Intermediate Accounting J David Spiceland 10 Edition – Test Bank

Intermediate Accounting, 10e (Spiceland)

Chapter 3 The Stability Sheet and Monetary Disclosures

1) A report issued by the balance sheet that depicts an entity’s financial status at a specific point in time.

Response: TRUE

Difficulty: 1 Simple

Topic: Balance sheet―Usefulness – Limits – Components

Objective: 03-01 Illustrate the purpose of the balance sheet and grasp its usefulness and restrictions.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

2) The market value of a company is frequently higher than its book value.

Response: FALSE

Difficulty: 1 Simple

Topic: Balance sheet―Usefulness – Limits – Components

Objective: 03-01 Illustrate the purpose of the balance sheet and grasp its usefulness and restrictions.

Bloom’s: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

3) All current assets consist of cash or items that will either be converted into cash or used up within 12 months or the operating cycle, whichever is lengthier.

Response: TRUE

Difficulty: 1 Simple

Topic: Classify assets―Current assets

Objective: 03-02 Identify and explain the various asset classifications.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

4) The net receivables balance signifies the amount expected to be collected.

Response: TRUE

Difficulty: 1 Simple

Topic: Classify assets―Current assets

Objective: 03-02 Identify and explain the various asset classifications.

Bloom’s: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

5) Prepaid expenses are classified as current assets if the services received are projected to expire within 12 months or the operating cycle, whichever is lengthier.

Response: TRUE

Difficulty: 1 Simple

Topic: Classify assets―Current assets

Objective: 03-02 Identify and explain the various asset classifications.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

6) Assets categorized as property, plant, and equipment include machinery, tools, and inventory.

Response: FALSE

Difficulty: 1 Simple

Topic: Classify assets―Current assets

Objective: 03-02 Identify and explain the various asset classifications.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

7) Intangible assets are typically disclosed in the balance sheet as current assets.

Response: FALSE

Difficulty: 1 Simple

Topic: Classify assets―Current assets

Objective: 03-02 Identify and explain the various asset classifications.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

8) Accrued salaries and wages on a balance sheet represent salaries that have been earned by employees but not yet disbursed.

Response: TRUE

Difficulty: 1 Simple

Topic: Classify liabilities―Current liabilities

Objective: 03-03 Identify and explain the various liability and shareholders’ equity classifications.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

9) The criteria for determining which items constitute cash equivalents are typically disclosed in the summary of significant accounting policies.

Response: TRUE

Difficulty: 1 Simple

Topic: Disclosure―Notes to financial statements

Objective: 03-04 Explain the purpose of financial statement disclosures.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation

10) Payment terms, interest rates, and other details of long-term liabilities are generally reported in disclosure notes.

Response: TRUE

Difficulty: 1 Simple

Topic: Disclosure―Notes to financial statements

Objective: 03-04 Explain the purpose of financial statement disclosures.

Bloom’s: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: BB Critical Thinking; FN Size / Keyboard Navigation