The price at which a bond sells is equal to the:
A. Maturity value of the bonds plus the present value to investors of the future interest
payments.
B. Sum of the future interest payments, minus the maturity value of the bonds.
C. Present value to investors of the future principal and interest payments.
D. Sum of the future interest payments, plus the maturity value of the bonds.
On November 1, 2014, Salem Corporation sold land priced at $900,000 in exchange for
a 6%, six-month note receivable.
Refer to the information above. The journal entry made by Salem to record this
transaction on November 1, 2014, includes:
A. A debit to Notes Receivable of $927,000.
B. A debit to Interest Receivable of $27,000.
C. A credit to Interest Revenue of $27,000.
D. A debit to Notes Receivable of $900,000.
Coronet Corp. has total stockholders’ equity of $7,400,000. The company’s outstanding
capital stock includes 100,000 shares of $10 par value common stock and 20,000 shares
of 6%, $100 par value preferred stock. (No dividends are in arrears.) The book value
per share of common stock is:
A. $39.
B. $49.
C. $54.
D. $74.
When a company reports both diluted earnings per share and basic earnings per share:
A. Basic EPS would be greater than fully diluted EPS.
B. Basic EPS would be less than fully diluted EPS.
C. Basic EPS may be either greater or less than fully diluted EPS.
D. Both should never be shown – only one or the other would be reported.
Which statement is true as to the FASB’s position on the presentation of the statement
of cash flows?
A. The FASB recommends the use of the indirect method, but most companies use the
direct method.
B. The FASB recommends the use of the direct method, but most companies use the
indirect method.
C. The FASB recommends the use of the direct method, and most companies use the
direct method.
D. The FASB recommends the use of the indirect method, and most companies use the
indirect method.
Accents Associates sells only one product, with a current selling price of $70 per unit.
Variable costs are 40% of this selling price, and fixed costs are $12,000 per month.
Management has decided to reduce the selling price to $65 per unit in an effort to
increase sales. Assume that the cost of the product and fixed operating expenses are not
changed by this reduction in selling price.
Refer to the information above. At the current selling price of $70 per unit, the dollar
volume of sales per month necessary for Accents to break-even is:
A. $12,000.
B. $20,000.
C. $30,000.
D. Some other amount.
On November 1, 2014, Salem Corporation sold land priced at $900,000 in exchange for
a 6%, six-month note receivable.
Refer to the information above. On May 1, 2015 (maturity date), the note is collected in
full by Salem Corporation. Assuming a fiscal year-end of December 31, Salem
recognizes which of the following in its income statement for 2015 with regard to this
note?
A. $927,000 sales revenue.
B. $27,000 interest revenue.
C. $18,000 interest revenue.
D. $9,000 interest revenue.
The Parry Company’s breakeven point in units is 20,000. Assuming that variable costs
are 30% and fixed costs are $100,000, what is the company’s projected operating
income if sales are $750,000?
A. $425,000.
B. $125,000.
C. $250,000.
D. $400,000.
The just-in-time manufacturing system:
A. Contrasts with the supply push systems.
B. Complements the supply push systems.
C. Neither complements nor contrasts with the supply push systems.
D. Contrasts the demand pull system.
The payback period:
A. Is the length of time necessary to recover the entire cost of an investment from its
resulting annual net cash flow.
B. Is the length of time necessary to recover the entire cost of an investment from its
resulting annual net income.
C. Takes into consideration the profitability of an investment over its entire life, but
ignores the timing of its future cash flows.
D. Takes into consideration both the profitability of an investment over its entire life
and the timing of its future cash flows.
Refer to the information above. A statement of cash flows for August, would report net
cash flows from financing activities of:
A. $26,000.
B. $32,400.
C. $40,000.
D. $46,400.
On September 1, 2015, Able Company purchased a building from Regal Corporation by
paying $200,000 cash and issuing a one-year note payable for the balance of the
purchase price. Interest on the note is stated at an annual rate of 9% and is paid at
maturity. In its December 31, 2015, balance sheet, Able correctly presented the note and
interest payable as follows:
Refer to the information above. What is the amount of the interest expense Able will
recognize on this note in 2016?
A. $18,000.
B. $31,500.
C. $36,000.
D. $54,000.
Which business organization is recognized as a separate legal entity under the law?
A. Corporation.
B. Sole proprietorship.
C. Partnership.
D. All business organizations are separate legal entities.
Which of the following is not one of the balanced scorecard lenses?
A. Financial perspective.
B. Learning and growth perspective.
C. Production perspective.
D. Business process perspective.
Silver Company received a two-month, 6% note for $16,000 on August 5. Which of the
following statements is true?
A. Silver will receive $16,000 plus interest of $960 at maturity.
B. Silver should record a total receivable due of $16,080 on August 5.
C. The principal of the note plus interest is due on October 15.
D. The maturity value of this note is $16,160.
Platinum Company reports net income of $520,000 for 2015 and declared a cash
dividend of $1 per share on each of its 100,000 shares of common stock outstanding.
What are earnings per share for 2015?
A. $5.20 per share.
B. $1.00 per share.
C. $1.20 per share.
D. $4.80 per share.
In a job cost system, the Work-in-Process Inventory controlling account may be
reconciled to the total of the:
A. Employee time cards.
B. Materials requisitions.
C. Work-in-Process Inventory records for each department or process.
D. Job cost sheets.
Refer to the information above. In Duffy’s operation, the Finished Goods Inventory
account is debited for:
A. The cost of units transferred directly from the Mixing Department.
B. The cost of units transferred directly from the Packaging Department.
C. The cost of units transferred directly from both the Mixing Department and the
Packaging Department.
D. The cost of the units sold.
Refer to the information above. On January 6, 2015, total assets are:
A. $1,350,000.
B. $1,399,000.
C. $1,560,000.
D. $1,574,000.
Shown below is the adjusted Trial Balance for Simon Inc., on December 31, after the
first year of operations, after adjusting entries:
Refer to the information above. Net income for the period equals:
A. $20,960.
B. $16,640.
C. $21,920.
D. $23,360.
When prices are increasing, which inventory method will produce the highest cost of
goods sold?
A. FIFO.
B. LIFO.
C. Average cost.
D. Cost of goods sold will not change.
The stockholders’ equity section of the balance sheet of Caesar Corporation at
December 31, 2015, appears as follows: (The company engaged in no treasury stock
transactions prior to 2015)
Refer to the information above. If Caesar Corporation had reacquired 7,000 shares of
treasury stock early in 2015, then some treasury stock must have been sold during 2015
for:
A. $8 per share.
B. $12.00 per share.
C. $1.50 per share.
D. $5 per share.
Peak pricing charges:
A. A higher price when demand is high and a lower price when demand is low.
B. A lower price when demand is high and a higher price when demand is low.
C. A low price when demand is high and a lower price when demand is low.
D. A high price when demand is high and a higher price when demand is low.
Tuna Co. purchased a building in 2015 for $650,000 and debited an asset called
“Buildings” for the entire amount. The company never depreciated the building
although it had a useful life of 15 years. At the end of 2015, this action will cause:
A. Net income to be understated.
B. Net income to be overstated.
C. Net income will not be affected.
D. Total assets will be understated.
Since manufacturing costs (direct materials, direct labor, and overhead) are incurred in
the process of manufacturing units of product, these costs are debited to:
A. The Direct Materials Inventory, Direct Labor, and Manufacturing Overhead
accounts.
B. Expense accounts.
C. The Work in Process Inventory account.
D. The Cost of Goods Sold account.
The Abrams Corporation incurred the following quality costs for the year ending
December 31, 2015:
Refer to the information above. What are the total appraisal costs for the Abrams
Corporation?
A. $38,300.
B. $34,500.
C. $19,700.
D. $35,250.
Refer to the information above. What is the return on sales for Mahen, Inc.?
A. 5%.
B. 6%.
C. 10%.
D. 20%.
If Bounder Dog Supplies, Inc. purchased inventory at $2,200 list price and the terms
were 3/10, n/30, what would be the value associated with the inventory if payment was
made within 10 days?
A. $2,268.
B. $2,334.
C. $2,200.
D. $2,134.
Variable costs would include:
A. Insurance expense.
B. Amortization expense.
C. Sales commission expense.
D. Executive salaries expense.
If preferred stock is convertible, it is so at the option of the:
A. Board of directors.
B. CEO.
C. CFO.
D. Stockholders.
Capital investment proposals may not be evaluated by using:
A. The payback period.
B. The return on investment method.
C. The discounted cash flow method.
D. The income statement method.