1) if a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods
sold section of the income statement.
2) the valuation of available-for-sale securities is similar to the procedures followed for
trading securities, except that changes in fair value are not recognized in current
income.
3) the formula for the future value of a single amount is p (1 + i)/n.
4) each transaction must be analyzed in terms of its effect on the accounts before it can
be recorded in a journal.
5) during the maturity phase, cash from operations and net income are approximately
the same.
6) the advantage of accounting information is that it provides exact and completely
reliable measures.
7) the future value of a single amount is the value at a future date of a given amount
invested assuming compound interest.
8) dividends may be declared and paid in cash or stock.
9) entering transactions into the journal is called posting.
10) when the terms of sale include a sales discount, it usually is advisable for the buyer
to pay within the discount period.
11) wooderson company sells many products. gizmo is one of its popular items. below
is an analysis of the inventory purchases and sales of gizmo for the month of march.
wooderson company uses the periodic inventory system.
instructions
(a)using the fifo assumption, calculate the amount charged to cost of goods sold for
march. (show computations)
(b)using the weighted-average method, calculate the amount assigned to the inventory
on hand on march 31 (show computations)
12) a check written by the company for $275 is incorrectly recorded by a company as
$257. on the bank reconciliation, the $18 error should be
a.added to the balance per books
b.deducted from the balance per book
c.added to the balance per bank
d.deducted from the balance per bank
13) in horizontal analysis, each item is expressed as a percentage of the
a.net income amount
b.stockholders equity amount
c.total assets amount
d.base-year amount
14) detailed records of goods held for resale are not maintained under a
a.perpetual inventory system
b.periodic inventory system
c.double entry accounting system
d.single entry accounting system
15) steinkuhler, inc. decided on january 1 to discontinue its telescope manufacturing
division. on july 1, the divisions assets with a book value of $840,000 are sold for
$600,000. operating income from january 1 to june 30 for the division amounted to
$100,000. ignoring income taxes, what total amount should be reported on steinkuhlers
income statement for the current year under the caption, discontinued operations?
a.$100,000
b.$140,000 loss
c.$240,000 loss
d.$340,000
16) the difference between the amount borrowed (or invested) and the amount repaid
(or collected) is commonly known as
a.simple interest
b.an annuity
c.principal
d.present value
17) which one of the following is not a characteristic generally evaluated in ratio
analysis?
a.liquidity
b.profitability
c.marketability
d.solvency
18) in its first year of operations, martinez corporation had the following transactions
pertaining to its $20 par value preferred stock.
instructions
(a)journalize the transactions.
(b)indicate the amount to be reported for (1) preferred stock, and (2) paid-in capital in
excess of par valuepreferred stock at the end of the year.
19) (a)what is a convertible bond?
(b)discuss the advantages of a convertible bond from the standpoint of the bondholders
and of the issuing corporation.
20) a trial balance is a listing of
a.transactions in a journal.
b.the chart of accounts.
c.general ledger accounts and balances.
d.the totals from the journal pages.
21) a loss on disposal of a plant asset is reported in the financial statements
a.in the other revenues and gains section of the income statement
b.in the other expenses and losses section of the income statement
c.as a direct increase to the capital account on the balance sheet
d.as a direct decrease to the capital account on the balance sheet
22) hoover company had beginning inventory of $15,000 at march 1, 2012. during the
month, the company made purchases of $50,000. the inventory at the end of the month
is $17,300. what is cost of goods sold for the month of march?
a.$47,700
b.$50,000
c.$65,000
d.$67,300
23) jennifers noel shoppe had severe damage done to its christmas inventory due to an
escaped circus elephant rampaging through the store. the inventory loss was $120,000
before applicable taxes of $30,000. jennifers noel shoppe should record the loss as a(n)
a.$120,000 loss in other expenses and losses
b.$120,000 extraordinary loss
c.$90,000 extraordinary loss
d.$150,000 extraordinary loss
24) the board of directors of benson company declared a cash dividend of $1.50 per
share on 42,000 shares of common stock on july 15, 2012. the dividend is to be paid on
august 15, 2012, to stockholders of record on july 31, 2012. the correct entry to be
recorded on august 15, 2012, will include a
a.debit to cash dividends
b.credit to cash dividends
c.credit to dividends payable
d.debit to dividends payable
25) a captive finance company refers to
a.a finance company that is owned by individuals who borrow money from the
company
b.finance companies that won’t allow early repayment of loans
c.a company that is wholly owned by another company and provides financing to
purchasers of its owner company’s goods
d.any company that issues a major credit card
26) redeker company issued $400,000, 10%, 2-year bonds that pay interest
semiannually. compute the amount at which the bonds would sell if investors required a
rate of return of 8%.
27) crowder corporation recorded the return of $150 of goods originally sold on credit
to discount industries. using the periodic inventory approach, crowder would record this
transaction as:
28) rosen company receives a $3,000, 3-month, 6% promissory note from bay company
in settlement of an open accounts receivable. what entry will rosen company make upon
receiving the note?
29) additions and improvements are costs incurred to increase the operating efficiency,
productive capacity, or expected useful life and are referred to as _________________.
30) how is the cost for a plant asset measured in a cash transaction? in a noncash
transaction?
31) sunkan company prepares monthly financial statements. below are listed some
selected accounts and their balances on the september 30 trial balance before any
adjustments have been made for the month of september.
(note: debit column does not equal credit column because this is a partial listing of
selected account balances.)
an analysis of the account balances by the company’s accountant provided the following
additional information:
1>a physical count of office supplies revealed $1,000 on hand on september 30.
2>a two-year life insurance policy was purchased on june 1 for $4,200.
3>office equipment depreciates $3,000 per year.
4>the amount of rent received in advance that remains unearned at september 30 is
$500.
using the information given, prepare the adjusting entries that should be made by
sunkan company on september 30
32) on january 1, rodgers company purchased as an investment a $1,000, 8% bond for
$1,040. the bond pays interest on january 1 and july 1. the bond is sold on october 1 for
$1,075 plus accrued interest. interest has not been accrued since the last interest
payment date. what is the entry to record the cash proceeds at the time the bond is sold?
33) payroll taxes include the employers share of ________________ taxes and both
state and federal ________________ taxes.
34) wolf camera shop inc. uses the lower-of-cost-or-market basis for its inventory. the
following data are available at december 31
what amount should be reported on wolf camera shop’s financial statements, assuming
the lower-of-cost-or-market rule is applied?