Question : 181. U.S. GAAP and IFRS provide criteria for distinguishing operating leases : 1245823

181. U.S. GAAP and IFRS provide criteria for distinguishing operating leases from capital leases. Which of the following is not true? 
A. Under the capital, or finance, lease method, the lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable.
B. Under the capital, or finance, lease method, the lessee recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds.
C. Under the capital, or finance, lease method, the lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment.
D. Under the capital, or finance, lease method, the lessor records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease.
E. The capital, or finance, lease method, treats leases equivalent to installment purchases or sales, where the lessee borrows funds from the lessor to purchase the asset and the lessor recognizes profit at the time of sale.

182. U.S. GAAP and IFRS account for notes and nonconvertible bonds payable similarly.Which of the following is/are not true? 
A. Firms initially record long-term notes and bonds at their issue price, the present value of the future contractual cash flows discounted at the market interest rate for the bonds at the time of issue.
B. The market interest rate at the time of issue is the rate that discounts the contractual cash flows to the initial issue price.
C. If the market interest rate equals the coupon rate for the bonds, the firm will issue the bonds for face value.
D. If the market interest rate exceeds the coupon rate, the firm will issue the bonds for less than face value.
E. If the coupon rate exceeds the market interest rate, the firm will issue the bonds for less than face value.

183. U.S. GAAP and IFRS require firms to disclose the fair value of long-term notes and bonds in notes to the financial statements. Fair value is  
A. the amount the firm would pay to settle the debt on the date of the balance sheet.
B. the current market price in the case of items that trade in active markets.
C. the present value of the contractual cash flows discounted at a current market interest rate that reflects all the factors that market participants would consider, including the item’s credit risk.
D. all of the above
E. none of the above

184. Which of the following is/are true about accounting for errors and changes in accounting principles and changes in accounting estimates? 
A. Firms account for material errors in previously issued financial statements by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings of the current period.
B. If practical, firms account for voluntary changes in accounting principles, such as from a LIFO to a FIFO cost-flow assumption for inventories, by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings of the current period.
C. Firms account for changes in accounting principles required by a new reporting standard in accordance with the guidance specified in the standard.
D. Firms account for changes in estimates, such as for depreciable lives, uncollectible accounts, or warranty cost, prospectively, in current and future periods’ earnings.
E. all of the above

185. A _____ is used to record properly the effects of an event or transaction that was improperly recorded during the accounting period. 
A. reversing entry
B. preliminary entry
C. closing entry
D. correcting entry
E. none of the above

186. When a firm has securities outstanding that, if exchanged for shares of common stock, would decrease basic earnings per share by _____  or more, generally accepted accounting principles require a dual presentation: basic earnings per share and diluted earnings per share. 
A. 1 percent
B. 3 percent
C. 10 percent
D. 20 percent
E. 30 percent

187. Accountants and financial analysts criticize earnings per share as a measure of profitability because it does 
A. not consider the amount of shareholders’ equity required to generate that level of earnings.
B. not consider the amount of liabilities required to generate that level of earnings.
C. consider the amount of assets required to generate that level of earnings.
D. not consider the amount of assets required to generate that level of earnings.
E. consider the amount of liabilities required to generate that level of earnings.

188. One firm may have a lower earnings per share simply because it has a  
A. smaller dollar amount of common and preferred shares outstanding.
B. smaller number of common shares outstanding.
C. larger number of common shares outstanding.
D. smaller number of common and preferred shares outstanding.
E. larger number of common and preferred shares outstanding.

189. Which of the following is true regarding the price-earnings ratio?  
A. price-earnings ratio = market price per share/earnings per share
B. tables of stock prices and financial periodicals often present price-earnings ratios
C. P/E ratios should use normal, ongoing earnings data in the denominator
D. the analyst must interpret the published P/E ratios cautiously if the firm’s net income includes unusual, nonrecurring gains and losses
E. all of the above

190. Earnings per share is a measure of 
A. cash income earned by the common shareholder.
B. profitability.
C. the financial viability of a firm.
D. the amount of dividends that will be paid by the firm.
E. how much an investor would be willing to pay for a share of common stock.