Scribd
Upload
279 views

Intermediate Accounting 1 Week Answers

The document contains multiple choice and true-false questions related to revenue recognition principles and methods for long-term contracts, installment sales, and other specialized topics. The multiple choice questions cover topics such as revenue recognition criteria, the percentage-of-completion method, and accounting for long-term contracts. The true-false questions address issues like recognizing revenue, accounting for contract costs, and applying different revenue recognition methods. Several sections include computational problems applying revenue recognition concepts.

Uploaded by

imsana minatozaki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
279 views

Intermediate Accounting 1 Week Answers

The document contains multiple choice and true-false questions related to revenue recognition principles and methods for long-term contracts, installment sales, and other specialized topics. The multiple choice questions cover topics such as revenue recognition criteria, the percentage-of-completion method, and accounting for long-term contracts. The true-false questions address issues like recognizing revenue, accounting for contract costs, and applying different revenue recognition methods. Several sections include computational problems applying revenue recognition concepts.

Uploaded by

imsana minatozaki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 7

TRUE-FALSE—Conceptual

Answer No. Description


F 1. Recognition of revenue.
T 2. Realization of revenue.
T 3. Delayed recognition of revenue.
F 4. Recognizing revenue when right of return exists.
T 5. Recognizing revenue prior to product completion.
F 6. Use of percentage-of-completion method.
T 7. Input measure for contract progress.
T 8. Reporting Construction in Process and Billings on Construction in Process.
F 9. Construction in Process account balance.
F 10. Recognition of revenue under completed-contract method.
T 11. Principal advantage of completed-contract method.
F 12. Recognizing loss on an unprofitable contract.
F 13. Recognizing current period loss on a profitable contract.
T 14. Recognizing revenue under completion-of-production basis.
F 15. Recording a loss on an unprofitable contract.
F 16. Deferring revenue under installment-sales method.
T 17. Deferring gross profit under installment-sales method.
T 18. Classification of deferred gross profit.
F 19. Recognizing revenue under cost-recovery method.
T 20. Recognizing profit under cost-recovery method.

MULTIPLE CHOICE—Conceptual
Answer No. Description
c 21. Revenue recognition principle.
b 22. Definition of "realized."
a 23. Definition of "earned."
S
b 24. Revenue recognition representations.
P
d 25. Definition of recognition.
P
b 26. Revenue recognition principle.
d 27. Recognizing revenue at point of sale.
d 28. Recording sales when right of return exists.
c 29. Revenue recognition when right of return exists.
d 30. Revenue recognition when right of return exists.
b 31. Appropriate accounting method for long-term contracts.
c 32. Percentage-of-completion method.
b 33. Percentage-of-completion method.
c 34. Classification of progress billings and construction in process.
b 35. Calculation of gross profit using percentage-of-completion.
a 36. Disclosure of earned but unbilled revenues.
b 37. Disadvantage of using percentage-of-completion.
S
d 38. Percentage-of-completion input measures.

MULTIPLE CHOICE—Conceptual (cont.)


Answer No. Description
S
a 39. Advantage of completed-contract method
c 40. Revenue, cost, and gross profit under the completed-contract method.
a 41. Loss recognition on a long-term contract.
c 42. Accounting for long-term contract losses.
d 43. Criteria for revenue recognition of completion of production.
a 44. Completion-of-production basis.
S
d 45. Revenue recognition of completion of production.
S
b 46. Treatment of estimated contract cost increase.
c 47. Presentation of deferred gross profit.
c 48. Appropriate use of the installment-sales method.
b 49. Valuing repossessed assets.
b 50. Gross profit deferred under the installment-sales method.
S
c 51. Income realization on installment sales.
P
d 52. Conservative revenue recognition method.
b 53. Income recognition under the cost-recovery method.
b 54. Income recognition under the cost-recovery method.
d 55. Cost recovery basis of revenue recognition.
b 56. Deposit method of revenue recognition.
d 57. Cost recovery method.
b *58. Types of franchising arrangements.
d *59. Accounting for consignment sales.
d *60. Allocation of initial franchise fee.
a *61. Recognition of continuing franchise fees.
b *62. Future bargain purchase option.
a *63. Option to purchase franchisee's business agreement.
d *64. Revenue recognition by the consignor.

DERIVATIONS — Computational
No. Answer Derivation

65. c $11,160,000  .30 = $3,348,000.

66. d ($10,800,000  .75) – ($10,650,000  .30) = $4,905,000.

67. b ($11,160,000  .75) – ($930,000  8) = $930,000 debit.

68. c $11,160,000  .25 = $2,790,000


$11,250,000 – ($10,800,000  .75) = $3,150,000.

DERIVATIONS — Computational (cont.)


No. Answer Derivation
69. b ($12,000,000 – $11,000,000)  ($5,060,000 ÷ $11,000,000) = $460,000.

70. c $5,060,000 + $460,000 = $5,520,000.

71. c $1,200,000
—————————— × ($3,000,000 – $2,000,000) = $600,000
$1,200,000 + $800,000
($3,000,000 – $2,100,000) – $600,000 = $300,000.

72. c $9,600,000
——————————— × ($20,000,000 – $16,000,000) = $2,400,000.
$9,600,000 + $6,400,000

73. b $360,000 – $150,000 = $210,000.

74. d $450,000 – $90,000 = $360,000

$360,000
————————— × ($3,600,000 – Total estimated cost) = $90,000
Total estimated cost

Total estimated cost = $2,880,000


$3,600,000 – $2,880,000 = $720,000.

75. c $1,950,000
—————- × ($5,500,000 – $3,250,000) = $1,350,000
$3,250,000

($5,500,000 – $3,350,000) – $1,350,000 = $800,000.

76. b $1,600,000
————— × ($9,600,000 – $6,400,000) = $800,000.
$6,400,000

77. c $9,600,000 – $6,500,000 = $3,100,000.

78. a $5,400,000
————— × ($12,600,000 – $9,000,000) = $2,160,000.
$9,000,000

79. b $12,600,000 – $8,400,000 = $4,200,000.

80. a [$3,900,000 ÷ ($3,900,000 + $2,600,000)] × $4,500,000 = $2,700,000


($11,000,000 – $6,700,000) – $2,700,00 = $1,600,000.

81. c $11,000,000 – $6,700,000 = $4,300,000.

DERIVATIONS — Computational (cont.)


No. Answer Derivation
82. b ($15,000,000 × .60) – ($13,500,000 × .25) = $5,625,000.

83. c ($7,590,000 ÷ $16,500,000) × $1,500,000 = $690,000.

84. a ($7,590,000 ÷ $16,500,000) × $1,500,000 = $690,000.


$7,590,000 + $690,000 = $8,280.000.
85. b $8,400,000 – ($3,840,000 + $4,920,000) = –$360,000.

86. c $3,200,000 – $2,150,000 = $1,050,000.

87. c $1,500,000 – $820,000 = $680,000.

88. a ($2,250,000 – $150,000) – $1,900,000 = $200,000.

89. d $11,200 – $7,840 = $3,360


($4,000 – $400) – $3,360 = $240 gain.

90. b $40,000 – $12,000 = $28,000


$28,000 – $22,500 = $5,500 loss.

91. a $36,000 – $14,400 = $21,600


($12,600 – $600) – $21,600 = $9,600 loss.

92. b 2012: $200,000 – ($758,160 × 10%) = $124,184.


2013: ($758,160 – $124,184) × 10% = $63,398.

93. b [($2,100,000 – $1,470,000) ÷ $2,100,000] × $1,260,000 = $378,000.

94. b ($300,000 ÷ $750,000) × $150,000 = $60,000


[($270,000 ÷ $900,000) × $180,000] + $60,000 = $114,000.

95. d [$2,800 × (1 – .40)] – ($1,050 – $70) = $700.

96. d ($4,000,000 – $3,000,000) ÷ $4,000,000 = 25%

97. a ($1,600,000 × .25) – $180,000 = $220,000,

98. d $1,400,000 × .25 = $350,000; $1,000,000 × .25 = $250,000.

99. a ($4,000,000 – $2,800,000) ÷ $4,000,000 = 30%.

100. d ($1,600,000  .30) – $160,000 = $320,000.

101. a $1,400,000  .30 = $420,000


$1,200,000 – [($1,600,000 + $1,400,000)  .30] = $300,000.
DERIVATIONS — Computational (cont.)
No. Answer Derivation
102. c ($5,400,000 – $3,600,000) ÷ $5,400,000 = 33 1/3%
($5,400,000  .20) + [(5,400,000  .80)  4/12)] = $2,520,000
$2,520,000  33 1/3% = $840,000.

103. b [($5,400,000  .20) + ($5,400,000  .80  8/12] – $3,600,000 = $360,000.

104. a $0.

*105. d Revenue = $500,000


Interest income = $200,000 × 8% × 9/12 = $12,000
Cash = $160,000 – $12,000 = $148,000
Repossession revenue: $300,000 – $160,000 = $140,000.

*106. c Cash = $700,000 + $60,000 = $760,000


Franchise Fee Revenue = $700,000
Unearned Franchise Fees = $60,000 × 20% = $12,000
Revenue from Franchise Fees = $60,000 – $12,000 = $48,000.

*107 b $300,000 + $818,808 – $36,000 = $1,082,808.

*108. d Sales – (Sales × 20%) – $800 – $520 – $280 = $17,200


.8 Sales = $18,800
Sales = $23,500.

*109. a ($360 × 50) + [($800 ÷ 80) × 50] = $18,500.

DERIVATIONS — CPA Adapted


No. Answer Derivation
110. a Conceptual.

111. b ($12,800,000 × 45%) – ($12,000,000 × 15%) = $3,960,000.

$8,400,000
112. d —————— × ($28,000,000 – $25,200,000) = $933,333.
$25,200,000

113. d $7,000,000 – $2,700,000 – $3,050,000 = $1,250,000.

114. c 1,200,000 lbs. × $.70 = $840,000.

115. b ($36,000 ÷ 24%) + ($198,000 ÷ 30%) = $810,000.

116. c $2,000,000 – $1,200,000 = $800,000 gross profit (40% gross profit rate)
$800,000 – ($480,000 × .4) = $608,000.
DERIVATIONS — CPA Adapted (cont.)
No. Answer Derivation
117. c $600,000 + $100,000 = $700,000
$700,000 – $490,000 = $210,000 gross profit (30% gross profit rate)
($600,000 – $200,000) × 30% = $120,000.

118. c $2,400,000 – $1,440,000 = $960,000 (40% gross profit rate)


$960,000 – ($1,100,000 × 40%) = $520,000.

119. c Conceptual.

120. a Conceptual.

121. D
122. D
123. A
124. A
125. A
126. C
127. B
128. B
129. B
130. C
131. C
132. B
133. D
134. D
135. A
136. C
137. C
138. C
139. D
140. C
141. C
142. D
143. C
144. D
145. C
146. B
147. D
148. D
149. A
150. A
151. D
152. C
153. D
154. B
155. D
156. A
157. A
158. B
159. A
160. A
161. C
162. B
163. D
164. C
165. C

You might also like