Question

Question 1

A disclosure note is required for all material loss contingencies for which the probability of loss is reasonably possible.

True

False

Question 2

P Corp. leased an asset to L Corp. using an operating lease in February. P Corp.'s December 31 statement of cash flows will report:

A cash outflow from investing activities.

A cash outflow from investment  activities.

A cash inflow from operating activities.

No cash outflow.

Question 3

When a company's only potential common shares are convertible bonds:

Diluted EPS will be greater if the bonds are actually converted than if they are not converted.

Diluted EPS will be smaller if the bonds are actually converted than if the bonds are not converted.

Diluted EPS will be the same whether or not the bonds are converted.

The effect of conversion on diluted EPS cannot be determined without additional information.

Question 4

For the lessee to account for a lease as a capital lease, the lease must meet:

All four of the criteria specified by GAAP regarding accounting for leases.

Any one of the six criteria specified by GAAP regarding accounting for leases.

Any two of the criteria specified by GAAP regarding accounting for leases.