Mastery Exercise
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Colorado State University, Fort Collins *
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300
Subject
Accounting
Date
May 11, 2024
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docx
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7
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Mastery Exercise
Question 1
1
/ 1
pts
A threshold used in measuring an operating segment would include:
The amount of its reported profit or loss is 10 percent or more of the company’s net income or loss.
The amount of its reported profit is 10 percent or more of the company’s net income, and only profitable segments must be considered.
The absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of either: 1) The combined reported profit of
all operating segments that did not report a loss or 2) The combined reported loss of all operating segments that did report a loss.
The amount of its profit or loss is not a factor in determining whether the operating segment needs to be separately reported. Only revenue and assets are tested.
Correct! The total of the greater of segments’ profit or loss should be used as
a basis for determining the 10% or greater threshold of each segment’s profit or loss (in absolute terms).
Question 2
1
/ 1
pts
Interim disclosures require:
Footnote discussions of seasonal revenue, costs, or expenses
Footnote discussions of changes in accounting principles
Footnote discussions of contingent items
All of the above
Both a and c
Correct! All significant financial information should be disclosed in interim financial reports.
Incorrect
Question 3
0
/ 1
pts
What Act governs over-the-counter trading?
The Securities Act of 1933
The Securities Exchange Act of 1934
The Corporate Securities Act of 1938
The Stockbrokers Act of 1996
Try again! The Securities Act of 1933 provides for regular open market trading of securities. Please review Chapter 12.
Question 4
1
/ 1
pts
What type of disclosures relating to major customers must be made?
Companies must disclose information about the extent of their reliance on major customers if revenues from transactions with a single external customer amount to 5% or more of the company’s total revenues
Companies must disclose information about the extent of their reliance on major customers if revenues from transactions with a single external customer amount to 10% or more of the company’s total revenues.
Companies must disclose information about the extent of their reliance on major customers if revenues from transactions with a single external customer amount to 15% or more of the company’s total revenues.
Companies must disclose information about the extent of their reliance on major customers if revenues from transactions with a single external customer amount to 20% or more of the company’s total revenues.
Correct! In keeping with the 10% threshold for segment determination, any customer providing 10% or more of the total revenues of the company must be disclosed as part of the segment reporting.
Question 5
1
/ 1
pts
What entity in the SEC is responsible for changes to Regulation S-X?
Chief accountant
Division of Rule Enforcement
Division of U.S. Regulation
Division of Corporate Finance
Correct! The chief accountant of the SEC is responsible for changes to Regulation S-X.
Question 6
1
/ 1
pts
(True) or (False)? Gross revenue is required to be disclosed on Interim Financial reports.
(True)
(False)
Correct! Sales and revenue are a prominent and required component of interim financial reports.
Question 7
1
/ 1
pts
The Financial Accounting Standards Board’s management approach relative to segment reporting would best be described as:
The management approach requires disclosures for the same business units that are routinely reported to senior management.
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Related Questions
Choose the correct. Which of the following is a criterion for determining whether an operating segment is separately reportable?a. Segment liabilities are 10 percent or more of consolidated liabilities.b. Segment profit or loss is 10 percent or more of consolidated net income.c. Segment assets are 10 percent or more of combined segment assets.d. Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales.
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Which of the following is a criterion for determining whether an operating segment is separately reportable?a. Segment liabilities are 10 percent or more of consolidated liabilities.b. Segment profit or loss is 10 percent or more of consolidated net income.c. Segment assets are 10 percent or more of combined segment assets.d. Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales.
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How should an entity perform the 10% test when each of its operating segments reports different measures of segment profitability and segment assets?
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An operating segment under IFRS is identified as a reportable segment if
a.its revenue is greater than 10% of the combined revenue of all the company's operating segments.
b. its identifiable assets are greater than 10% of the combined assets of all operating segments.
c. the absolute amount of its profit (loss) is 10% or more of the greater in absolute amount, of the combined operating segments' profit, or of the combined operating segments' loss.
d. any of the above options are satisfied.
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Which of the following is not a quantitative threshold for defining a segment’s materiality?
Segment assets are 10% or more of the combined assets of all operating segments.
The segment absolute value of its profit or loss is 10% or more of the greater of (1) the combined reported profit of all operating segments that reported a profit or (2) the absolute value of the combined reported loss of all operating segments that reported a loss.
Segment reported revenue, including intersegment revenues, is 10% or more of the combined revenue of all operating segments.
Segment residual profit after the cost of equity is 10% or more of the combined residual profit of all operating segments.
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Maturity (years)
1
2
3
1-year Forward rate (%)
0-years from now 1.25
1-year from now 1.75
2-years from now 1.908
Using the same information, what is the value of the put option?
A. $0.2063
B.
$0.16
C. $7.817
O D. $6.817
Spot rate (%)
1.25
1.5019
1.70491
Cash flow
$3
$3
$103
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Return on investment =
O Average operating assets ÷ Net operating income
O Net operating income Segment revenue
Segment revenue ÷ Net operating income
ONet operating income ÷ Average operating assets
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What is the minimum number of operating segments that must be separately reported?a. Ten.b. Segments with at least 75 percent of revenues as measured by the revenue test.c. At least 75 percent of the segments must be separately reported.d. Segments with at least 75 percent of the revenues generated from outside parties.
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Question 51: In the vertical analysis of an income statement, what is the base (100%) figure?
Answer:
A.
Total expenses
B.
Total revenues
C.
Total assets
D.
Net income
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For the purpose of segment reporting, what amount should be reported as segment total profit?
A. 930,000
B. 830,000
C. 845,000
D. 730,000
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19 -
When vertical analysis is applied to the income statement of a business with net sales of TL 1,000,000 and non-operating expenses of TL 13,000, which of the following is the vertical analysis value of non-operating expenses (%)?
a)
4.5
B)
2,5
NS)
5.5
D)
1.3
TO)
3.3
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Return on Sales
Asset or investment
turnover
Company A
8.00%
4 times
a. Which company is more efficient?
Company B
6.00%
5 times
Company C
4.00%
6 times
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Assume a company reported the following information:
Sales
Minimum required rate of return on average operating assets
Turnover
Return on investment (ROI)
The residual income is closest to:
Multiple Choice
O
O
O
$14,800.
$10,800.
$16,800.
$20,800.
$ 900,000
9.2%
1.5
12%
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COURSE: ACCOUNTABILITY
Alpha Company reports $125,636,256 as revenue from ordinary activities and the cost of ordinary activities corresponds to 30% over revenue, what is the gross margin?Select one:a. $42,669,159b. $37,690,877c. $87,945,379d. $21,636,639e. $39,696,101
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An entity shall report information about an operating segment that meets any of the following quantitative thresholds except.
Choices;
The segment revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of combined revenue, internal and external, of all operating segments.
The assets of the segment are 10% or more of the combined assets of all operating segments.
The absolute amount of profit or loss of the segment is 10% or more of the greater in absolute amount of combined profit of all operating segments that reported a profit.
The absolute amount of profit or loss of the segment is 10% or more of the greater in absolute amount of combined loss of all operating segments.
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Clay Company: What amount should be reported as operating profit for Segment One? *
a. 1250000
b. 1000000
c. 650000
d. 500000
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Question 8
The variability of a company's operating income can be measured by calculating:
O the standard deviation of operating income
O the coefficient of variation of net income
O the beta of the company
O the correlation coefficient between operating income and sales
10 pts
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Question 37
The net profit percentage in a company is 9% and the turnover to asset ratio is 3.
What is the return on capital employed?
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b. Assume that more than one product is being sold in each of the four following case situations:AverageContribution Net OperatingVariable Margin Fixed IncomeCase Sales Expenses Ratio Expenses (Loss)1 ........................ $500,000 ? 20% ? $7,0002 ........................ $400,000 $260,000 ? $100,000 ?3 ........................ ? ? 60% $130,000 $20,0004 ........................ $600,000 $420,000 ? ? $(5,000)
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a. Prepare a vertical analysls
percents as whole numbers.
Versatile Company
Income Statements
For the Years Ended December 31
20Y5
20Y5 Percent
20Y4
20Y4 Percent
Amount
Amount
Fees earned
$793,000
100 %
$672,000
100 %
Operating expenses
650,260
81 %
591,360
86 %
Income from
$142,740
19 %
$80,640
14 %
operations
b. Does the vertical analysis indicate a favorable or an unfavorable trend?
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25 -When vertical analysis is applied to the income statement of a business with net sales of 1,000,000 TL and marketing expenses of 88,000 TL, which of the following is the vertical analysis value of marketing expenses (%)?a)10.8
B)50
NS)9.9
D)8.8
TO)30.5
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- Choose the correct. Which of the following is a criterion for determining whether an operating segment is separately reportable?a. Segment liabilities are 10 percent or more of consolidated liabilities.b. Segment profit or loss is 10 percent or more of consolidated net income.c. Segment assets are 10 percent or more of combined segment assets.d. Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales.arrow_forwardWhich of the following is a criterion for determining whether an operating segment is separately reportable?a. Segment liabilities are 10 percent or more of consolidated liabilities.b. Segment profit or loss is 10 percent or more of consolidated net income.c. Segment assets are 10 percent or more of combined segment assets.d. Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales.arrow_forwardHow should an entity perform the 10% test when each of its operating segments reports different measures of segment profitability and segment assets?arrow_forward
- An operating segment under IFRS is identified as a reportable segment if a.its revenue is greater than 10% of the combined revenue of all the company's operating segments. b. its identifiable assets are greater than 10% of the combined assets of all operating segments. c. the absolute amount of its profit (loss) is 10% or more of the greater in absolute amount, of the combined operating segments' profit, or of the combined operating segments' loss. d. any of the above options are satisfied.arrow_forwardWhich of the following is not a quantitative threshold for defining a segment’s materiality? Segment assets are 10% or more of the combined assets of all operating segments. The segment absolute value of its profit or loss is 10% or more of the greater of (1) the combined reported profit of all operating segments that reported a profit or (2) the absolute value of the combined reported loss of all operating segments that reported a loss. Segment reported revenue, including intersegment revenues, is 10% or more of the combined revenue of all operating segments. Segment residual profit after the cost of equity is 10% or more of the combined residual profit of all operating segments.arrow_forwardMaturity (years) 1 2 3 1-year Forward rate (%) 0-years from now 1.25 1-year from now 1.75 2-years from now 1.908 Using the same information, what is the value of the put option? A. $0.2063 B. $0.16 C. $7.817 O D. $6.817 Spot rate (%) 1.25 1.5019 1.70491 Cash flow $3 $3 $103arrow_forward
- Return on investment = O Average operating assets ÷ Net operating income O Net operating income Segment revenue Segment revenue ÷ Net operating income ONet operating income ÷ Average operating assetsarrow_forwardWhat is the minimum number of operating segments that must be separately reported?a. Ten.b. Segments with at least 75 percent of revenues as measured by the revenue test.c. At least 75 percent of the segments must be separately reported.d. Segments with at least 75 percent of the revenues generated from outside parties.arrow_forwardQuestion 51: In the vertical analysis of an income statement, what is the base (100%) figure? Answer: A. Total expenses B. Total revenues C. Total assets D. Net incomearrow_forward
- For the purpose of segment reporting, what amount should be reported as segment total profit? A. 930,000 B. 830,000 C. 845,000 D. 730,000arrow_forward19 - When vertical analysis is applied to the income statement of a business with net sales of TL 1,000,000 and non-operating expenses of TL 13,000, which of the following is the vertical analysis value of non-operating expenses (%)? a) 4.5 B) 2,5 NS) 5.5 D) 1.3 TO) 3.3arrow_forwardReturn on Sales Asset or investment turnover Company A 8.00% 4 times a. Which company is more efficient? Company B 6.00% 5 times Company C 4.00% 6 timesarrow_forward
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