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1) molina corporation issues 3,000, 10-year, 8%, $1,000 bonds dated january 1, 2012, at
103. the journal entry to record the issuance will show a
a.debit to cash of $3,000,000
b.debit to premium on bonds payable for $90,000
c.credit to bonds payable for $3,000,000
d.credit to cash for $3,090,000
2) physical controls to safeguard assets do not include
a.cashier department supervisors
b.vaults
c.safety deposit boxes
d.locked warehouses
3) baker bakery company just began business and made the following four inventory
purchases in june:
a physical count of merchandise inventory on june 30 reveals that there are 250 units on
hand. using the fifo inventory method, the amount allocated to ending inventory for
june is
a.$1,300
b.$1,365
c.$1,620
d.$1,650
4) if $20,000 is deposited in a savings account at the end of each year and the account
pays interest of 5% compound annually, what will be the balance of the account at the
end of 10 years?
a.$32,578
b.$210,000
c.$251,558
d.$300,000
5) national molding is building a new plant that will take three years to construct. the
construction will be financed in part by funds borrowed during the construction period.
there are significant architect fees, excavation fees, and building permit fees. which of
the following statements is true?
a.excavation fees are capitalized but building permit fees are not
b.architect fees are capitalized but building permit fees are not
c.interest is capitalized during the construction as part of the cost of the building
d.the capitalized cost is equal to the contract price to build the plant less any interest on
borrowed funds
6) gomez company is about to issue $800,000 of 10-year bonds paying an 8% interest
rate with interest payable semiannually. the discount rate for such securities is 10%.
below are time value of money factors that gomez uses to calculate compounded
interest.
to the closest dollar, how much can gomez expect to receive for the sale of these bonds?
a.$700,302
b.$585,274
c.$1,600,000
d.$2,811,006
7) the purpose of the ledger is to
a.record chronologically the days transactions.
b.keep a record of documentation to support each transaction.
c.keep in one place all information about changes in specific account balances.
d.make sure that all assets, liabilities, etc., have normal balances at all times.
8) the revenue recognition principle dictates that revenue should be recognized in the
accounting records:
a.when cash is received
b.when it is earned
c.at the end of the month
d.in the period that income taxes are paid
9) if 10% of the common stock of an investee company is purchased as an investment,
the appropriate method of accounting for the investment is
a.the cost method
b.the equity method
c.the preparation of consolidated financial statements
d.determined by agreement with whomever owns the remaining 90% of the stock
10) which of the following is not true of the terms debit and credit?
a.they can be abbreviated as dr. and cr.
b.they can be interpreted to mean increase and decrease.
c.they can be used to describe the balance of an account.
d.they can be interpreted to mean left and right.
11) equipment is classified on the balance sheet as
a.a current asset
b.property, plant, and equipment
c.an intangible asset
d.a long-term investment
12) which of the following is not considered in computing net cost of purchases?
a.purchases returns and allowances
b.purchases
c.freight paid on purchased goods
d.freight paid on goods shipped to customers
13) at december 31, 2012 howell companys inventory records indicated a balance of
$928,000. upon further investigation it was determined that this amount included the
following:
what is howells correct ending inventory balance at december 31, 2012?
a.$760,000
b.$919,000
c.$640,000
d.$751,000
14) bruce company issued common stock for proceeds of $372,000 during 2012. the
company paid dividends of $66,000 and issued a long-term note payable for $90,000 in
exchange for equipment during the year. the company also purchased treasury stock that
had a cost of $14,000. the financing section of the statement of cash flows will report
net cash inflows of
a.$292,000
b.$404,000
c.$306,000
d.$358,000
15) the interest charged on a $200,000 note payable, at the rate of 6%, on a 60-day note
would be
a.$12,000
b.$6,000
c.$3,000
d.$2,000
16) in a common size balance sheet, the 100 percent figure is
a.total current assets
b.total property, plant and equipment
c.total liabilities
d.total assets
17) sleep cheap is a private camping ground near the boulder peak recreation area. it
has compiled the following financial information as of december 31, 2012.
instructions
(a)determine net income from sleep cheap for 2012.
(b)prepare a retained earnings statement and a balance sheet for sleep cheap as of
december 31, 2012.
18) when a customer returns inventory previously purchased on credit, the entry to
record the credit granted to the customer requires a debit to the ___________________
account and a credit to the ________________ account.
19) ritchey corporation has the following capital stock outstanding at december 31,
2012:
the preferred stock was issued at $115 per share. the common stock was issued at an
average per share price of $16.
instructions
prepare the paid-in capital section of the balance sheet at december 31, 2012.
20) jamison company purchased debt investment for $83,000 on january 1, 2012. on
july 1, 2012, jamison received cash interest of $2,905. assuming no interest has been
accrued, which of the following correctly presents the journals entries for the purchase
and the receipt of interest?
21) when determining the value of a bond using present value, what are the two
components used in the calculation?
22) at august 31 kiner company has this bank information: cash balance per bank
$8,950; outstanding checks $762; deposits in transit $1,700; and a bank service charge
$20. determine the adjusted cash balance per bank at august 31, 2012.
23) greyhound stables, inc., operates several dog-racing tracks throughout the united
states. since most facilities are outdoor tracks only, most of the cash receipts for
greyhound are received from april through october. these funds are usually invested in
temporary, very liquid investments, such as stocks and bonds. among the stocks
purchased last year, was servitronics, a company specializing in automatic vending
equipment.
the company decided not to sell its servitronics stock at the end of last year, and has
purchased more of the stock this year. the company intends to continue to purchase
stock until it holds enough to make a takeover bid for the company. the accountants
have been instructed to continue to classify the investment as temporary until the
takeover is accomplished, so that less attention will be directed to it. (presently,
greyhound has no long-term investment in stock at all.)
24) adjusting entries are needed to enable financial statements to conform to
international financial reporting standards (ifrs).
25) ______________ analysis, also called trend analysis, is a technique for evaluating a
series of financial statement data over a period of time.
