31.Costs incurred internally to create intangibles are
A. capitalized.
B. capitalized if they have an indefinite life.
C. expensed as incurred.
D. expensed only if they have a limited life.
32.The amount to be recorded as the cost of an asset under capital lease is equal to the
A. present value of the minimum lease payments.
B. present value of the minimum lease payments or the fair value of the asset, whichever is lower
C. present value of the minimum lease payments plus the present value of any unguaranteed residual value.
D. carrying value of the asset on the lessor's books
33.In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
A. weighted by the number of days outstanding
B. weighted by the number of months outstanding
C. considered outstanding at the beginning of the year
D. considered outstanding at the beginning of the earliest year reported
34.Debt securities that are accounted for at amortized cost, NOT fair value, are
A. held-to-maturity debt securities
B. trading debt securities
C. available-for-sale debt securities
D. never-sell debt securities
35.Elvis Company purchases inventory for $70,000 on March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14, 2008. Graceland still holds the inventory on December 31, 2008, and determines that its market value (replacement cost.is $82,000 at that time. Graceland writes the inventory down from $95,000 to its lower market value of $82,000 at the end of the year. Elvis owns 75% of Graceland. Based on this information, what amount of inventory should be eliminated in the consolidation workpaper for 2008?
A. $15,000
B. $14,000
C. $12,000
D. $13,000
36.Which of the following objectives is considered the cornerstone of financial reporting by a governmental entity?
A. Accountability
B. Budgetary compliance
C. Interperiod equity
D. Service efforts and accomplishments
37.Expenditures should be budgeted by character. An example of a character classification is
A. current expenditures
B. salaries
C. public safety
D. police department
38.Which of the following funds is accounted for on the modified accrual basis of accounting?
A. General
B. Internal service
C. Proprietary
D. Pension trust
39.Several years ago, Durham City issued $1 million in zero coupon bonds due and payable in 2010. The bonds were sold at an amount to yield investors 6% over the life of the bonds. During the current year, how much interest expenditures would Durham City recognize related to these bonds?
A. Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period
B. Face amounts of bonds times 6%
C. Book value of bonds times 6%
D. The present value of the bonds at the beginning of the period minus the present value of the bonds at the end of the period multiplied by 6%
40.As used in governmental accounting, interperiod equity refers to a concept of
A. providing the same level of services to citizens each year
B. measuring whether current revenues are sufficient to pay for current services
C. levying property taxes at the same rate each year
D. requiring that general fund budgets be balanced each year
41.The state has a legally separate State Building Authority, which has a board appointed by the Governor. The authority issues debt in its name, holds title to buildings in its name, and leases its building exclusively to the state. The authority would be considered a(n.
A. primary government.
B. component unit.
C. related organization.
D. affiliated organization.
42.Revenues of a not-for-profit organization should be reported as
A. increases in one of the three categories of net assets.
B. increases in unrestricted net assets.
C. increases in temporarily restricted net assets.
D. increases in permanently restricted net assets.
43.Financial statements for a church-supported college should be prepared according to standards set by the
A. American Institute of Certified Public Accountants (AICPA).
B. Financial Accounting Standards Board (FASB).
C. Government Accounting Standards Board (GASB).
D. Securities and Exchange Commission (SEC).
44.For a not-for-profit hospital, which of the following financial statements is required?
A. Statement of financial position
B. Statement of revenues
C. Statement of retained earnings
D. Statement of functional expenses
45.What agency has the ultimate authority in defining independence for publicly traded companies?
A. AICPA
B. SEC
C. Department of Justice
D. Congress
46.A report on internal control effectiveness by management of public companies is required by which of the following:
A. The Sarbanes-Oxley Act of 2002
B. The PCAOB
C. The AICPA
D. Only auditors are required to report on internal control effectiveness
47.Once sufficient predication has been established, what is the first step a fraud examiner following the fraud theory approach should take?
A. Create a hypothesis.
B. Analyze data.
C. Interview witnesses.
D. Interview the suspect.
48.Which of the following best describes the objective of a fraud examination?
A. Make recommendations to management about how to prevent fraud.
B. Determine whether financial statements are free of misstatements because of fraud.
C. Express an opinion on the guilt or innocence of a suspect.
D. Determine whether a crime has been committed, and if so, who is responsible.
49.Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called
A. penalty damages.
B. retribution damages.
C. punitive damages.
D. nominal damages.
50.Where a contract calls for action that violates a statute, in a breach of contract case the court will
A. impose the appropriate criminal penalty.
B. ignore the contract and leave the parties where they are.
C. order both parties to return any consideration received.
D. order payments so that the parties to the illegal contract share any losses equally.
51.Ted's Gifts and Sweets enters into a written contract with Bannon Candies to supply Ted's with 60 boxes containing a dozen coconut clusters each month for sale to the public. The agreement contained an integration clause. Before the first delivery under the contract, Ted and his warehouse manager called Debbie, the Bannon's account representative, to request that the candies be delivered in special Valentine's Day boxes. Debbie told Ted, "Don't worry, I'll tell the shipping department to take care of that." When the candies were delivered, they were in standard cardboard boxes. Ted called Bannon and threatened to sue for breach of contract. Will Ted prevail in his suit?
A. Yes, Ted made a valid modification to the parties' original agreement.
B. No, Ted should have written a letter to change the type of boxes in the contract.
C. Yes, Ted will prevail because he has a witness to the telephone call.
D. No, Ted will not prevail because his attempt to modify the agreement was not effective.
52.Jane and Bill are married. They purchase a house and lot as tenants by the entirety. Then Jane is killed in a car accident. Her will leaves everything to her sister, Ruth. What will happen to Jane's interest in the property?
A. Ruth will own the property with Bill as tenants by the entirety.
B. Ruth will own the property with Bill as joint tenants.
C. Bill will be the sole owner of the property.
D. Bill will have to buy out Ruth's interest in the property.
53.Which of the following is a correct statement of the requirements for a bona fide occupational qualification?
A. Job related and cost effective
B. Job related and nondiscriminatory
C. Job related and a business necessity
D. Rationally based and evenly applied
54.Which of the following statements accurately describes the workers' compensation rules?
A. The employer can avoid liability if the injured employee was contributory negligent.
B. The employer is liable for employment-related injuries only if negligent.
C. The employee will collect for all work-related injuries and will not need to prove negligence on the part of the employer.
D. The employee has the choice to sue or proceed under the workers' compensation statute.
57.Which of the following serves as the highest authority for tax research, planning, and compliance activities?
A. Internal Revenue Code
B. Income Tax Regulations
C. Revenue rulings
D. Revenue procedure
58.The retail inventory method is based on the assumption that the
A. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
B. ratio of gross margin to sales is approximately the same each period.
C. ratio of cost to retail changes at a constant rate.
D. proportions of markups and markdowns to selling price are the same.
59.When an item of expense is paid and recorded in advance, it is normally called
A. a prepaid expense.
B. an accrued expense.
C. an estimated expense.
D. a cash expense.
60.Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?
A. $0
B. $20,000
C. $28,000
D. $48,000
A. capitalized.
B. capitalized if they have an indefinite life.
C. expensed as incurred.
D. expensed only if they have a limited life.
32.The amount to be recorded as the cost of an asset under capital lease is equal to the
A. present value of the minimum lease payments.
B. present value of the minimum lease payments or the fair value of the asset, whichever is lower
C. present value of the minimum lease payments plus the present value of any unguaranteed residual value.
D. carrying value of the asset on the lessor's books
33.In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
A. weighted by the number of days outstanding
B. weighted by the number of months outstanding
C. considered outstanding at the beginning of the year
D. considered outstanding at the beginning of the earliest year reported
34.Debt securities that are accounted for at amortized cost, NOT fair value, are
A. held-to-maturity debt securities
B. trading debt securities
C. available-for-sale debt securities
D. never-sell debt securities
35.Elvis Company purchases inventory for $70,000 on March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14, 2008. Graceland still holds the inventory on December 31, 2008, and determines that its market value (replacement cost.is $82,000 at that time. Graceland writes the inventory down from $95,000 to its lower market value of $82,000 at the end of the year. Elvis owns 75% of Graceland. Based on this information, what amount of inventory should be eliminated in the consolidation workpaper for 2008?
A. $15,000
B. $14,000
C. $12,000
D. $13,000
36.Which of the following objectives is considered the cornerstone of financial reporting by a governmental entity?
A. Accountability
B. Budgetary compliance
C. Interperiod equity
D. Service efforts and accomplishments
37.Expenditures should be budgeted by character. An example of a character classification is
A. current expenditures
B. salaries
C. public safety
D. police department
38.Which of the following funds is accounted for on the modified accrual basis of accounting?
A. General
B. Internal service
C. Proprietary
D. Pension trust
39.Several years ago, Durham City issued $1 million in zero coupon bonds due and payable in 2010. The bonds were sold at an amount to yield investors 6% over the life of the bonds. During the current year, how much interest expenditures would Durham City recognize related to these bonds?
A. Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period
B. Face amounts of bonds times 6%
C. Book value of bonds times 6%
D. The present value of the bonds at the beginning of the period minus the present value of the bonds at the end of the period multiplied by 6%
40.As used in governmental accounting, interperiod equity refers to a concept of
A. providing the same level of services to citizens each year
B. measuring whether current revenues are sufficient to pay for current services
C. levying property taxes at the same rate each year
D. requiring that general fund budgets be balanced each year
41.The state has a legally separate State Building Authority, which has a board appointed by the Governor. The authority issues debt in its name, holds title to buildings in its name, and leases its building exclusively to the state. The authority would be considered a(n.
A. primary government.
B. component unit.
C. related organization.
D. affiliated organization.
42.Revenues of a not-for-profit organization should be reported as
A. increases in one of the three categories of net assets.
B. increases in unrestricted net assets.
C. increases in temporarily restricted net assets.
D. increases in permanently restricted net assets.
43.Financial statements for a church-supported college should be prepared according to standards set by the
A. American Institute of Certified Public Accountants (AICPA).
B. Financial Accounting Standards Board (FASB).
C. Government Accounting Standards Board (GASB).
D. Securities and Exchange Commission (SEC).
44.For a not-for-profit hospital, which of the following financial statements is required?
A. Statement of financial position
B. Statement of revenues
C. Statement of retained earnings
D. Statement of functional expenses
45.What agency has the ultimate authority in defining independence for publicly traded companies?
A. AICPA
B. SEC
C. Department of Justice
D. Congress
46.A report on internal control effectiveness by management of public companies is required by which of the following:
A. The Sarbanes-Oxley Act of 2002
B. The PCAOB
C. The AICPA
D. Only auditors are required to report on internal control effectiveness
47.Once sufficient predication has been established, what is the first step a fraud examiner following the fraud theory approach should take?
A. Create a hypothesis.
B. Analyze data.
C. Interview witnesses.
D. Interview the suspect.
48.Which of the following best describes the objective of a fraud examination?
A. Make recommendations to management about how to prevent fraud.
B. Determine whether financial statements are free of misstatements because of fraud.
C. Express an opinion on the guilt or innocence of a suspect.
D. Determine whether a crime has been committed, and if so, who is responsible.
49.Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called
A. penalty damages.
B. retribution damages.
C. punitive damages.
D. nominal damages.
50.Where a contract calls for action that violates a statute, in a breach of contract case the court will
A. impose the appropriate criminal penalty.
B. ignore the contract and leave the parties where they are.
C. order both parties to return any consideration received.
D. order payments so that the parties to the illegal contract share any losses equally.
51.Ted's Gifts and Sweets enters into a written contract with Bannon Candies to supply Ted's with 60 boxes containing a dozen coconut clusters each month for sale to the public. The agreement contained an integration clause. Before the first delivery under the contract, Ted and his warehouse manager called Debbie, the Bannon's account representative, to request that the candies be delivered in special Valentine's Day boxes. Debbie told Ted, "Don't worry, I'll tell the shipping department to take care of that." When the candies were delivered, they were in standard cardboard boxes. Ted called Bannon and threatened to sue for breach of contract. Will Ted prevail in his suit?
A. Yes, Ted made a valid modification to the parties' original agreement.
B. No, Ted should have written a letter to change the type of boxes in the contract.
C. Yes, Ted will prevail because he has a witness to the telephone call.
D. No, Ted will not prevail because his attempt to modify the agreement was not effective.
52.Jane and Bill are married. They purchase a house and lot as tenants by the entirety. Then Jane is killed in a car accident. Her will leaves everything to her sister, Ruth. What will happen to Jane's interest in the property?
A. Ruth will own the property with Bill as tenants by the entirety.
B. Ruth will own the property with Bill as joint tenants.
C. Bill will be the sole owner of the property.
D. Bill will have to buy out Ruth's interest in the property.
53.Which of the following is a correct statement of the requirements for a bona fide occupational qualification?
A. Job related and cost effective
B. Job related and nondiscriminatory
C. Job related and a business necessity
D. Rationally based and evenly applied
54.Which of the following statements accurately describes the workers' compensation rules?
A. The employer can avoid liability if the injured employee was contributory negligent.
B. The employer is liable for employment-related injuries only if negligent.
C. The employee will collect for all work-related injuries and will not need to prove negligence on the part of the employer.
D. The employee has the choice to sue or proceed under the workers' compensation statute.
57.Which of the following serves as the highest authority for tax research, planning, and compliance activities?
A. Internal Revenue Code
B. Income Tax Regulations
C. Revenue rulings
D. Revenue procedure
58.The retail inventory method is based on the assumption that the
A. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
B. ratio of gross margin to sales is approximately the same each period.
C. ratio of cost to retail changes at a constant rate.
D. proportions of markups and markdowns to selling price are the same.
59.When an item of expense is paid and recorded in advance, it is normally called
A. a prepaid expense.
B. an accrued expense.
C. an estimated expense.
D. a cash expense.
60.Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio's realized gain?
A. $0
B. $20,000
C. $28,000
D. $48,000
