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All of the following are true regarding accrual accounting except: A

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1. All of the following are true regarding accrual accounting except:
   A.) Accrual basis measures operating success by the extent to which accomplishments exceed efforts.
   B.) Accrual basis measures operating success by the extent to which revenues exceed expenses.
   C.) Accrual basis reports operating activities in terms of their success in generating value.
   D.) Accrual basis for the recognition of expenses is not required under IFRS.
2. Which of the following would not be suggestive of a company recognizing sales too early?
   A.) large and volatile amounts of uncollectible accounts receivable
   B.) excessive warranty expenditures
   C.) large growth in accounts receivables
   D.) unusually large amount of returned goods
3. All of the following are conditions for revenue recognition outlined by SAB 104 except:
   A.) There is pervasive evidence that an arrangement exists.
   B.) Delivery has occurred or services have been performed.
   C.) The seller's price to the buyer can be variable.
   D.) Collectability is reasonably assured.
4. Which of the following statements best describes the difference between U.S. GAAP and IFRS with respect to revenue recognition?
   A.) IFRS has a substantial amount of industry specific guidance for revenue recognition.
   B.) IFRS revenue recognition is not consistent with U.S. GAAP in principle.
   C.) There are subtle differences in the wording of U.S. GAAP as compared with IFRS.
   D.) IFRS has four criteria and U.S. GAAP has five conditions for revenue recognition.
5. Under current U.S. GAAP unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss. Which of the following is not one of the balance sheet items?
   A.) Derivatives held as cash flow hedges.
   B.) Deferred tax assets related to net operating loss carryforwards.
   C.) Minimum pension obligations.
   D.) Investment securities classified as available for sale.
6. Typical U.S. GAAP disclosures for deferred income taxes include all of the following except:
   A.) Components of income tax expense
   B.) Components of income before taxes
   C.) Reconciliation of income taxes at statutory rate with income tax expense
   D.) Components of permanent tax differences
7. Which of the following is not a disclosure for derivatives required under SFAS No. 133?
   A.) Firms must describe their risk management strategy and how particular derivatives help accomplish their hedging objectives.
   B.) For fair value and cash flow hedges, firms must disclose the net gain or loss recognized in earnings resulting from the hedges' ineffectiveness and the line item on the income statement that includes this net gain or loss.
   C.) For cash flow hedges, firms must describe the transactions or events that will result in reclassifying gains and losses from other comprehensive income to net income and the estimated amount of such reclassifications during the next 12 months.
   D.) The specifics of a model that simulates with a 95 percent or other confidence level the minimum, maximum, or average amount of loss that a firm would incur.
8. Assume that Funtime Corp. has agreed to construct a new playground for Durrey County for $2,300,000. Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013. At the signing of the contract Funtime Corp. estimates that the it will cost $1,600,000 to build the playground. At the end of 2012 Funtime provided the following information about the project as of year end 2012: Cost incurred = $1,000,000 Estimated cost to complete = $800,000 At the end of 2012, what percentage is playground complete?
9. Assume that Funtime Corp. has agreed to construct a new playground for Durrey County for $2,300,000. Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013. At the signing of the contract Funtime Corp. estimates that the it will cost $1,600,000 to build the playground. At the end of 2012 Funtime provided the following information about the project as of year end 2012: Cost incurred = $1,000,000 Estimated cost to complete = $800,000 If Funtime uses the percentage of completion to recognize revenue on the long-term contract how much gross margin should Funtime recognize in 2012?

Parnell Industries sold a copy machine to Ranger Inc. on January 1, 2012. The sale price of the machine was $4,000,000 and the machine cost $3,200,000 for Parnell to manufacture. Ranger will make four payments at the end of each year, beginning with 2012, of $1,261,883 each. The four payments of $1,261,883 when discounted at 10% have a present value of $4,000,000. A 2012 amortization table appears below: Note Receivable balance Jan. 1, 2012 = $4,000,000 Interest revenue @ 10% = 400,000 Cash payment received = 1,261,833 Repayment of principal = 861,886 Note receivable balance Dec. 31, 2012 = 3,138,117 After 2012, three additional payments of 1,261,833 will be made. If Parnell Industries is UNCERTAIN that it will collect all four payments from Ranger Inc. and uses the installment method of accounting for revenue recognition what amount of gross profit should Parnell recognize in 2012 from the sale?