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NEW QUESTION: 1
If a GK, by resolving the called number, finds that the called terminal registers with a neighboring GK, the GK can request the neighboring GK to resolve the called number.
A. TRUE
B. FALSE
Answer: A
NEW QUESTION: 2
Which of the following formulas is used to determine the Single Loss Expectancy (SLE)?
A. ALE before implementing safeguard - ALE after implementing safeguard - annual cost of safeguar
B. Asset Value x Exposure factor
C. Single Loss Expectancy x Annualized Rate of Occurrence
D. ALE before implementing safeguard + ALE after implementing safeguard + annual cost of safeguard
Answer: B
NEW QUESTION: 3
On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with
Quo's president and outside accountants, made changes in accounting policies, corrected several errors
dating from 1992 and before, and instituted new accounting policies.
Quo's 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo's transactions. List B represents the general accounting treatment
required for these transactions. These treatments are:
. Cumulative effect approach - Include the cumulative effect of the adjustment resulting from the
accounting change or error correction in the 1993 financial statements, and do not restate the 1992
financial statements.
. Retroactive or retrospective restatement approach - Restate the 1992 financial statements and adjust
1 992 beginning retained earnings if the error or change affects a period prior to 1992.
. Prospective approach - Report 1993 and future financial statements on the new basis but do not restate
1 992 financial statements.
During 1993, Quo increased its investment in Worth, Inc. from a 10% interest, purchased in 1992, to 30%,
and acquired a seat on Worth's board of directors. As a result of its increased investment, Quo changed
its method of accounting for investment in Worth, Inc. from the cost method to the equity method.
List B
A. Retroactive or retrospective restatement approach.
B. Cumulative effect approach.
C. Prospective approach.
Answer: A
Explanation:
Choice "B" is correct. The equity method of accounting is applied retroactively when the investor has
acquired 20% ownership. Prior to acquiring the ability to influence the investee, the cost method is proper.
The retroactive restatement approach does not mean that this change is the correction of an error (which
is now treated retroactively), a change in accounting principle (which is now treated retrospectively), or a
change in accounting entity (which is now treated retrospectively). It just means that retroactive
restatement is the proper treatment.
