1) 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
2) seasons construction is constructing an office building under contract for cannon
company. the contract calls for progress billings and payments of $930,000 each
quarter. the total contract price is $11,160,000 and seasons estimates total costs of
$10,650,000. seasons estimates that the building will take 3 years to complete, and
commences construction on january 2, 2012.
at december 31, 2013, seasons construction estimates that it is 75% complete with the
building; however, the estimate of total costs to be incurred has risen to $10,800,000
due to unanticipated price increases. what is the total amount of construction expenses
that seasons will recognize for the year ended december 31, 2013?
a.$8,100,000
b.$4,725,000
c.$4,792,500
d.$4,905,000
3) during 2013, equipment was sold for $312,000. the equipment cost $504,000 and had
a book value of $288,000. accumulated depreciationequipment was $1,374,000 at
12/31/12 and $1,470,000 at 12/31/13. depreciation expense for 2013 was
a.$120,000
b.$192,000
c.$312,000
d.$384,000
4) the primary purpose of the statement of cash flows is to provide information
a.about the operating, investing, and financing activities of an entity during a period
b.that is useful in assessing cash flow prospects
c.about the cash receipts and cash payments of an entity during a period
d.about the entity’s ability to meet its obligations, its ability to pay dividends, and its
needs for external financing
5) which of the following most accurately reflects the concept of depreciation as used in
accounting?
a.the process of charging the decline in value of an economic resource to income in the
period in which the benefit occurred
b.the process of allocating the cost of tangible assets to expense in a systematic and
rational manner to those periods expected to benefit from the use of the asset
c.a method of allocating asset cost to an expense account in a manner which closely
matches the physical deterioration of the tangible asset involved
d.an accounting concept that allocates the portion of an asset used up during the year to
the contra asset account for the purpose of properly recording the fair market value of
tangible assets
6) the approach most companies use to provide information related to the components
of other comprehensive income is a
a.second separate income statement
b.combined income statement of comprehensive income
c.separate column in the statement of changes in stockholders equity
d.footnote disclosure
7) richman co. purchased $600,000 of 8%, 5-year bonds from carlin, inc. on january 1,
2012, with interest payable on july 1 and january 1. the bonds sold for $624,948 at an
effective interest rate of 7%. using the effective interest method, richman co. decreased
the available-for-sale debt securities account for the carlin, inc. bonds on july 1, 2012
and december 31, 2012 by the amortized premiums of $2,124 and $2,196, respectively.
at february 1, 2013, richman co. sold the carlin bonds for $618,000. after accruing for
interest, the carrying value of the carlin bonds on february 1, 2013 was $620,250.
assuming richman co. has a portfolio of available-for-sale debt investments, what
should richman co. report as a gain (or loss) on the bonds?
a.$0
b.($2,250)
c.($13,122)
d.($17,622)
8) nichols company had 400 units of dink in its inventory at a cost of $10 each. it
purchased 600 more units of dink at a cost of $15 each. nichols then sold 700 units at a
selling price of $25 each. the lifo liquidation overstated normal gross profit by
a.$ -0-
b.$500
c.$1,000
d.$1,500
9) how should an unusual event not meeting the criteria for an extraordinary item be
disclosed in the financial statements?
a.shown as a separate item in operating revenues or expenses if material and
supple-mented by a footnote if deemed appropriate
b.shown in operating revenues or expenses if material but not shown as a separate item
c.shown net of income tax after ordinary net earnings but before extraordinary items
d.shown net of income tax after extraordinary items but before net earnings
10) which of the following nonmonetary exchange transactions represents a
culmination of the earning process?
a.exchange of assets with no difference in future cash flows
b.exchange of products by companies in the same line of business with no difference in
future cash flows
c.exchange of assets with a difference in future cash flows
d.exchange of an equivalent interest in similar productive assets that causes the
companies involved to remain in essentially the same economic position
11) jamison corp.’s balance sheet accounts as of december 31, 2013 and 2012 and
information relating to 2013 activities are presented below.
information relating to 2013 activities:
net income for 2013 was $1,500,000.
cash dividends of $600,000 were declared and paid in 2013.
equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in
2013 for $360,000.
a long-term investment was sold in 2013 for $320,000. there were no other transactions
affecting long-term investments in 2013.
20,000 shares of common stock were issued in 2013 for $25 a share.
short-term investments consist of treasury bills maturing on 6/30/14.
net cash provided by jamisons 2013 operating activities was
a.$1,500,000
b.$2,120,000
c.$2,080,000
d.$2,160,000
12) the following items were among those that were reported on dye co.’s income
statement for the year ended december 31, 2012:
legal and audit fees$390,000
rent for office space540,000
interest on inventory floor plan630,000
loss on abandoned equipment used in operations105,000
the office space is used equally by dye’s sales and accounting departments. what
amount of the above-listed items should be classified as general and administrative
expenses in dye’s multiple-step income statement?
a.$660,000
b.$765,000
c.$930,000
d.$1,290,000
13) for rondelli company, the following information is available:
cost of goods sold$270,000
dividend revenue12,000
income tax expense27,000
operating expenses105,000
sales revenue450,000
in rondelli’s multiple-step income statement, gross profit
a.should not be reported
b.should be reported at $60,000
c.should be reported at $180,000
d.should be reported at $192,000
14) putnam, inc.
comparative balance sheets
additional information:
a.accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. the allowance for bad debts was the same at the end of 2013
and 2012, and no receivables were charged against the allowance. accounts payable are
recorded net of any discount and are always paid within the discount period.
b.the proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. capital stock was sold to provide additional working capital.
the amount to be shown on the cash flow statement as net cash provided by investing
activities would total what amount?
a.$225,000
b.$750,000
c.$795,000
d.$975,000
15) at the december 31, 2012 balance sheet date, unruh corporation reports an accrued
receivable for financial reporting purposes but not for tax purposes. when this asset is
recovered in 2013, a future taxable amount will occur and
a.pretax financial income will exceed taxable income in 2013
b.unruh will record a decrease in a deferred tax liability in 2013
c.total income tax expense for 2011 will exceed current tax expense for 2013
d.unruh will record an increase in a deferred tax asset in 2013
16) a company acquires a patent for a drug with a remaining legal and useful life of six
years on january 1, 2011 for $2,100,000. the company uses straight-line amortization
for patents. on january 2, 2013, a new patent is received for a timed-release version of
the same drug. the new patent has a legal and useful life of twenty years. the least
amount of amortization that could be recorded in 2013 is
a.$350,000
b.$ 70,000
c.$ 95,454
d.$ 80,500
17) layne corporation had the following information in its financial statements for the
years ended 2012 and 2013:
what is the book value per share for layne corporation for the year ended 2013?
a.$10.00
b.$9.92
c.$9.44
d.$8.89