Multiple Choice
Identify the choice that best completes the
statement or answers the question.
|
|
|
1.
|
Bailey Company, a calendar year corporation, has the following income before
income tax provision and estimated effective annual income tax rates for the first three quarters of
20X9: Quarter | | Income before income tax provision | | Estimated effective annual tax rate at end of
quarter | First
| | $60,000 | | 40% | Second | | 70,000 | | 40% | Third | | 40,000 | | 45% | | | | | |
Bailey's income tax provision in its interim income statement for the third quarter should
be
a. | $18,000 | b. | $24,500 | c. | $25,500 | d. | $76,500 |
|
|
|
2.
|
In January 20X0 Horner Company paid $80,000 in property taxes on its plant for
the calendar year 20X0. Also in January 20X0 Horner estimated that its year-end bonus to
executives for 20X0 would be $320,000. What is the amount of the expenses related to these two
items that should be reflected in Horner's quarterly income statement for the three months ended
June 30, 20X0 (second quarter)?
a. | $0 | b. | $ 20,000 | c. | $
80,000 | d. | $100,000 |
|
|
|
3.
|
During the second quarter of 20X8, Buzz Company sold a piece of equipment at a
$12,000 gain. What portion of the gain should Buzz report in its income statement for the
second quarter of 20X8?
a. | $12,000 | b. | $ 6,000 | c. | $
4,000 | d. | $0 |
|
|
|
4.
|
APB Opinion No. 28, Interim Financial Reporting, concluded that interim
financial reporting should be viewed primarily in which of the following ways?
a. | As useful only if activity is spread evenly throughout the year. | b. | As if the interim
period were an annual accounting period. | c. | As reporting for an integral part of an annual
period. | d. | As reporting under a comprehensive basis of accounting other than
GAAP. |
|
|
|
5.
|
Conceptually, interim financial statements can be described as
emphasizing
a. | Timeliness over reliability. | b. | Reliability over relevance. | c. | Relevance over
comparability. | d. | Comparability over neutrality. |
|