooses but must pay Semen for work completed. Semen believes that, if Aces cancelled the contract, Semen t could sell the bumper cars to another amusement park and still make a profit. The manufacturing contract is expected to last six months, and as of December 31, 2021, the job is 80% complete. How much revenue should Semen t recognize in 2021 for this contract?

A) $60,000

B) $12,000

C) $48,000

D) $0