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1) under a perpetual inventory system, the cost of goods sold is determined each time a
sale occurs.
2) cash is another term for stockholders equity.
3) ordinary repairs should be recognized when incurred as revenue expenditures.
4) the growth phase of the product life cycle occurs when the company is purchasing
fixed assets and beginning to produce and sell.
5) financing activities for corporations include borrowing money and selling shares of
their own stock.
6) the activity from the balance sheet to be presented in the financing activities section
of the statement of cash flows is based on an analysis of stockholders equity only.
7) a stock dividend is a pro rata distribution of cash to a corporations stockholders.
8) the loss on disposal of a significant component of a business is disclosed in the
statement of retained earnings.
9) pension funds and mutual funds are corporations that regularly invest for strategic
reasons.
10) the acquisition of treasury stock by a corporation increases total assets and total
stockholders equity.
11) a dishonored note is a note that is not paid in full at maturity.
12) a concentration of credit risk is a threat of nonpayment from a single customer or
class of customers that could adversely affect the financial health of the company.
13) the allowance for doubtful accounts is a liability account.
14) if a revenue account is credited, the revenue account is increased.
15) farwell company purchased merchandise with an invoice price of $2,000 and credit
terms of 2/10, n/30. assuming a 360 day year, what is the implied annual interest rate
inherent in the credit terms?
a.4%
b.24%
c.36%
d.72%
16) a corporation issues $400,000, 8%, 5-year bonds on january 1, 2012, for $416,800.
interest is paid annually on january 1. if the corporation uses the straight-line method of
amortization of bond premium, the amount of bond interest expense to be recognized in
december 31, 2012s adjusting entry is
a.$28,640
b.$32,000
c.$35,360
d.$3,360
17) under gaap, companies generally classify income statement items by
a.function
b.nature
c.nature or function
d.date incurred
18) goodwill
a.may be expensed upon purchase if desired
b.can be sold by itself to another company
c.can be purchased and charged directly to stockholders equity
d.is only recorded when the purchase of an entire business occurs
19) the interest expense recorded on an interest payment date is increased
a.by the amortization of premium on bonds payable
b.by the amortization of discount on bonds payable
c.only if the bonds were sold at face value
d.only if the market rate of interest is less than the stated rate of interest on that date
20) green, inc. had 200,000 shares of common stock outstanding before a stock split
occurred and 400,000 shares outstanding after the stock split. the stock split was
a.2-for-4
b.4-for-1
c.1-for-4
d.2-for-1
21) under the direct write-off method of accounting for uncollectible accounts
a.the allowance account is increased for the actual amount of bad debt at the time of
write-off
b.a specific account receivable is decreased for the actual amount of bad debt at the
time of write-off
c.balance sheet relationships are emphasized
d.bad debt expense is always recorded in the period in which the revenue was recorded
22) payments to stockholders are called
a.expenses
b.liabilities
c.dividends
d.distributions
23) the interest charged on a $200,000 note payable, at the rate of 6%, on a 90-day note
would be
a.$12,000
b.$6,000
c.$3,000
d.$1,000
24) hogan industries had the following inventory transactions occur during 2012:
the company sold 51 units at $63 each and has a tax rate of 30%. assuming that a
periodic inventory system is used, and operating expenses of $300, what is the
companys after-tax income using lifo? (rounded to whole dollars)
a.$472
b.$548
c.$384
d.$330
25) a short-term creditor is primarily interested in the __________ of the borrower.
a.liquidity
b.profitability
c.consistency
d.solvency
26) in the month of november gavin company inc. wrote checks in the amount of
$18,500. in december, checks in the amount of $25,316 were written. in november,
$16,936 of these checks were presented to the bank for payment, and $21,766 in
december. what is the amount of outstanding checks at the end of november?
a.$3,550
b.$1,564
c.$5,114
d.$7,100
27) the right to receive money in the future is called a(n)
a.account payable
b.account receivable
c.liability
d.revenue
28) freight costs incurred by a seller on merchandise sold to customers will cause an
increase
a.in the selling expenses of the buyer
b.in operating expenses for the seller
c.to the cost of goods sold of the seller
d.to a contra-revenue account of the seller
29) using the indirect method, if equipment is sold at a gain, the
a.sale proceeds received are deducted in the operating activities section
b.sale proceeds received are added in the operating activities section
c.amount of the gain is added in the operating activities section
d.amount of the gain is deducted in the operating activities section
30) the payment of a cash dividend would be classified as a(n)
a.operating activity
b.investing activity
c.financing activity
d.significant noncash activity
31) if the market rate of interest is greater than the contractual rate of interest, bonds
will sell
a.at a premium
b.at face value
c.at a discount
d.only after the stated rate of interest is increased
32) identify the impact on the accounting equation of the following transactions.
1)purchased 24-month insurance policy for cash.
2)purchased supplies on account.
3)received utility bill to be paid at later date.
4)paid utility bill previously accrued.
33) johnson company issued 600 shares of no-par common stock for $10,200. which of
the following journal entries would be made if the stock has no stated value?
34) merry co. sells christmas angels. merry determines that at the end of december, they
have the following aging schedule of accounts receivable:
compute the net receivables based on the above information at the end of december
(there was no beginning balance in the allowance for doubtful accounts).
35) a debit memorandum issued by the bank ______________ the cash balance in the
depositor's account.
36) a cash register tape shows cash sales of $2,000 and sales taxes of $160. the journal
entry to record this information is
