Chapter 8 Exam 3

33 Questions | Total Attempts: 105

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Chapter 8 Exam 3

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Questions and Answers
  • 1. 
    1.  Generally accepted accounting principles require a U.S. corporation to disclose the following disaggregated information for each operating segment, except:
    • A. 

      A) Revenues from external customers.

    • B. 

      B) Unusual items.

    • C. 

      C) Cost of goods sold.

    • D. 

      D) Depreciation expense.

    • E. 

      E) Intersegment revenues.

  • 2. 
    2.  Which tests must a company use to determine which operating segments require separate disclosure?
    • A. 

      A) Revenue test and asset test.

    • B. 

      B) Revenue test, profit or loss test, and asset test.

    • C. 

      C) Revenue test and profit or loss test.

    • D. 

      D) Profit or loss test and asset test.

    • E. 

      E) Revenue test, asset test, and liability test.

  • 3. 
    3.  Coulanger Corp. identified four operating segments: A, B, C, and D.  Segment A met the revenue test for identifying reportable segments while Segment C met the revenue test, profit or loss test, and asset test.  Segment B and Segment D did not meet any of these tests.  Which of these segments must be disclosed separately? Segment A Segment B Segment C Segment D A) Yes Yes No No B) Yes Yes Yes Yes C) Yes No Yes No D) No Yes No Yes E) No No Yes Yes
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

    • E. 

      E

  • 4. 
    4- Kaycee Corporation's revenues for the year ended December 31, 2017, were as follows:      Consolidated Revenue per the Income Statement: $1,200,000      Division 1 Intersegment Sales: $180,000      Division 2 Intersegment Sales: $60,000      For purposes of the Revenue Test, what amount will be used as the benchmark for determining whether a segment is reportable?
    • A. 

      A)  $  24,000.

    • B. 

      B)  $120,000.

    • C. 

      C)  $138,000.

    • D. 

      D)  $144,000.

    • E. 

      E)  $            0.

  • 5. 
    5.  When defining a reportable segment, which of the following conditions would be sufficient to allow a company to combine two operating segments for purposes of testing?
    • A. 

      A) The products sold by each segment are produced in the same plant.

    • B. 

      B) Both segments have several customers in common.

    • C. 

      C) The segments may sell different products, but they have a similar economic environment and similar business activities.

    • D. 

      D) Both segments are required to adhere to U.S. Department of Labor regulations regarding immigration laws.

    • E. 

      E) Both segments are owned by the same parent company.

  • 6. 
    6- The Fratilo Co. had three operating segments with the following information:       Pens Pencils Erasers Sales to outsiders $  11,200 $  5,600 $  8,400 Intersegment revenues         840     1,400     1,960         In addition, revenues generated at corporate headquarters are $1,400.         Combined segment revenues are calculated to be
    • A. 

      A)  $29,400.

    • B. 

      B)  $25,200.

    • C. 

      C)  $26,600.

    • D. 

      D)  $28,000.

    • E. 

      E)  $27,300.

  • 7. 
    7.  The Rivers Co. had four separate operating segments:     What amount of revenues must be generated from one customer before that party must be identified as a major customer?
    • A. 

      A)  $57,680.

    • B. 

      B)  $64,960.

    • C. 

      C)  $52,640.

    • D. 

      D)  $78,960.

    • E. 

      E)  $63,560.

  • 8. 
    8-  Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I.) Revenue from external customers. (II.) Total Segment Assets (III.) Revenues from foreign customers, identified by country.
    • A. 

      A) I, II, and III

    • B. 

      B) I and III only

    • C. 

      C) II and III only

    • D. 

      D) I and II only

    • E. 

      E) There is no requirement of information to disclose for operating segments.

  • 9. 
    9.  Kurves Corp. had six different operating segments reporting the following operating profit and loss figures: Which one of the following statements is true?
    • A. 

      A) Segment A is a reportable segment based on this test.

    • B. 

      B) Segment B is not a reportable segment based on this test.

    • C. 

      C) Segment E is a reportable segment based on this test.

    • D. 

      D) Segment C is not a reportable segment based on this test.

    • E. 

      E) Segment D is a reportable segment based on this test.

  • 10. 
    10- Retro Corp. was engaged solely in manufacturing operations.  The following data pertain to the operating segments for 2017:       What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable?
    • A. 

      A)  $4,343,684.

    • B. 

      B)  $4,826,316.

    • C. 

      C)  $5,067,632.

    • D. 

      D)  $4,585,000.         

    • E. 

      E)  $4,705,658.

  • 11. 
    11-   Retro Corp. was engaged solely in manufacturing operations.  The following data pertain to the operating segments for 2017:           What is the minimum amount of profit or loss that each of these segments must earn to be considered separately reportable?
    • A. 

      A)  $769,263.

    • B. 

      B)  $812,000.                          

    • C. 

      C)  $854,737.

    • D. 

      D)  $897,000.

    • E. 

      E)  $833,368.

  • 12. 
    12.  A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports.  Which of the following statement(s) is correct? (I.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker       for its financial performance. (II.) If more than one set of organizational units exists, each organizational unit is considered an operating segment  even if there is only one set for which segment managers are held responsible. (III.) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered.
    • A. 

      A) I, II, and III.

    • B. 

      B) I and III only.

    • C. 

      C) I and II only.

    • D. 

      D) II and III only.

    • E. 

      E) None of the above.

  • 13. 
    13.  Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar?
    • A. 

      A) The geographical location of the operations.

    • B. 

      B) The nature of the production process.

    • C. 

      C) The distribution methods.

    • D. 

      D) The nature of the regulatory environment, if applicable.

    • E. 

      E) The type or class of customer.

  • 14. 
    14.  The Hardware operating segment of Bloom Corporation has the following revenues for the year ended December 31, 2018:       For purposes of the revenue test, what amount will be used as total revenues of the Hardware operating segment?
    • A. 

      A)  $417,000.

    • B. 

      B)  $440,000.

    • C. 

      C)  $424,000.

    • D. 

      D)  $460,000.

    • E. 

      E)  $480,000.                          

  • 15. 
    15.  Which one of the following items is not required to be disclosed for each operating segment?
    • A. 

      A) Factors used to identify operating segments.

    • B. 

      B) Products and services from which each segment derives its revenues.

    • C. 

      C) Revenues from external customers.

    • D. 

      D) Factors used to allocate company-wide expenses.

    • E. 

      E) Revenues from transactions with other operating segments.

  • 16. 
    16.  The following items are required to be disclosed for each operating segment except:
    • A. 

      A) Factors used to allocate company-wide pension expense.

    • B. 

      B) Revenues from transactions with other operating segments.

    • C. 

      C) Interest revenue and interest expense. C) Interest revenue and interest expense.

    • D. 

      D) Depreciation, depletion, and amortization expense.

    • E. 

      E) Revenues from external customers.

  • 17. 
    17.  Which of the following statements is true according to U.S. GAAP regarding operating segment disclosure?
    • A. 

      A) The measurement of segment profit and loss disclosure need not be similar to the measurement provided to the chief operating decision maker.

    • B. 

      B) Segment information does not have to be in accordance with generally accepted accounting principles.

    • C. 

      C) Disclosure of a major customer’s identity is required.

    • D. 

      D) Geographic area information must be disclosed in interim financial statements.

    • E. 

      E) Immaterial items must be disclosed.

  • 18. 
    18. Which of the following is a criterion for determining whether an operating segment is separately reportable?
    • A. 

      A) An operating segment’s assets are 10 percent or more of combined segment assets.

    • B. 

      B) An operating segment’s assets are 10 percent or more of consolidated assets.

    • C. 

      C) An operating segment’s assets are 10 percent or more of combined segment liabilities.

    • D. 

      D) An operating segment’s assets are 10 percent or more of consolidated liabilities.

    • E. 

      E) An operating segment’s assets are 10 percent or more of corporate assets.

  • 19. 
    19. Which of the following operating segment disclosures is not required by U.S. GAAP?
    • A. 

      A) Interest expense.

    • B. 

      B) Intersegment sales.

    • C. 

      C) Unusual items.

    • D. 

      D) Depletion.

    • E. 

      E) Liabilities.

  • 20. 
    20. Vapor Corporation has a fan products operating segment.  With respect to the following, which is Vapor not required to report for this segment?
    • A. 

      A) Depreciation expense.

    • B. 

      B) Amortization expense.

    • C. 

      C) Research and development expense.

    • D. 

      D) Interest expense.

    • E. 

      E) Interest income.

  • 21. 
    21. Which of the following must be disclosed by a geographic segment according U.S. GAAP?
    • A. 

      A) Operating profit or loss.

    • B. 

      B) Gross profit.

    • C. 

      C) Total assets.

    • D. 

      D) Revenues from external customers.

    • E. 

      E) Revenues from internal customers.

  • 22. 
    22. Which of the following is not true for an operating segment according to U.S. GAAP?
    • A. 

      A) Discrete financial information generated by the internal accounting system is available.

    • B. 

      B) The segment recognizes revenues and incurs expenses.

    • C. 

      C) The segment is regularly reviewed by a chief decision maker to assess performance decisions.

    • D. 

      D) The segment is regularly reviewed by a chief decision maker to make resource allocations.

    • E. 

      E) An organizational unit cannot be an operating segment if all of its operating transactions are only with other segments of the organization.

  • 23. 
    23. Which of the following statements is true?
    • A. 

      A) In determining reportable segments, two tests are applied and both must be met.

    • B. 

      B) In determining reportable segments, three tests are applied and all three must be met.

    • C. 

      C) In determining reportable segments, two tests are applied and only one must be met.

    • D. 

      D) In determining reportable segments, three tests are applied and only one must be met.

    • E. 

      E) In determining reportable segments, at least 80% of the revenues from external customers must be reported.

  • 24. 
    24. According to U.S. GAAP, which of the following would be an acceptable grouping by a U.S. company for presentation of information by geographic area?
    • A. 

      A) France, Germany, All Other Countries.

    • B. 

      B) United States, Europe, Canada.

    • C. 

      C) United States, Africa, Europe, Asia.

    • D. 

      D) United States, Canada, Mexico, Germany.

    • E. 

      E) North America, Spain, All Other Countries.

  • 25. 
    25. Which of the following would be an acceptable grouping for a U.S. company to provide information by geographic area?
    • A. 

      A) United States, All Other Countries.

    • B. 

      B) United States, Europe, Taiwan.

    • C. 

      C) United States, Asia, Germany.

    • D. 

      D) United States, Central America, Mexico, Germany.

    • E. 

      E) South America, Spain, All Other Countries.

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