1. Which of the following is not normally recognized as a liability on the balance sheet?
   A. Bonds Payable
   B. Warranties payable
   C. Employment Commitments
   D. Subscription Fees Received in Advance

C. Employment Commitments

2. Which of the following is the date on which the dividend distribution occurs?
   A. Commitment date
   B. Date of payment
   C. Date of record
   D. Date of declaration

B. Date of Payment

3. Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met? b) The selling or sponsoring firm physically controls the inventory.
   c) The payments made to the other entity cover all acquisition, holding, and financing costs.
   d) Both A and C are correct.
   a) The arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices.

D.) Both A and C are correct

4. What are three Benefits of leasing?

1. They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets.
2. They provide flexibility to change capacity as needed without having to purchase or sell assets.
3. They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income. (Not: In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.)

5. Regarding accounting for troubled debt, which of the following statements is true?
   A. The treatment for troubled debt is the same under both U.S. GAAP and IFRS.
   b. U.S. GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation.
   C. The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt.
   D. Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.

D. Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.

6. Which of the following is an acceptable method of accounting for employee stock options?
   a. historical value method
   b. prospective method
   c. fair value method
   d. intrinsic method

c. Fair Value Method

7. Under IFRS, cash payments for interes can be reported as what?

Both operating and financing cash flow are correct

8. Which of the following is not a condition that requires capital lease accounting?
   A. The present value of the minimum lease payments equals or exceeds 90% of the fair market value of the asset.
   B. The lease agreement transfers ownership of the leased asset to the lessee.
   C. The lease term extends for more than 70% of the assets economic life.
   D. The lease agreement contains a bargain purchase option.

C. The lease term extends for more than 70% of the assets economic life.

9. Which of the following companies would be at most risk with respect to refinancing its debt during a recession?
   
   A, Company A Debt/equity ratio = 2.0 Debt repayments schedule Year 1 = 1,000 Year 2 = 1,000 Year 3 = 1,000 Year 4 = 1,000 Year 5 = 1,000 Thereafter = 5,000
   
   B. Company B Debt/equity ratio = 2.0 Debt repayments Year 1 = 2,000 Year 2 = 2,000 Year 3 = 2,000 Year 4 = 2,000 Year 5 = 2,000 Thereafter = 10,000
   
   C. Company C Debt/equity ratio = 2.0 Debt repayments Year 1 = 9,000 Year 2 = 1,000 Year 3 = 500 Year 4 = 500 Year 5 = 500 Thereafter = 2,000
   
   D. Company D Debt/equity ratio = 1.0 Debt repayments Year 1 = 10,000 Year 2 = 10,000 Year 3 = 10,000 Year 4 = 10,000 Year 5 = 10,000 Thereafter = 50,000

Comonay C

10. Under which of the following conditions does the equipment lease qualify for capital lease accounting?
    A. The lease term is equal to or greater than 90% of the asset's economic life.
    B. The lease does not contain a bargain purchase option.
    C. The lease does not transfer ownership to the lessee at the end of the lease term.
    D. The lease term is equal to or greater than 75% of the asset's economic life.

D. The lease term is equal to or greater than 75% of the asset's economic life.