最新のFAR問題集で試験を準備する

On January 1, 1991, Brecon Co. installed cabinets to display its merchandise in customers' stores.
Brecon expects to use these cabinets for five years. Brecon's 1991 multi-step income statement should
include:

• A. One-fifth of the cabinet costs in cost of goods sold.
• B. All of the cabinet costs in selling, general, and administrative expenses.
• C. All of the cabinet costs in cost of goods sold.
• D. One-fifth of the cabinet costs in selling, general, and administrative expenses.

On August 31, 1992, Harvey Co. decided to change from the FIFO periodic inventory system to the
weighted average periodic inventory system. Harvey is on a calendar year basis. The cumulative effect of
the change is determined:

• A. During 1992 by a weighted average of the purchases.
• B. As of August 31, 1992.
• C. As of January 1, 1992.
• D. During the eight months ending August 31, 1992, by a weighted average of the purchases.

On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with
Quo's president and outside accountants, made changes in accounting policies, corrected several errors
dating from 1992 and before, and instituted new accounting policies.
Quo's 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo's transactions. List B represents the general accounting treatment
required for these transactions. These treatments are:
. Cumulative effect approach - Include the cumulative effect of the adjustment resulting from the
accounting change or error correction in the 1993 financial statements, and do not restate the 1992
financial statements.
. Retroactive or retrospective restatement approach - Restate the 1992 financial statements and adjust
1 992 beginning retained earnings if the error or change affects a period prior to 1992.
. Prospective approach - Report 1993 and future financial statements on the new basis but do not restate
1 992 financial statements.
During 1993, Quo increased its investment in Worth, Inc. from a 10% interest, purchased in 1992, to 30%,
and acquired a seat on Worth's board of directors. As a result of its increased investment, Quo changed
its method of accounting for investment in Worth, Inc. from the cost method to the equity method.
List B

• A. Prospective approach.
• B. Cumulative effect approach.
• C. Retroactive or retrospective restatement approach.

A statement of cash flows for a development stage enterprise:

• A. Is the same as that of an established operating enterprise and, in addition, shows cumulative amounts
  from the enterprise's inception.
• B. Is the same as that of an established operating enterprise, but does not show cumulative amounts from
  the enterprise's inception.
• C. Is not presented.
• D. Shows only cumulative amounts from the enterprise's inception.

In Yew Co.'s 1992 annual report, Yew described its social awareness expenditures during the year as
follows:
"The Company contributed $250,000 in cash to youth and educational programs. The Company also gave
$ 140,000 to health and human-service organizations, of which $80,000 was contributed by employees
through payroll deductions. In addition, consistent with the Company's commitment to the environment,
the Company spent $100,000 to redesign product packaging."
What amount of the above should be included in Yew's income statement as charitable contributions
expense?

• A. $390,000
• B. $310,000
• C. $410,000
• D. $490,000