1) composite or group depreciation is a depreciation system whereby
a.the years of useful life of the various assets in the group are added together and the
total divided by the number of items
b.the cost of individual units within an asset group is charged to expense in the year a
unit is retired from service
c.a straight-line rate is computed by dividing the total of the annual depreciation
expense for all assets in the group by the total cost of the assets
d.the original cost of all items in a given group or class of assets is retained in the asset
account and the cost of replacements is charged to expense when they are acquired
2) espinosa co. has a loss contingency to accrue. the loss amount can only be reasonably
estimated within a range of outcomes. no single amount within the range is a better
estimate than any other amount. the amount of loss accrual should be
a.zero
b.the minimum of the range
c.the mean of the range
d.the maximum of the range
3) which characteristic is not possessed by intangible assets?
a.physical existence
b.short-lived
c.result in future benefits
d.expensed over current and/or future years
4) black corporation uses the fifo method for internal reporting purposes and lifo for
external reporting purposes. the balance in the lifo reserve account at the end of 2012
was $100,000. the balance in the same account at the end of 2013 is $150,000. blacks
cost of goods sold account has a balance of $750,000 from sales transactions recorded
during the year. what amount should black report as cost of goods sold in the 2013
income statement?
a.$700,000
b.$750,000
c.$800,000
d.$900,000
5) which of the following is not a debt security?
a.convertible bonds
b.commercial paper
c.loans receivable
d.all of these are debt securities.
6) twilight corporation acquired end-of-the-world products on january 1, 2012 for
$8,000,000, and recorded goodwill of $1,500,000 as a result of that purchase. at
december 31, 2012, the end-of-the-world products division had a fair value of
$6,800,000. the net identifiable assets of the division (excluding goodwill) had a fair
value of $5,800,000 at that time. what amount of loss on impairment of goodwill should
twilight record in 2012?
a.$ -0-
b.$500,000
c.$700,000
d.$1,200,000
7) how should the balances of progress billings and construction in process be shown at
reporting dates prior to the completion of a long-term contract?
a.progress billings as deferred income, construction in progress as a deferred expense
b.progress billings as income, construction in process as inventory
c.net, as a current asset if debit balance, and current liability if credit balance
d.net, as income from construction if credit balance, and loss from construction if debit
balance
8)
9) which of the following statements about ifrs and u.s. gaap accounting and reporting
requirements for the balance sheet is not correct?
a.the presentation formats required by ifrs and u.s. gaap for the balance sheet are
similar.
b.one difference between the reporting requirements under ifrs and those of
u.s. gaap balance sheet is that an ifrs balance sheet may list long-term assets first.
c.both ifrs and u.s. gaap require that property, plant and equipment be reported at
historical cost on the balance sheet.
d.both ifrs and u.s. gaap require that comparative information be reported.
10) in order to be classified as an extraordinary item in the income statement, an event
or transaction should be
a.unusual in nature, infrequent, and material in amount
b.unusual in nature and infrequent, but it need not be material
c.infrequent and material in amount, but it need not be unusual in nature
d.unusual in nature and material, but it need not be infrequent
11) a flood damaged a building and contents. floods are unusual and infrequent in this
area. the receipts from insurance companies totaled $400,000, which was $120,000 less
than the book values. the tax rate is 30%.
on the statement of cash flows (indirect method), the flood loss should
a.be shown as an addition to net income of $84,000
b.be shown as an addition to net income of $120,000
c.be shown as an inflow from investing activities of $84,000
d.not be shown
12) in determining diluted earnings per share, dividends on nonconvertible cumulative
preferred stock should be
a.disregarded
b.added back to net income whether declared or not
c.deducted from net income only if declared
d.deducted from net income whether declared or not
13) vargas company has 35 employees who work 8-hour days and are paid hourly. on
january 1, 2011, the company began a program of granting its employees 10 days of
paid vacation each year. vacation days earned in 2011 may first be taken on january 1,
2012. information relative to these employees is as follows:
vargas has chosen to accrue the liability for compensated absences at the current rates
of pay in effect when the compensated time is earned.
what is the amount of the accrued liability for compensated absences that should be
reported at december 31, 2013?
a.$79,100
b.$75,600
c.$66,500
d.$79,800
14) vasguez corporation had a 1/1/12 balance in the allowance for doubtful accounts of
$30,000. during 2012, it wrote off $21,600 of accounts and collected $6,300 on
accounts previously written off. the balance in accounts receivable was $600,000 at 1/1
and $720,000 at 12/31. at 12/31/12, vasguez estimates that 5% of accounts receivable
will prove to be uncollectible. what is bad debt expense for 2012?
a.$6,000
b.$21,300
c.$27,600
d.$36,000
15) which of the following is included in comprehensive income?
a.investments by owners
b.unrealized gains on available-for-sale securities
c.distributions to owners
d.changes in accounting principles