1) When preparing a statement of cash flows, an increase in accounts payable during a
period would require which of the following adjustments in determining cash flows
from operating activities?
Indirect MethodDirect Method
a.IncreaseDecrease
b.DecreaseIncrease
c.IncreaseIncrease
d.DecreaseDecrease
2) Spencer Corporation will invest $20,000 every December 31st for the next six years
(2014 2019). If Spencer will earn 12% on the investment, what amount will be in the
investment fund on December 31, 2019?
a.$82,228
b.$92,096
c.$162,304
d.$181,780
3) Boxer Inc. uses the conventional retail method to determine its ending inventory at
cost. Assume the beginning inventory at cost (retail) were $196,500 ($297,000),
purchases during the current year at cost (retail) were $1,704,000 ($2,596,800),
freight-in on these purchases totaled $79,500, sales during the current year totaled
$2,333,000, and net markups were $207,000. What is the ending inventory value at
cost?
a.$767,800
b.$541,425
c.$490,624
d.$525,175
4) 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
5) On September 1, 2014, Halley Co. issued a note payable to Fidelity Bank in the
amount of $1,800,000, bearing interest at 10%, and payable in three equal annual
principal payments of $600,000. On this date, the bank’s prime rate was 11%. The first
payment for interest and principal was made on September 1, 2015 . At December 31,
2015, Halley should record accrued interest payable of
a.$66,000
b.$60,000
c.$40,000
d.$132,000
6) According to Statement of Financial Accounting Concepts No. 2, completeness is an
ingredient of the fundamental quality of
RelevanceFaithful Representation
a.YesNo
b.YesYes
c.NoNo
d.NoYes
7) The pervasive criterion by which accounting information can be judged is that of
a.decision usefulness
b.freedom from bias
c.timeliness
d.comparability
8) On January 1, 2014, West Co. exchanged equipment for a $600,000
zero-interest-bearing note due on January 1, 2017 . The prevailing rate of interest for a
note of this type at January 1, 2014 was 10%. The present value of $1 at 10% for three
periods is 0.75. What amount of interest revenue should be included in West’s 2015
income statement?
a.$0
b.$45,000
c.$49,500
d.$60,000
9) Presented below is information related to Tolbert Company.
Current Assets
Cash$ 4,000
Short-term investments75,000
Accounts receivable61,000
Inventories110,000
Prepaid expenses 30,000
Total current assets$280,000
Total current liabilities are $100,000. What is the acid-test ratio?
a.2.8 to 1
b.2.5 to 1
c.1.4 to 1
d.0.8 to 1
10) Jim Yount, M.D., keeps his accounting records on the cash basis. During 2015, Dr.
Yount collected $350,000 from his patients. At December 31, 2014, Dr. Yount had
accounts receivable of $40,000. At December 31, 2015, Dr. Yount had accounts
receivable of $70,000 and unearned revenue of $10,000. On the accrual basis, how
much was Dr. Yount’s patient service revenue for 2015?
a.$310,000
b.$370,000
c.$380,000
d.$390,000
11) Liabilities are
a.any accounts having credit balances after closing entries are made
b.deferred credits that are recognized and measured in conformity with generally
accepted accounting principles
c.obligations to transfer ownership shares to other entities in the future
d.obligations arising from past transactions and payable in assets or services in the
future
12) The following data concerning the retail inventory method are taken from the
financial records of Welch Company.
Cost Retail
Beginning inventory$ 147,000$ 210,000
Purchases672,000960,000
Freight-in18,000
Net markups60,000
Net markdowns42,000
Sales1,008,000
If the foregoing figures are verified and a count of the ending inventory reveals that
merchandise actually on hand amounts to $108,000 at retail, the business has
a.realized a windfall gain
b.sustained a loss
c.no gain or loss as there is close coincidence of the inventories
d.none of these answer choices are correct
13) Fry Corporations computation of cost of goods sold is:
Beginning inventory$ 60,000
Add: Cost of goods purchased 530,000
Cost of goods available for sale 590,000
Ending inventory 80,000
Cost of goods sold$510,000
The average days to sell inventory for Fry are
a.42.9 days
b.43.5 days
c.50.0 days
d.57.0 days