1. When canceling debt before its maturity, debt retirement, it is theorized that the recall of the debt is a current decision. For that reason any gains or losses arising from the debt retirement should beA. reported in the current period income statement as an extraordinary itemB. reported in the current period income statement as an extraordinary item, net of taxC. reported in the current period statement of retained earnings as a prior period adjustmentD. reported in the current period income statement but not as an extraordinary item2. For disclosing the periodic income tax expense on the income statement, one method advocated by proponents of the net-of-tax method theorize that this method should reportA. income tax expense equal to current income tax payable B. only deferred tax assets but not deferred tax liabilitiesC. only deferred tax liabilities but not deferred tax assetsD. net operating loss tax carry-forwards but not net operating loss tax carry-backs3. The SEC has rules which protect entities from fraud charges as long as the estimates by management used in their annual reports are prepared in a reasonable manner and disclosed in good faith. These rules are referred to asA. management by exception allowancesB. Regulation Y-PC. Wheat RulesD. safe harbor4. A method of accounting for business combinations that is no longer allowed is the A. purchase methodB. pooling of interests methodC. goodwill methodD. parent-subsidiary method5. One of the primary reasons that the Federal Government passed the ERISA Act of 1974 (Pension Reform Act of 1974) is that the Federal Government was concerned aboutA. the accounting for the pension expenseB. the accounting for the pension asset/liabilityC. the funding policies of pension plans D. the sudden rise in the popularity of defined contribution plans6. If the benefits and risks of ownership have been transferred in a lease agreement, a capital lease should be recognized. Besides this, another conceptual consideration for recording capital leases for the lessee and sales or direct-financing leases for the lessor isA. consistency in accounting between the lessee and lessorB. the use of the same discount rate for present value computations by both the lessee and lessorC. the same asset cost-basis for both the lessee and lessor D. the recognition of the same amount of interest revenue (lessor) and interest expense (lessee)
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