Acct Final Exam Latest Update

1. The following information ($ in millions) comes from a recent annual report of
Orinoco.com, Incorporated:
Net sales $ 10,753
Total assets 4,482
End of year balance in cash 1,149
Total stockholders' equity 530
Gross profit (Sales − Cost of Sales) 2,620
Net increase in cash for the year 11
Operating expenses 2,055
Net operating cash flow 686
Other income (expense), net (28)
Compute Orinoco's total liabilities at the end of the year.
Multiple Choice
• $2,365
• $3,204
• $4,482
• $3,952
Correct
Explanation
Total assets = Total liabilities + Total Stockholders' equity
Therefore, Total liabilities = Total assets − Total Stockholders' equity
= $4,482 − $530 = $3,952
2. The FASB's standard-setting process includes, in the correct order:
Multiple Choice
• Discussion paper, research, exposure draft, Accounting Standards Update.
• Research, exposure draft, discussion paper, Accounting Standards Update.
• Research, discussion paper, exposure draft, Accounting Standards Update.
Correct
• Exposure draft, research, discussion paper, Accounting Standards Update.
3. Porite Company recognizes revenue in the period in which it records an asset for the
related account receivable, rather than in the period in which the account receivable is
collected in cash.
Porite's practice is an example of:
Multiple Choice
Cash basis accounting.
Economic entity.
The matching principle.
Accrual accounting.