1) using the following information, which company appears to be most liquid?
a.xu company
b.lin company
c.ng company
d.chen company
2) when preparing an income statement, which of the following is the proper order for
income statement components?
a.comprehensive income, other comprehensive income items, irregular items, net
income
b.net income, irregular items, comprehensive income, other comprehensive income
items
c.irregular items, net income, other comprehensive income items, comprehensive
income
d.irregular items, net income, comprehensive income, other comprehensive income
items
3) which one of the following is not a qualitative characteristic of useful accounting
information?
a.relevance
b.faithful representation
c.materiality
d.comparability
4) benson products uses the receivable approach in estimating uncollectible accounts.
on december 31, 2012, the balance in accounts receivable was $650,000. an aging
analysis of the accounts receivable indicated that $25,500 in accounts are expected to
be uncollectible.
prepare the adjusting entry to record estimated bad debts expense using the percentage
of receivables basis under each of the following independent assumptions:
(a)allowance for doubtful accounts has a credit balance of $3,000 before adjustment.
(b)allowance for doubtful accounts has a debit balance of $830 before adjustment.
5) which of the following groups uses accounting information to determine whether the
company can pay its obligations?
a.investors in common stock
b.marketing managers
c.creditors
d.chief financial officer
6) dividends are reported on the
a.income statement
b.retained earnings statement
c.balance sheet
d.income statement and balance sheet
7) the receivables turnover ratio is computed by dividing
a.total sales by average receivables
b.total sales by ending receivables
c.net credit sales by average receivables
d.net credit sales by ending receivables
8) after gross profit is calculated, operating expenses are deducted to determine
a.gross margin
b.net income
c.gross profit on sales
d.net margin
9) sparks company received proceeds of $211,500 on 10-year, 8% bonds issued on
january 1, 2011. the bonds had a face value of $200,000, pay interest annually on
december 31st, and have a call price of 102. sparks uses the straight-line method of
amortization. what is the amount of interest expense sparks will show with relation to
these bonds for the year ended december 31, 2012?
a.$16,000
b.$16,920
c.$14,850
d.$12,550
10) managements views on the companys short-term debt paying ability, expansion
financing, and results of operations are found in the
a.auditors report
b.management discussion and analysis section
c.notes to the financial statements
d.presidents state of the company report
11) adjusting entries are required:
a.because some costs expire with the passage of time and have not yet been journalized
b.when the company’s profits are below the budget
c.when expenses are recorded in the period in which they are earned
d.none of the above
12) which of the following adjustments to convert net income to net cash provided by
operating activities is not added to net income?
a.gain on sale of equipment
b.depreciation expense
c.patent amortization expense
d.depletion expense
13) which of the following most likely would be classified as a current liability?
a.dividends payable
b.bonds payable in 5 years
c.three-year notes payable
d.mortgage payable as a single payment in 10 years
14) if an individual asset is increased, then
a.there could be an equal decrease in a specific liability.
b.there could be an equal decrease in stockholders equity.
c.there could be an equal decrease in another asset.
d.none of these answer choices are correct.
15) salem company hired kirk construction to construct an office building for 8,000,000
on land costing 2,000,000, which salem company owned. the building was complete
and ready to be used on january 1, 2011 and it has a useful life of 40 years. the price of
the building included land improvements costing 600,000 and personal property costing
750,000. the useful lives of the land improvements and the personal property are 10
years and 5 years, respectively. salem company uses component depreciation, and the
company uses straight-line depreciation for other similar assets. what total amount of
depreciation expense would salem company report on its income statement for the year
ended december 31, 2011?
a.335,000
b.200,000
c.426,250
d.376,250
16) liabilities are classified as current or long-term based on their
a.description
b.payment terms
c.due date
d.amount