1. Typical U.S. GAAP disclosures for deferred income taxes include all of the following except:
Components of income tax expense
Components of income before taxes
Reconciliation of income taxes at statutory rate with income tax expense
Components of permanent tax differences
2. Which of the following would not be suggestive of a company recognizing sales too early?
large and volatile amounts of uncollectible accounts receivable
excessive warranty expenditures
large growth in accounts receivable
unusually large amount of returned goods
3. Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?
$655,000
$980,000
$560,000
$620,000
4. Academic research has found that market rates of return on common stock are the most highly correlated with
net income.
cash flow from operations.
EBITDA.
cash flow from investing activities.
5. Under the percentage-of-completion contract method
revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.
revenue, cost, and gross profit are recognized during the production cycle.
revenue, cost, and gross profit are recognized at the time the contract is completed.
none of these
6. Which of the following is not a distinguishing characteristic of a derivative instrument?
Derivative instruments have terms that require or permit net settlement.
Derivative instruments have a low initial net investment.
Derivative instruments are highly effective throughout their term.
Derivative instruments have one or more underlyings and notional amounts.
7. When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as
a decrease in the operating activities section
an increase in the operating activities section
a use of cash in the investing activities section
a source of cash in the investing activities section
8. A typical defined benefit pension plan formula includes all of the following except:
the number of years of employee service
the fair market value of pension plan assets
a credit for each year of annual service
the final salary at retirement date
9. To evaluate a company's average tax rate an analyst would
Divide income tax payable by income before taxes
Divide income tax expense by income before taxes
Multiply the statutory income tax rate by income before tax
Average a firm's Federal, State, Local and Foreign tax rates.
10. All of the following are conditions for revenue recognition outlined by SAB 104 except:
There is pervasive evidence that an arrangement exists.
Delivery has occurred or services have been performed.
The seller's price to the buyer can be variable.
Collectability is reasonably assured.