1. When evaluating the quality of accounting information, an analyst should consider all of the following except:
   a.
   reliability of the measurements made
   b.
   adequacy of disclosures
   c.
   comparability of estimates
   d.
   economic faithfulness of the measurements made

c.
comparability of estimates

2. Which of the following are characteristics of an extraordinary item?
   a.
   Unusual in nature
   b.
   Infrequent in occurrence
   c.
   Material in amount
   d.
   All of the above

d.
All of the above

3. All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:
   a.
   The transaction or event that gave rise to the obligation has already occurred.
   b.
   The firm has a present obligation and little or no discretion to avoid the transfer.
   c.
   The firm must know the precise amount of the obligation before recording it.
   d.
   The obligation involves a probable future sacrifice of economic benefits—a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares—at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.

c.
The firm must know the precise amount of the obligation before recording it.

4. All of the following are typically recognized as accounting liabilities except:
   a.
   Bonds Payable
   b.
   Rental Fees Received in Advance
   c.
   Loan Guarantees
   d.
   Taxes Payable

c.
Loan Guarantees

5. Outback Corp. recorded sales of $1,300,000 in 2010, in addition the company's accounts receivable balance grew from $120,000 at the beginning of 2010 to $165,000 at the end of 2010. How much cash did Outback collect from customers in 201 am0?

1,300,000 + 120,000 - 165,000 =
$1,255,000

6. Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

EI + COGS - BI = Purchases
230,000 + 655,000 -325,000
$560,000