6.

FASB Statement 131 requires that general purpose financial statements include
selected information on a single basis of segmentation

8.If 10 percent or more of company revenue is derived from a single customer, the company
must disclose the total amount of revenue from each such customer by segment.


10.Companies should generally use the same accounting principles for interim reports and for
annual reports.

11. Companies report extraordinary items in interim reports by prorating them over the four
quarters.

12. To compute the year-to-date tax, companies apply the estimated annual effective tax
rate to the year-to-date ordinary income at the end of each interim period.
True-False AnswersConceptual
Item Ans. Item Ans. Item Ans. Item Ans.
1. F 6. T 11. F 16. T
2. T 7. F 12. T 17. F
3. T 8. T 13. F 18. T
4. F 9. F 14. T 19. T
5. F 10. T 15. F 20. F

30.Revenue of a segment includes
a. only sales to unaffiliated customers.
b. sales to unaffiliated customers and intersegment sales.
c. sales to unaffiliated customers and interest revenue.
d. sales to unaffiliated customers and other revenue and gains.

31. An operating segment is a reportable segment if
a. its operating profit is 10% or more of the combined operating profit of profitable
segments.
b. its operating loss is 10% or more of the combined operating losses of segments that
incurred an operating loss.
c. the absolute amount of its operating profit or loss is 10% or more of the company's
combined operating profit or loss.
d. none of these.

32. A segment of a business enterprise is to be reported separately when the revenues of
the segment exceed 10 percent of the
a. total combined revenues of all segments reporting profits.
b. total revenues of all the enterprise's industry segments.
c. total export and foreign sales.
d. combined net income of all segments reporting profits.

33. All of the following information about each operating segment must be reported except
a. unusual items.
b. interest revenue.
c. cost of goods sold.
d. depreciation and amortization expense.
S
35. In presenting segment information, which of the following items must be reconciled to
the entity's consolidated financial statements?
Operating Identifiable
Revenues Profit (Loss) Assets
a. Yes Yes Yes
b. No Yes Yes
c. Yes No Yes
d. Yes Yes No


S
36. APB Opinion No. 28 indicates that
a. all companies that issue an annual report should issue interim financial reports.
b. the discrete view is the most appropriate approach to take in preparing interim
financial reports.
c. the three basic financial statements should be presented each time an interim period
is reported upon.
d. the same accounting principles used for the annual report should be employed for
interim reports.
P
37. Rondelli Manufacturing Company employs a standard cost system. A planned volume
variance in the first quarter of 2011, which is expected to be absorbed by the end of the
fiscal year, ordinarily should
a. be deferred at the end of the first quarter, regardless of whether it is favorable or
unfavorable.
b. never be deferred beyond the quarter in which it occurs.
c. be deferred at the end of the first quarter if it is favorable; unfavorable variances are
to be recognized in the period incurred.
d. be deferred at the end of the first quarter if it is unfavorable; favorable variances are
to be recognized in the period incurred.

38. In considering interim financial reporting, how does the profession conclude that such
reporting should be viewed?
a. As a "special" type of reporting that need not follow generally accepted accounting
principles.
b. As useful only if activity is evenly spread throughout the year so that estimates are
unnecessary.
c. As reporting for a basic accounting period.
d. As reporting for an integral part of an annual period.

39. Accounting principles are modified for the following at interim dates.
Revenue Losses
a. Yes Yes
b. Yes No
c. No Yes
d. No No

40. The following methods of estimating inventory can be used at interim dates for inventory
pricing. May they also be used at year end?
Gross Profit Method Retail Inventory Method
a. No No
b. No Yes
c. Yes No
d. Yes Yes

41. A company that uses the last-in, first-out (LIFO) method of inventory pricing finds at an
interim reporting date that there has been a partial liquidation of the base period
inventory level. The decline is considered temporary and the partial liquidation is
expected to be replaced prior to year end. The amount shown as inventory at the interim
reporting date should
a. be shown at the actual level, and cost of sales for the interim reporting period should
include the expected cost of replacement of the liquidated LIFO base.
b. be shown at the actual level, and cost of sales for the interim reporting period should
reflect the historical cost of the liquidated LIFO base.
c. not give effect to the LIFO liquidation, and cost of sales for the interim reporting
period should reflect the historical cost of the liquidated LIFO base.
d. be shown at the actual level, and the decrease in inventory level should not be
reflected in the cost of sales for the interim reporting period.

42. Companies should disclose all of the following in interim reports except
a. basic and diluted earnings per share.
b. changes in accounting principles.
c. post-balance-sheet events.
d. seasonal revenue, cost, or expenses.

43. The required approach for handling extraordinary items in interim reports is to
a. prorate them over all four quarters.
b. prorate them over the current and remaining quarters.
c. charge or credit the loss or gain in the quarter that it occurs.
d. disclose them only in the notes.
Multiple Choice AnswersConceptual
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
21. d 26. b 31. d 36. d 41. a 46. c *51. d
22. c 27. c 32. b 37. a 42. c 47. a *52. c
23. c 28. d 33. c 38. d 43. c *48. a *53. c
24. d 29. d 34. d 39. d 44. b *49. b *54 c
25. b 30. b 35. a 40. b 45. c *50. b *55. d
56.Presented below are four segments that have been identified by Haley Productions:
Total Revenue Operating
Segments (Unaffiliated) Profit (Loss) Identifiable Assets
A $255,000 $30,000 $900,000
B 600,000 (55,000) 800,000
C 225,000 6,000 450,000
D 90,000 4,000 225,000
For which of the segments would information have to be disclosed in accordance with
professional pronouncements?
a. Segments A, B, C, and D
b. Segments A, B, and C
c. Segments A and B
d. Segments A and D

57. In January 2011, Post, Inc. estimated that its year-end bonus to executives would be
$720,000 for 2011. The actual amount paid for the year-end bonus for 2010 was
$660,000. The estimate for 2011 is subject to year-end adjustment. What amount, if any,
of expense should be reflected in Post's quarterly income statement for the three months
ended March 31, 2011?
a. $ -0-.
b. $165,000.
c. $180,000.
d. $720,000.

58. On January 15, 2011, Vancey Company paid property taxes on its factory building for
the calendar year 2011 in the amount of $560,000. In the first week of April 2011,
Vancey made unanticipated major repairs to its plant equipment at a cost of $1,400,000.
These repairs will benefit operations for the remainder of the calendar year. How should
these expenses be reflected in Vancey's quarterly income statements?
Three Months Ended
3/31/11 6/30/11 9/30/11 12/31/11
a. $140,000 $606,667 $606,667 $606,667
b. $140,000 $1,540,000 $140,000 $140,000
c. $560,000 $1,400,000 $ -0- $ -0-
d. $490,000 $490,000 $490,000 $490,000

59. An inventory loss from market decline of $1,600,000 occurred in May 2011, after its March
31, 2011 quarterly report was issued. None of this loss was recovered by the end of the
year. How should this loss be reflected in the company's quarterly income statements?
Three Months Ended
3/31/11 6/30/11 9/30/11 12/31/11
a. $ -0- $ -0- $ -0- $1,600,000
b. $ -0- $533,333 $533,333 $533,333
c. $ -0- $1,600,000 $ -0- $ -0-
d. $400,000 $400,000 $400,000 $400,000
Multiple Choice AnswersComputational
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
56. b 59. c *62. d *65. d *68. a *71. c
57. c *60. d *63. c *66. b *69. a *72. c
58. a *61. c *64. c *67. c *70. c
74.Farr, Inc. is a multidivisional corporation which has both intersegment sales and sales to
unaffiliated customers. Farr should report segment financial information for each division
meeting which of the following criteria?
a. Segment profit or loss is 10% or more of consolidated profit or loss.
b. Segment profit or loss is 10% or more of combined profit or loss of all company
segments.
c. Segment revenue is 10% or more of combined revenue of all the company
segments.
d. Segment revenue is 10% or more of consolidated revenue.
75.Unruh Corp. and its divisions are engaged solely in manufacturing operations. The following
data (consistent with prior years' data) pertain to the industries in which operations were
conducted for the year ended December 31, 2011.
Assets
Industry Revenue Profit 12/31/11
A $ 8,000,000 $1,320,000 $16,000,000
B 6,400,000 1,120,000 14,000,000
C 4,800,000 960,000 10,000,000
D 2,400,000 440,000 5,200,000
E 3,400,000 540,000 5,600,000
F 1,200,000 180,000 2,400,000
$26,200,000 $4,560,000 $53,200,000
In its segment information for 2011, how many reportable segments does Unruh have?
a. Three
b. Four
c. Five
d. Six

76. The following information pertains to Nixon Corp. and its divisions for the year ended
December 31, 2011.
Sales to unaffiliated customers $2,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers 750,000
Interest earned on loans to other operating segments 50,000
Nixon and all of its divisions are engaged solely in manufacturing operations. Nixon has
a reportable segment if that segment's revenue exceeds
a. $330,000.
b. $325,000.
c. $255,000.
d. $250,000.

77. Advertising costs may be accrued or deferred to provide an appropriate expense in each
period for
Interim Year-end
Financial Reporting Financial Reporting
a. Yes No
b. Yes Yes
c. No No
d. No Yes

78. Mayo Corp. has estimated that total depreciation expense for the year ending December 31,
2011 will amount to $300,000, and that 2011 year-end bonuses to employees will total
$600,000. In Mayo's interim income statement for the six months ended June 30, 2011,
what is the total amount of expense relating to these two items that should be reported?
a. $0.
b. $150,000.
c. $450,000.
d. $900,000.
79. Fina Corp. had the following transactions during the quarter ended March 31, 2011:
Loss from hurricane damage $350,000
Payment of fire insurance premium for calendar year 2011 500,000
What amount should be included in Fina's income statement for the quarter ended
March 31, 2011?
Extraordinary Loss Insurance Expense
a. $350,000 $500,000
b. $350,000 $125,000
c. $87,500 $125,000
d. $0 $500,000

80. For interim financial reporting, an extraordinary gain occurring in the second quarter
should be
a. recognized ratably over the last three quarters.
b. recognized ratably over all four quarters with the first quarter being restated.
c. recognized in the second quarter.
d. disclosed by note only in the second quarter.