1) Opera Corp. uses the dollar-value LIFO method of computing its inventory cost.
Data for the past three years is as follows:
Year endedInventory atPrice
December 31End-of-year PricesIndex
2013 $390,0001.00
2014756,0001.05
2015810,0001.10
What is the 2013 inventory balance using dollar-value LIFO?
a.$390,000
b.$371,424
c.$736,362
d.$810,000
2) Ortiz Co. had the following account balances:
Sales revenue$ 220,000
Cost of goods sold110,000
Salaries and wages expense15,000
Depreciation expense30,000
Dividend revenue6,000
Utilities expense12,000
Rent revenue30,000
Interest expense18,000
Sales returns and allow.16,500
Advertising expense19,500
What would Ortiz report as total expenses in a single-step income statement?
a.$210,500
b.$221,000
c.$204,500
d.$ 94,500
3) Gross Corporation adopted the dollar-value LIFO method of inventory valuation on
December 31, 2013 . Its inventory at that date was $550,000 and the relevant price
index was 100 . Information regarding inventory for subsequent years is as follows:
Inventory at Current
DateCurrent PricesPrice Index
December 31, 2014$642,000107
December 31, 2015725,000125
December 31, 2016812,500130
What is the cost of the ending inventory at December 31, 2014 under dollar-value
LIFO?
a.$600,000
b.$642,000
c.$603,500
d.$588,500
4) Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring
equal annual payments of $172,076, with the first payment due at lease inception. The
lease does not transfer ownership, nor is there a bargain purchase option. The
equipment has a 4-year useful life and no salvage value. If Pisa, Inc.s incremental
borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is
8%, what is the amount recorded for the leased asset at the lease inception?
PV Annuity DuePV Ordinary Annuity
8%, 4 periods 3.57710 3.31213
10%, 4 periods 3.48685 3.16986
a.$615,533
b.$545,456
c.$569,937
d.$600,000
5) Fleming Company provided the following information on selected transactions
during 2015:
Dividends paid to preferred stockholders$ 250,000
Loans made to affiliated corporations700,000
Proceeds from issuing bonds800,000
Proceeds from issuing preferred stock1,050,000
Proceeds from sale of equipment400,000
Purchases of inventories1,200,000
Purchase of land by issuing bonds300,000
Purchases of treasury stock600,000
The net cash provided (used) by investing activities during 2015 is
a.$(600,000)
b.$(300,000)
c.$100,000
d.$400,000
6) The second level of the conceptual framework includes each of the following except
a.elements
b.principles
c.enhancing qualities
d.fundamental qualities
7) The projected benefit obligation is the measure of pension obligation that
a.is required to be used for reporting the service cost component of pension expense
b.requires pension expense to be determined solely on the basis of the plan formula
applied to years of service to date and based on existing salary levels
c.requires the longest possible period for funding to maximize the tax deduction
d.is not sanctioned under generally accepted accounting principles for reporting the
service cost component of pension expense
8) With regard to recognizing stock-based compensation
a.IFRS and U.S. GAAP follow the same model
b.IFRS and U.S. GAAP standards are undergoing major reform on valuation issues
c.it has been agreed that these standards will not be merged due to the differences in
currencies
d.the reform of U.S. GAAP standards will not be addressed until IFRS standards have
been finalized
9) Drake Corporation had the following amounts, all at retail:
Beginning inventory$ 3,600Purchases$140,000
Purchase returns6,000Net markups18,000
Abnormal shortage4,000Net markdowns2,800
Sales revenue77,000Sales returns1,800
Employee discounts1,600Normal shortage2,600
What is Drakes ending inventory at retail?
a.$69,400
b.$71,000
c.$72,600
d.$73,400
10) Nickerson Corporation began operations in 2013 . There have been no permanent or
temporary differences to account for since the inception of the business. The following
data are available:
In 2015, Nickerson had an operating loss of $1,860,000. What amount of income tax
benefits should be reported on the 2015 income statement due to this loss assuming that
it uses the carryback provision?
a.$819,000
b.$747,000
c.$744,000
d.$558,000
11) Harding Corporation reports the following information:
Net income$480,000
Depreciation expense 140,000
Increase in accounts receivable60,000
Harding should report cash provided by operating activities of
a.$280,000
b.$400,000
c.$560,000
d.$680,000
12) Rondelli Manufacturing Company employs a standard cost system. A planned
volume variance in the first quarter of 2015, which is expected to be absorbed by the
end of the fiscal year, ordinarily should
a.be deferred at the end of the first quarter, regardless of whether it is favorable or
unfavorable
b.never be deferred beyond the quarter in which it occurs
c.be deferred at the end of the first quarter if it is favorable; unfavorable variances are to
be recognized in the period incurred
d.be deferred at the end of the first quarter if it is unfavorable; favorable variances are
to be recognized in the period incurred
13) State Company manufactured a machine at a cost of $80,000. The product is sold
for $88,000 at a 5% discount. The delivery costs are estimated to be $8,000. Under
IFRS, how much should be the carrying amount of this inventory?
a.$80,000
b.$88,000
c.$72,000
d.$75,600
14) Which of the following methods of amortization is normally used for intangible
assets?
a.Sum-of-the-years’-digits
b.Straight-line
c.Units of production
d.Double-declining-balance
15) Horner Company buys a delivery van with a list price of $60,000. The dealer grants
a 15% reduction in list price and an additional 2% cash discount on the net price if
payment is made in 30 days. Sales taxes amount to $800 and the company paid an extra
$600 to have a special device installed. What should be the recorded cost of the van?
a.$49,980
b.$51,290
c.$51,380
d.$50,780
16) On December 29, 2015, James Company sold an equity security that had been
purchased on January 4, 2014 . James owned no other equity securities. An unrealized
holding loss was reported in the 2014 income statement. A realized gain was reported in
the 2015 income statement. Was the equity security classified as available-for-sale and
did its 2014 market price decline exceed its 2015 market price recovery?
2014 Market Price
Decline Exceeded 2015
Available-for-SaleMarket Price Recovery
a.YesYes
b.YesNo
c.NoYes
d.NoNo
17) To be consistent with the historical cost principle, overhead costs incurred by an
enterprise constructing its own building should be
a.allocated on the basis of lost production
b.eliminated completely from the cost of the asset
c.allocated on an opportunity cost basis
d.allocated on a pro rata basis between the asset and normal operations
18) Which of the following tables would show the smallest factor for an interest rate of
10% for six periods?
a.Future value of an ordinary annuity of 1
b.Present value of an ordinary annuity of 1
c.Future value of an annuity due of 1
d.Present value of an annuity due of 1
19) Generally accepted accounting principles
a.are fundamental truths or axioms that can be derived from laws of nature
b.derive their authority from legal court proceedings
c.derive their credibility and authority from general recognition and acceptance by the
accounting profession
d.have been specified in detail in the FASB conceptual framework