Devry week 8 final exam

1. (TCO 1)using straight-line depreciation for financial reporting purposes and MACRS for tax purposes in the first year of an asset’s life creates a (points : 6)

· Future deductible amount.

· Permanent difference not requiring interperiod tax allocation.

· Deferred tax asset.

· Deferred tax liability.

2. (TCO 2) eligibility for postretirement healthcare benefits usually is based on the employee’s (points : 6)

· Job title.

· Number of years in the profession.

· Number of years in the current position.

· Age and/or years of service.

3. (TCO 3) which of the following is not included among the assumptions needed to estimate postretirement healthcare benefits? (points : 6)

· Employee turnover

· Expected retirement age of plan participants

· Life expectancy of plan participants

· Return on plan assets

4. (TCO 4) stock splits are issued primarily to (points : 6)

· Increase the number of outstanding shares

· Increase the number of authorized shares

· Induce a decline in market value per share

· Induce an increase in market value per share.

5. (TCO 5) if a stock dividend was distributed, when calculating the current year’s EPS, the shares distributed are treated as having been issued (points : 6)

· At the beginning of the year.

· At the end of the year.

· On the declaration date.

· On the date of distribution.

6. (TCO 7) which of the following changesshould be accounted for using the retrospective approach? (points : 6)

· A change in the estimated life of a depreciable asset.

· A change from straight-line to declining balance depreciation.

· A change from the completed-contract method of accounting for long-term construction contracts.

· A change to the LIFO method of costing inventories.

7. (TCO7) A voluntary change in accounting principle is accounting for by (points : 6)

· A cumulative effect on income in the year of the change.

· A prior period adjustment.

· A retrospective reporting of all comparative financial statements shown.

· A separate line component of income.

8. (TCO 8) when preparing the statement of cash flows using the indirect method, depreciation (points : 6)

· Is deducted from net income.

· Is added to net income.

· Is not included in the statement of cash flows.

· Is an investing activity.

9. (TCO 8) which of the following is reported as an operating activity in the statement of cash flows? (points : 6)

· The purchase of equipment.

· The sale of preferred stock.

· The repayment of bonds payable.

· The payment of prepaid rent.

10. (TCO 6) which of the following is not a potential common stock? (points : 6)

· Participating preferred stock

· Stock rights

· Convertible bonds

· Convertible preferred stock

1. (TCO 1) please describe net operating loss carry-backs and carry-forwards and how they can be used, and discuss how many years they can be used. (points : 30)

2. (TCO 2) what are some events that may cause the balance in the PBO to change? (points : 30)

3. (TCO 4) what are the two categories of stock dividends? How do they differ? How are retained earnings and APIC impacted in each category? (points : 30)

4. (TCO 5) please describe how to compute diluted EPS for a capital structure that is complex. ( points : 30)

5. (TCO 7) please describe the retrospective approach and an example of when it should be used. ( points : 35)

6. (TCO 8) please describe noncash investing and financing transactions and how they are presented on the cash flow statement. Also, please provide three examples. (points : 35)