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1) the cost method of accounting for investments in stock should be used when the
investment is
a.influential and controlling
b.influential and noncontrolling
c.controlling
d.non-influential and noncontrolling
2) working capital is calculated by taking
a.current assets plus current liabilities
b.current assets minus current liabilities
c.current assets divided by current liabilities
d.current assets times current liabilities
3) stine company purchased machinery with a list price of $32,000. they were given a
10% discount by the manufacturer. they paid $200 for shipping and sales tax of $1,500.
stine estimates that the machinery will have a useful life of 10 years and a residual
value of $10,000. if stine uses straight-line depreciation, annual depreciation will be
a.$2,050
b.$2,036
c.$3,050
d.$1,880
4) wynne company issued $600,000 of 10%, 5-year bonds at 108. interest is paid
annually, and the effective interest method is used for amortization. assume that the
market rate for similar investments is 8%. the bonds are issued on the date of the bonds.
a.what amount was received for the bonds?
b.how much interest is paid each interest period?
c.what is the premium amortization for the first interest period?
d.how much bond interest expense is recorded on the first interest date?
e.what is the carrying value of the bonds after the first interest date?
5) which of the following statements regarding the date of a cash dividend declaration
is not accurate?
a.the dividend can be rescinded once it has been declared
b.the corporation is committed to a legal, binding obligation
c.the board of directors formally authorizes the cash dividend
d.a liability account must be increased
6) a $600,000 bond was retired at 103 when the carrying value of the bond was
$622,000. the entry to record the retirement would include a
a.gain on bond redemption of $18,000
b.loss on bond redemption of $4,000
c.loss on bond redemption of $18,000
d.gain on bond redemption of $4,000
7) which trial balance will consist of the greatest number of accounts?
a.post-closing trial balance
b.trial balance
c.adjusted trial balance
d.all of the above will contain the same number of accounts
8) why was apple required to spread their iphone revenues over a two year period?
a.because of its newness, their returns might exceed the normal level of returns
b.because they were required to provide software updates over that two year period
c.because that was the estimated life of the iphone
d.because they needed to defer revenue recognition since they had a swap program
available for future models
9) all of the following are significant contributions that the journal makes to the
recording process except the journal
a.discloses the complete effect of a transaction in one place.
b.helps prevent or locate errors because debits and credits can be readily compared.
c.keeps complete information about changes in a specific account balance in one place.
d.provides a chronological record of transactions.
10) atom 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 lifo inventory method, the value of the ending inventory on june 30 is
a.$1,385
b.$1,425
c.$1,455
d.$1,475
11) ifrs defines market for lower-of-cost-or market as
a.net realizable value
b.estimated selling price in the ordinary course of business
c.replacement cost
d.replacement cost less costs of disposal
12) non-trade receivables should be reported separately from trade receivables. why is
this statement either true or false?
a.it is true because trade receivables are current assets and non-trade receivables are
long term
b.it is false because all current receivables must be grouped together in one account
c.it is true because non-trade receivables do not result from business operations and
should not be included with accounts receivable
d.it is false because management can decide how to report receivables
13) the management of otto corp. is considering the effects of various inventory costing
methods on its financial statements and its income tax expense. assuming that the price
the company pays for inventory is increasing, which method will:
1>result in the lowest income tax expense?
2>provide the highest net income?
3>provide the highest ending inventory?
4>result in the most stable earnings over a number of years?
14) here is financial information for ridell inc.
instructions
prepare a schedule showing a horizontal analysis for 2012 using 2011 as the base year.
15) clinix is a medical office management franchise. there are currently twenty-five
medical offices managed by a clinix franchisee. one of the services provided to
franchisees is assistance in training various staff members.
clinix is preparing a manual for the front office staff to use as a reference guide. it will
be used in training new employees as well. one of the reasons the manual is being
prepared is to stress the importance of strong internal controls.
16) interest is the difference between the amount borrowed and the principal.
17) these transaction took place for sanders co.
instructions
record the transactions in general journal.
18) the freight costs incurred by a seller on outgoing inventory are a(n)
________________ to the seller.
19) assume that mitchell company uses a periodic inventory system and has these
account balances: purchases $550,000; purchase returns and allowances $14,000;
purchases discounts $9,000; and freight-in $15,000. determine net purchases and cost of
goods purchased.
20) a company receives $174, of which $14 is for sales tax. the journal entry to record
the sale would include a
adebit to sales tax expense for $14
b.debit to sales tax payable for $14
c.debit to sales for $174
d.debit to cash for $174
