Which of the following statements are TRUE？
A. Neither of these are correct.
B. With the installment sales method sales are recognized when cash is received but profits are only recognized after all costs have been recovered.
C. Both of these are correct.
D. With the cost recovery method sales and profits are recognized as cash is received.
Which of the following entities can most likely claim its compliance with GIPS？
A local subsidiary corporation that provides investment management business.
B. A transnational investment consulting services company.
C. An independence investment research firm.
White Corp.抯 financial statements for the year ended December 31, 2001 included the
following:
Income Statement
Sales $8,000,000
Cost of Goods Sold (3,800,000)
Gross Profit 4,200,000
Wages (1,000,000)
Depreciation (600,000)
Interest (500,000)
Taxes (600,000)
Net Income $1,500,000
Selected Balance Sheet Accounts
Dec. 31, 2000 Dec. 31, 2001
Accounts Receivable $1,200,000 $1,500,000
Inventory 800,000 1,000,000
Accounts Payable 600,000 400,000
Equipment 5,300,000 5,500,000
White prepares its Statement of Cash Flow using the direct method.
The Cash Flow from Operations (CFO) section of the statement will show Cash Collections of:
A. $7,700,000.
B. $7,100,000.
C. $6,900,000.
D. $6,700,000.
Which of the following statements are TRUE？
A. Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method.
B. Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method; Analysis of cash flow from operations is more important when using the completed-contract method than when using the percent-of-completion method.
C. Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method; When cash receipts are greater than revenues earned the completed-contract method will give lower net income, retained earnings, liabilities, and current assets than the percent-of-completion method.
D. Analysis of cash flow from operations is more important when using the completed-contract method than when using the percent-of-completion method; When cash receipts are greater than revenues earned the completed-contract method will give lower net income, retained earnings, liabilities, and current assets than the percent-of-completion method.
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