1) at the end of the fiscal year, apha airlines has an outstanding non-cancellable
purchase commitment for the purchase of 1 million gallons of jet fuel at a price of $4.10
per gallon for delivery during the coming summer. the company prices its inventory at
the lower of cost or market. if the market price for jet fuel at the end of the year is
$4.50, how would this situation be reflected in the annual financial statements?
a.record unrealized gains of $400,000 and disclose the existence of the purchase
commitment
b.no impact
c.record unrealized losses of $400,000 and disclose the existence of the purchase
commitment
d.disclose the existence of the purchase commitment
2) transactions for the month of june were:
assuming that perpetual inventory records are kept in units only, the ending inventory
on an average-cost basis, rounded to the nearest dollar, is
a.$6,144
b.$6,357
c.$6,435
d.$6,483
3) instrument corp. has the following investments which were held throughout
20122013:
what amount would be reported as accumulated other comprehensive income related to
investments in instrument corp.s balance sheet at december 31, 2012?
a.$60,000 gain
b.$90,000 gain
c.$30,000 gain
d.$180,000 gain
4) pike co. purchased a machine on july 1, 2012, for $800,000. the machine has an
estimated useful life of five years and a salvage value of $160,000. the machine is being
depreciated from the date of acquisition by the 150% declining-balance method. for the
year ended december 31, 2012, pike should record depreciation expense on this
machine of
a.$240,000
b.$160,000
c.$120,000
d.$96,000
5) the following information applied to howe, inc. for 2012:
howe’s 2012 inventoriable cost was
a.$350,000
b.$353,000
c.$356,000
d.$361,000
6) hart company purchased a depreciable asset for $450,000. the estimated salvage
value is $30,000, and the estimated useful life is 8 years. the double-declining balance
method will be used for depreciation. what is the depreciation expense for the second
year on this asset?
a.$52,500
b.$78,750
c.$84,375
d.$112,500
7) the purpose of the international accounting standards board is to
a.issue enforceable standards which regulate the financial accounting and reporting of
multinational corporations
b.develop a uniform currency in which the financial transactions of companies
through-out the world would be measured
c.promote uniform accounting standards among countries of the world
d.arbitrate accounting disputes between auditors and international companies
8) hill corp. had 600,000 shares of common stock outstanding on january 1, issued
900,000 shares on july 1, and had income applicable to common stock of $1,680,000
for the year ending december 31, 2012. earnings per share of common stock for 2012
would be
a.$2.80
b.$1.33
c.$1.60
d.$1.87
9) on january 1, 2013, reston co. purchased 25% of ace corp.’s common stock; no
goodwill resulted from the purchase. reston appropriately carries this investment at
equity and the balance in restons investment account was $960,000 at december 31,
2013. ace reported net income of $600,000 for the year ended december 31, 2013, and
paid common stock dividends totaling $240,000 during 2013. how much did reston pay
for its 25% interest in ace?
a.$870,000
b.$1,020,000
c.$1,050,000
d.$1,170,000
10) plank co. uses the retail inventory method. the following information is available
for the current year.
the approximate cost of the ending inventory by the conventional retail method is
a.$191,800
b.$189,840
c.$196,000
d.$204,960
11) when converting from cash basis to accrual-basis accounting, which of the
following adjustments should be made to cash receipts from customers to determine
accrual basis service revenue?
a.subtract ending accounts receivable
b.subtract beginning unearned service revenue
c.add ending accounts receivable
d.add cash sales.
12) below is a list of items. classify each into one of the following balance sheet
categories:
a.cashc.short-term investments
b.receivablesd.other
1>compensating balances held in long-term borrowing arrangements
2>savings account
3>trust fund
4>checking account
5>postage stamps
6>treasury bills maturing in six months
7>post-dated checks from customers
8>certificate of deposit maturing in five years
9>common stock of another company (to be sold by december 31, this year)
10>change fund
13) if income tax effects are ignored, accelerated depreciation methods
a.provide funds for the earlier replacement of fixed assets
b.increase funds provided by operations
c.tend to offset the effect of steadily increasing repair and maintenance costs on the
income statement
d.tend to decrease the fixed asset turnover ratio
14) which of the following is true about accounts payable?
1>.accounts payable should not be reported at their present value.
2>.when accounts payable are recorded at the net amount, a purchase discounts account
will be used.
3>.when accounts payable are recorded at the gross amount, a purchase discounts lost
account will be used.
a.1
b.2
c.3
d.both 2 and 3 are true.
15) on december 1, miser corporation exchanged 3,000 shares of its $25 par value
common stock held in treasury for a parcel of land to be held for a future plant site. the
treasury shares were acquired by miser at a cost of $40 per share, and on the exchange
date the common shares of miser had a fair value of $50 per share. miser received
$9,000 for selling scrap when an existing building on the property was removed from
the site. based on these facts, the land should be capitalized at
a.$111,000
b.$120,000
c.$141,000
d.$150,000
16) in accounting for plant assets, which of the following outlays made subsequent to
acquisition should be fully expensed in the period the expenditure is made?
a.expenditure made to increase the efficiency or effectiveness of an existing asset
b.expenditure made to extend the useful life of an existing asset beyond the time frame
originally anticipated
c.expenditure made to maintain an existing asset so that it can function in the manner
intended
d.expenditure made to add new asset services