Question 1

On March 15, 1992, Krol Co. paid property taxes of $90,000 on its office building for the calendar year 1992. On April 1, 1992, Krol paid $150,000 for unanticipated repairs to its office equipment. The repairs will benefit operations for the remainder of 1992. What is the total amount of these expenses that Krol should include in its quarterly income statement for the three months ended June 30, 1992?

Options :

A : $172,500

B : $97,500

C : $72,500

D : $37,500

Answer: C

Question 2

Which of the following facts concerning fixed assets should be included in the summary of significant accounting policies?

Options :

A : Option A

B : Option B

C : Option C

D : Option D

Answer: C

Question 3

Reclassification adjustments must be shown in the financial statement that discloses comprehensive income:

Options :

A : To show what portion of comprehensive income is from the realization of current assets.

B : To show the tax effect of items of comprehensive income.

C : To avoid double counting in comprehensive income items, which are currently displayed in net income.

D : To avoid including transactions with shareholders in items of comprehensive income.

Answer: C

Question 4

In general, an enterprise preparing interim financial statements should:

Options :

A : Defer recognition of seasonal revenue.

B : Disregard permanent decreases in the market value of its inventory.

C : Allocate revenues and expenses evenly over the quarters, regardless of when they actually occurred.

D : Use the same accounting principles followed in preparing its latest annual financial statements.

Answer: D

Question 5

Which of the following is not a valuation technique that can be used to measure the fair value of an asset or liability?

Options :

A : The market approach.

B : The impairment approach.

C : The income approach.

D : The cost approach.

Answer: B

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