Statement I: The estimated deficiency to unsecured claims represents the amount unrecoverable by the creditors. Statement II: In the case of corporate liquidation, historical cost is a material valuation for assets. Group of answer choices Only Statement II is correct Both statements are incorrect Both statements are correct Only Statement I is correct

Statement I: The estimated deficiency to unsecured claims represents the amount unrecoverable by the creditors. Statement II: In the case of corporate liquidation, historical cost is a material valuation for assets. Group of answer choices Only Statement II is correct Both statements are incorrect Both statements are correct Only Statement I is correct

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 1EA: Match the correct term with its definition. A. cost principle i. if uncertainty in a potential...

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36 Statement I: In cases wherein the net free assets are greater than the unsecured claims, the difference is called estimated deficiency to unsecured claims. Statement II: Fully secured creditors are holding a claim that is higher than the estimated realizable value of the assets pledged. Group of answer choices Both statements are incorrect Only Statement I is correct Only Statement II is correct Both statements are correct
11. The valuation of assets in the balance sheet is based primarily upon: What it would cost to replace the assets. Cost, because cost is usually factual and verifiable. Current fair market value as established by independent appraisers. Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost. 12. Which one of the following equations correctly expresses the relationship between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)? (a) A = L + R + E + C (b) A = C + L + (R-E) (c) A = C - (R - E) + L (d) A = (L - C) + (R - E) 13. Which of the following would be added to net income using the indirect method? An increase in accounts receivable An increase in prepaid expenses Depreciation expense A decrease in accounts payable 14. Unpaid expenses may be included as an expense on the income statement. True False…
13 Under what circumstances under PFRS 9 can an entity classify financial assets that meet the amortized cost criteria as at FVTPL? Group of answer choices Where the instrument is held to maturity. Where the business model approach is adopted. Where the financial asset passes the contractual cash flow characteristics test. Not sure If doing so eliminates or reduces an accounting mismatch.
29. A public utility reports noncurrent assets as the first item on its balance sheet. This is an example of a. Conservatism b. Improper statement presentation c. Substance over form d. Industry practice
12-Which of the following concept states that a business will continue its operations for the foreseeable future and the company will not be forced to liquidate in near future. a. Accrual basis b. Materiality c. Going concern d. Consistency concept
#21 TRUE OR FALSE Statement I Liquidation expenses incurred are deducted in the capital balances during liquidation Statement II Cash withheld for the future liquidation is treated as possible loss in preparing schedule of safe payments Statement III Loss absorption capacity or loss absorption potential is the minimum amount of loss that a partner may sustain before incurring negative capital balance Group of answer choices A. True, False, False B. True, True, False C. False, True, True D. False, False, False E. True, False, True
30. The following statements are incorrect, except: a. Issued instruments are classified as liabilities or equity in accordance with the legal form of the contractual arrangement and the definitions of the financial liability and an equity instrument. b. A preference share that will be redeemed by the issuer for cash on a future date is a financial liability. c. IAS 37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, and those resulting from financial instruments that are carried at fair value. d. Issued instruments are classified as liabilities or equity in accordance with the management’s designation of the contractual arrangement.
Match the correct term with its definition. A. cost principle i. if uncertainty in a potential financial estimate, a company should err on the side of caution and report the most conservative amount B. full disclosure principle ii. also known as the historical cost principle, states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition C. separate iii. (also referred to as the matching principle) matches expenses with associated revenues in the period in which the revenues were generated. D. monetary iv. business must report any business activities that could affect what is reported on the financial statements E. conservatism v. system of using a monetary unit by which to value the transaction, such as the US dollar. F. revenue vi. period of time in which you performed the service or gave the customer the product is the period in which revenue is recognized. G. expense vii. business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally.
41.Which of the following shall be taken into consideration when measuring and recognizing impairment loss on receivables?A. Past experiences on the collectability of the receivablesB. Present condition of the debtor, including the present economic environmentC. Future expectations based on information that are available without undue cost and effort a. A, B and C b. A and B only c. A only d. B only
QUESTION 41 Which one of the following is violated when a firm reports its long-term debt at the present value of the cash flows associated with that debt? Matching No violations occurred. This accounting is correct. Revenue recognition Gross value of the debt
Assume that a business is headed for certain bankruptcy and it is evident that its liabilities greatly exceed its assets. Which principle would be violated if its financial statements wereprepared using standard U.S. GAAP?a. Entity assumptionb. Continuity assumptionc. Historical cost principled. Stable-monetary-unit assumption
Statement 1: It is not always necessary to identify both fair value less cost to sell and value in use. Only when fair value less cost to sell is not greater than the carrying amount, then value in use calculation is required. Statement 2: IAS 36 is not applicable to financial assets, particularly those that are classified as investments in subsidiaries, joint ventures and associates. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.