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Question 1

What is the purpose of information presented in notes to the financial statements?

Options :

A : To provide disclosures required by generally accepted accounting principles.

B : To correct improper presentation in the financial statements.

C : To provide recognition of amounts not included in the totals of the financial statements.

D : To present management's responses to auditor comments.

Answer: A

Question 2

In which of the following situations should a company report a prior-period adjustment?

Options :

A : A change in the estimated useful lives of fixed assets purchased in prior years.

B : The correction of a mathematical error in the calculation of prior years' depreciation.

C : A switch from the straight-line to double-declining balance method of depreciation.

D : The scrapping of an asset prior to the end of its expected useful life.

Answer: B

Question 3

What information should a public company present about revenues from its reporting segments?

Options :

A : Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales.

B :

Disclose as a combined amount sales to unaffiliated customers and intracompany sales between geographic areas.

C :

Disclose separately the amount of sales to unaffiliated customers but not the amount of intracompany sales between geographic areas.

D : No disclosure of revenues from foreign operations need be reported.

Answer: A

Question 4

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 5

Which of the following is true regarding the presentation of "comprehensive income."

Options :

A : Option A

B : Option B

C : Option C

D : Option D

Answer: C