Question: Multiple Choice Questions 1 A donated fixed asset from a governmental

Multiple Choice Questions
1. A donated fixed asset (from a governmental unit) for which the fair value has been determined should be recorded as a debit to Fixed Assets and a credit to:
a. Contributed Capital
b. Retained Earnings
c. Deferred Income
d. Other Income
2. A company receives an advance payment for special-order goods to be manufactured and delivered within 6 months. The advance payment should be reported on the company’s balance sheet as a:
a. Deferred charge
b. Contra-asset account
c. Current liability
d. Noncurrent liability
3. Which of the following may be used to determine fair value based on Level 3 inputs?
4. On October 2, 2017, a company borrowed cash and signed a 3-year, interest-bearing note on which both the principal and interest are payable on October 2, 2020. At December 31, 2019, the principal and accrued interest should:
a. Be reported on the balance sheet as current liabilities
b. Be reported on the balance sheet as non-current liabilities
c. Be reported on the balance sheet as long-term notes payable
d. Not be reported on the balance sheet as liabilities
5. Land reported in the property, plant, and equipment section of a manufacturing company’s balance sheet is reported at:
a. Historical cost
b. Historical cost, less accumulated depreciation
c. Fair value
d. Lower of cost or market value
6. Rent revenue collected 1 month in advance should be accounted for as:
a. Revenue in the month collected
b. A current liability for deferred revenue
c. A separate item in shareholders’ equity
d. An accrued liability
7. GAAP related to the disclosure of accounting policies:
a. Requires a description of every accounting policy followed by a reporting entity
b. Provides a specific listing of all types of accounting policies that must be disclosed
c. Requires disclosure of the format for the statement of cash flows
d. Requires a description of all significant accounting policies to be included as an integral part of the financial statements
8. Which of the following contingencies should generally be accrued on the balance sheet when the occurrence of the contingent event is probable and its amount can be reasonably estimated?
9. Which of the following should be disclosed in the Summary of Significant Accounting Policies?
a. Rent expense amount
b. Maturity dates of long-term debt
c. Methods of amortizing intangibles
d. Composition of plant assets
10. The balance sheet provides information about each of the following items, except:
a. Operating capability of entity
b. Results of entity’s operations
c. Entity’s liquidity
d. Financial flexibility of entity

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