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Course 171043- Full Disclosure In Financial Reporting
  Final Exam
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171043v - Full Disclosure In Financial Reporting

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Final Exam
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Read 'Chapter 0: Course Material' & answer the following question(s):
1. The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
2. Which of the following should be disclosed in a Summary of Significant Accounting Policies?
3. An example of an inventory accounting policy that should be disclosed in a Summary of Significant Accounting Policies is the
4. The focus of ASC 235-10-05 and 50-3, Notes to Financial Statements: Overall (APB Opinion No. 22, Disclosure of Accounting Policies) is on the disclosure of accounting policies. This information is important to financial statement readers in determining
5. Which of the following facts concerning fixed assets should be included in the summary of significant accounting policies?
6. A segment of a business enterprise is to be reported separately when the revenues of the segment exceed 10 percent of the
7. Terra Co.'s total revenues from its three operating segments were as follows: Lion sold $70K to external customers and had $30K of intersegment sales; Monk sold $22K to external customers, and $4K of intersegment sales; Nevi sold $8K to external customers and had $16K of intersegment sales. Total revenue for Terra Co was $150K. Which operating segment(s) is(are) deemed to be (a) reportable segment(s)?
8. Correy Corp. and its divisions are engaged solely in manufacturing operations. The following data (consistent with prior years' data) pertain to the industries in which operations were conducted for the year ended December 31, Year 2: SEGMENT A = $10M revenue, $1.75M profit, and $20M in assets; SEGMENT B = $8M revenue, $1.4M profit, and $17.5M in assets; SEGMENT C = $6M in revenue, $1.2M in profit and $12.5M in assets; SEGMENT D = $3M revenue, $.550M in profit, and $7.5M in assets; SEGMENT E has $4.25 in revenue, $.675 in profit, and $7M in assets; SEGMENT F = $1.5M revenue, $.25 in profit, and $3M in assets. Total Revenue = $32.75M, Total Profit = $5.8M, and Total Assets = $67.5M. In its segment information for Year 2, how many reportable segments does Correy have?
9. In presenting segment information, which of the following items must be reconciled to the entity's consolidated financial statements?
10. Lemu Co. and Young Co. are under the common management of Ego Co. Ego can significantly influence the operating results of both Lemu and Young. While Lemu had no transactions with Ego during the year, Young sold merchandise to Ego under the same terms given to unrelated parties. In the notes to their respective financial statements, should Lemu and Young disclose their relationship with Ego?
11. Dex Co. has entered into a joint venture with an affiliate to secure access to additional inventory. Under the joint venture agreement, Dex will purchase the output of the venture at prices negotiated on an arm's-length basis. Which of the following is(are) required to be disclosed about the related party transaction: I) The amount due to the affiliate at the balance sheet date; II) The dollar amount of the purchases during the year.
12. Which of the following payments by a company should be disclosed in the notes to the financial statements as a related party transaction? I) Royalties paid to a major shareholder as consideration for patents purchased from the shareholder; or II) Officers' salaries.
13. GAAP pertaining to disclosure of long-term obligations does not apply to an unconditional purchase obligation that is cancelable under which of the following conditions?
14. If an unconditional purchase obligation is NOT presented in the balance sheet, certain disclosures are required. A disclosure that is NOT required is
15. Whether recognized or unrecognized in an entity's financial statements, disclosure of the fair values of the entity's financial instruments, such as derivatives, is required when
16. Which of the following subsequent events would require adjustment of the accounts before issuance of the financial statements?
17. Zero Corp. suffered a loss that would have a material effect on its financial statements on an uncollectible trade account receivable due to a customer's bankruptcy. The bankruptcy occurred suddenly due to a natural disaster 10 days after Zero's balance sheet date but 1 month before the issuance of the financial statements. Under these circumstances, which of the following must occur:
18. Conceptually, interim financial statements can be described as emphasizing
19. For interim financial reporting, an extraordinary gain occurring in the second quarter should be
20. Because of a decline in market price in the second quarter, Petal Co. incurred an inventory loss, but the market price was expected to return to previous levels by the end of the year. At the end of the year, the decline had not reversed. When should the loss be reported in Petal's interim income statements?
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