1) which of the following statements is correct?
a.a company may exclude a short-term obligation from current liabilities if the firm
intends to refinance the obligation on a long-term basis
b.a company may exclude a short-term obligation from current liabilities if the firm can
demonstrate an ability to consummate a refinancing
c.a company may exclude a short-term obligation from current liabilities if it is paid off
after the balance sheet date and subsequently replaced by long-term debt before the
balance sheet is issued
d.none of these
2) the amortization of bond premium on long-term debt should be presented in a
statement of cash flows (using the indirect method for operating activities) as a(n)
a.addition to net income
b.deduction from net income
c. investing activity
d.financing activity
3) which of the following is not a correct statement about sales taxes?
a.sales taxes are an expense of the seller
b.many companies record sales taxes in the sales account
c.if sales taxes are included in the sales account, the first step to find the amount of
sales taxes is to divide sales by 1 plus the sales tax rate
d.all of these are true
4) during 2012, woods company purchased 40,000 shares of holmes corp. common
stock for $630,000 as an available-for-sale investment. the fair value of these shares
was $600,000 at december 31, 2012. woods sold all of the holmes stock for $17 per
share on december 3, 2013, incurring $28,000 in brokerage commissions. woods
company should report a realized gain on the sale of stock in 2013 of
a.$22,000
b.$50,000
c.$52,000
d.$80,000
5) portugal, inc. has the following amounts related to its activities for the year ended
december 31, 2013:
portugal, inc. uses ifrs for its external financial reporting. how much revenue should
portugal, inc. report on its income statement for the year ended december 31, 2013?
a.$5,000,000
b.$5,760,000
c.$6,120,000
d.$5,880,000
6) hanson co. had 200,000 shares of common stock, 20,000 shares of convertible
preferred stock, and $1,000,000 of 7.5% convertible bonds outstanding during 2013. the
preferred stock is convertible into 40,000 shares of common stock. during 2013, hanson
paid dividends of $.90 per share on the common stock and $3 per share on the preferred
stock. each $1,000 bond is convertible into 45 shares of common stock. the net income
for 2013 was $600,000 and the income tax rate was 30%.
basic earnings per share for 2013 is (rounded to the nearest penny)
a.$2.20
b.$2.42
c.$2.51
d.$2.70
7) what would you pay for an investment that pays you $15,000 at the end of each year
for the next twenty years? assume that the relevant interest rate for this type of
investment is 12%.
a.$125,487
b.$1,080,786
c.$15,550
d.$112,042
8) chen company’s account balances at december 31, 2012 for accounts receivable and
the allowance for doubtful accounts are $480,000 debit and $900 credit. sales during
2012 were $1,350,000. it is estimated that 1% of sales will be uncollectible. the
adjusting entry would include a credit to the allowance account for
a.$14,400
b.$13,500
c.$12,600
d.$4,800
9) chess top uses the periodic inventory system. for the current month, the beginning
inventory consisted of 300 units that cost $65 each. during the month, the company
made two purchases: 450 units at $68 each and 225 units at $70 each. chess top also
sold 750 units during the month. using the fifo method, what is the amount of cost of
goods sold for the month?
a.$50,655
b.$48,750
c.$51,225
d.$50,100
10) primary users for general-purpose financial statements include
a.creditors
b.employees
c.investors
d.both creditors and investors
11) a machine with a five-year estimated useful life and an estimated 10% salvage value
was acquired on january 1, 2011. the depreciation expense for 2013 using the
double-declining balance method would be original cost multiplied by
a.90% 40% 40%
b.60% 60% 40%
c.90% 60% 40%
d.40% 40%
12) when an investment in an available-for-sale security is transferred to trading
because the company anticipates selling the stock in the near future, the carrying value
assigned to the investment upon entering it in the trading portfolio should be
a.its original cost
b.its fair value at the date of the transfer
c.the higher of its original cost or its fair value at the date of the transfer
d.the lower of its original cost or its fair value at the date of the transfer
13) which of the following is not a basic element of financial statements?
a.assets
b.balance sheet
c.losses
d.revenue
14) sealy corporation had the following information in its financial statements for the
years ended 2012 and 2013:
what is the rate of return on common stock equity for sealy corporation for the year
ended 2013?
a.7.1%
b.6.5%
c.6.2%
d.5.7%
15) limited-life intangibles are reported at their
a.replacement cost
b.carrying amount unless impaired
c.acquisition cost
d.liquidation value
16) long co. issued 100,000 shares of $10 par common stock for $1,200,000. long
acquired 10,000 shares of its own common stock at $15 per share. three months later
long sold 5,000 of these shares at $19 per share. if the cost method is used to record
treasury stock transactions, to record the sale of the 5,000 treasury shares, long should
credit
a.treasury stock for $95,000
b.treasury stock for $50,000 and paid-in capital from treasury stock for $45,000
c.treasury stock for $75,000 and paid-in capital from treasury stock for $20,000
d.treasury stock for $75,000 and paid-in capital in excess of par for $20,000
17) if an industrial firm uses the units-of-production method for computing depreciation
on its only plant asset, factory machinery, the credit to accumulated depreciation from
period to period during the life of the firm will
a.be constant
b.vary with unit sales
c.vary with sales revenue
d.vary with production
18) the cost of purchasing patent rights for a product that might otherwise have
seriously competed with one of the purchaser’s patented products should be
a.charged off in the current period
b.amortized over the legal life of the purchased patent
c.added to factory overhead and allocated to production of the purchaser’s product
d.amortized over the remaining estimated life of the original patent covering the
product whose market would have been impaired by competition from the newly
patented product
19) which of the following statements is true regarding ifrs and inventories?
a.in order to determine market valuation of inventories, ifrs uses a ceiling and a floor
b.ifrs permits the option of valuing inventories at fair value
c.with respect to inventories, ifrs defines market as net realizable value
d.ifrs allows inventory to be written up above its original cost
20) the major difference between the service life of an asset and its physical life is that
a.service life refers to the time an asset will be used by a company and physical life
refers to how long the asset will last
b.physical life is the life of an asset without consideration of salvage value and service
life requires the use of salvage value
c.physical life is always longer than service life
d.service life refers to the length of time an asset is of use to its original owner, while
physical life refers to how long the asset will be used by all owners