Week 1 Quiz All Questions Details given below (Please Check) Question 1 � The fair value hierarchy provided by GAAP in FASB 157 is comprised of three (3) levels. Which of these levels is/are based, either directly or indirectly, on observable data? Question 2 Giaconda, Inc. acquires an asset for which it will measure the fair value by discounting future cash flows of the asset. Which of the following terms best describes this fair value measurement approach? Question 3 On July 1, 2003, Roxy Co. obtained fire insurance for a three-year period at an annual premium of $72,000 payable on July 1 of each year. The first premium payment was made July 1, 2003. On October 1, 2003, Roxy paid $24,000 for real estate taxes to cover the period ending September 30, 2004. This prepayment was made to obtain a discount. In its December 31, 2003, Balance Sheet, Roxy should report prepaid expenses of: Question 4 The effect of a transaction that is infrequent in occurrence but not unusual in nature should be presented separately as a component of income from continuing operations when the transaction results in a Question 5 � Which of the following is a generally accepted accounting principle that illustrates the practice of conservatism during a particular reporting period? Question 6 According to the FASB conceptual framework, which of the following statements conforms to the realization concept? Question 7 � In a statement of cash flows, which of the following would increase reported cash flows from operating activities using the direct method? (Ignore income tax considerations.) Question 8 White Co. wants to convert its 2001 financial statements from the accrual basis of accounting to the cash basis. Both supplies inventory and office salaries payable increased between January 1, 2001, and December 31, 2001.To obtain 2001 cash basis net income, how should these increases be added to or deducted from accrual basis net income? Question 9 A company is an accelerated filer that is required to file Form 10-K with the United States Securities and Exchange Commission (SEC). What is the maximum number of days after the company’s fiscal year end that the company has to file Form 10-K with the SEC? Question 10 During the current year, Ace Co. amortized a bond discount. Ace prepares its statement of cash flows using the indirect method. In which section of the statement should Ace report the amortization of the bond discount? Question 11 Which of the following statements is correct regarding reporting comprehensive income? Question 12 Which of the following is correct concerning financial statement disclosure of accounting policies? Question 13 According to the FASB conceptual framework, which of the following situations violates the concept of reliability? Question 14 Which of the following describes how comprehensive income should be reported? Question 15 Which of the following cash flows per share should be reported in a statement of cash flows? Question 16 Compared to the accrual basis of accounting, the cash basis of accounting understates income by the net decrease during the accounting period of Question 17 On July 1, 20×2, Dewey Co. signed a 20-year building lease that it reported as a capital lease. Dewey paid the monthly lease payments when due. How should Dewey report the effect of the lease payments in the financing activities section of its 20×2 statement of cash flows? Question 18 In a comparison of 2004 to 2003, Neir Co.’s inventory turnover ratio increased substantially although sales and inventory amounts were essentially unchanged. Which of the following statements explains the increased inventory turnover ratio? Question 19 Heath Co.’s current ratio is 4:1. Which of the following transactions would normally increase its current ratio? Question 20 Which of the following levels of the fair value hierarchy, if any, requires the most extensive disclosures about fair value measurements?