1) bettys bunny barn has experienced a $40,000 loss due to tornado damage to their
inventory. tornados have never before occurred in this area. assuming that the
companys tax rate is 30%, what amount will be reported for this loss on the income
statement?
a.$40,000
b.$28,000
c.$12,000
d.$36,000
2) what is a difference between merchandising companies and service enterprises?
a.merchandising companies must prepare multiple-step income statements and service
enterprises must prepare single-step income statements
b.merchandising companies generally have a longer operating cycle than service
enterprises
c.cost of goods sold is an expense for service enterprises but not for merchandising
companies
d.all are differences
3) a company that owns more than 50% of the common stock of another company is
known as the
a.charge company
b.subsidiary company
c.parent company
d.management company
4) if an investor owns less than 20% of the common stock of another corporation as an
investment
a.the equity method of accounting for the investment should be employed
b.no dividends can be expected
c.it is presumed that the investor has relatively little influence on the investee
d.it is presumed that the investor has significant influence on the investee
5) laser listening has the following inventory data:
a physical count of merchandise inventory on november 30 reveals that there are 100
units on hand. assuming that the specific identification method is used and that ending
inventory consists of 30 units from each of the three purchases and 10 units from the
november 1 inventory, cost of goods sold is
a.$854
b.$1,714
c.$1,708
d.$1,672
6) a common measure of liquidity is
a.return on assets
b.receivables turnover
c.profit margin
d.debt to equity
7) olympus climbers company has the following inventory data:
a physical count of merchandise inventory on july 30 reveals that there are 40 units on
hand. using the fifo inventory method, the amount allocated to cost of goods sold for
july is
a.$780
b.$820
c.$1,180
d.$1,220
8) which of the following is not an internal control activity for cash?
a.all payments should be made with currency, not checks
b.banking facilities should be used as much as possible
c.the amount of cash on hand should be kept to a minimum
d.employees who have access to cash should be bonded
9) *a petty cash fund of $200 is replenished when the fund contains $10 in cash and
receipts for $184. the entry to replenish the fund would
a.credit cash over and short for $6
b.credit miscellaneous revenue for $6
c.debit cash over and short for $6
d.debit miscellaneous expense for $6
10) an income statement shows
a.revenues, liabilities, and stockholders equity
b.expenses, dividends, and stockholders equity
c.revenues, expenses, and net income
d.assets, liabilities, and stockholders equity
11) trademarks are generally shown on the balance sheet under
a.intangibles
b.investments
c.property, plant, and equipment
d.current assets
12) karcan, inc. purchased supplies costing 2,500 on january 1, 2011 and recorded the
transaction by increasing assets. at the end of the year 1,300 of the supplies are still on
hand. how will the adjusting entry impact karcan, inc.s statement of financial position at
december 31, 2011?
a.decreased assets 1,300
b.increased equity 1,300
c.increased liabilities 1,200
d.decreased assets 1,200
13) xyz company has $20,000 of dividends in arrears. based on this information, which
of the following statements is false?
a.dividends in arrears are not considered to be liabilities
b.an obligation for dividends in arrears exists only after the board of directors declares
payment
c.the investment community looks favorably on companies with dividends in arrears,
since the money is redirected toward more important growth opportunities
d.the amount of dividends in arrears should be disclosed in the notes to the financial
statements
14) the calculation of depreciation using the declining-balance method
a.ignores salvage value in determining the amount to which a constant rate is applied
b.multiplies a constant percentage times the previous year’s depreciation expense
c.yields an increasing depreciation expense each period
d.multiplies a declining percentage times a constant book value
15) racer corporations december 31, 2012 balance sheet showed the following:
racer declared and paid a $75,000 cash dividend on december 15, 2012. if the companys
dividends in arrears prior to that date were $18,000, racers common stockholders
received
a.$57,000
b.$27,000
c.$33,000
d.no dividend
16) receivables might be sold to
a.lengthen the cash-to-cash operating cycle
b.take advantage of deep discounts on the cash realizable value of receivables
c.generate cash quickly
d.finance companies at an amount greater than cash realizable value
17) landis company reported a net loss of $6,000 for the year ended december 31, 2012.
during the year, accounts receivable decreased $14,000, merchandise inventory
increased $10,000, accounts payable increased by $20,000, and depreciation expense of
$10,000 was recorded. during 2012, operating activities
a.used net cash of $2,000
b.used net cash of $28,000
c.provided net cash of $28,000
d.provided net cash of $18,000
18) which of the following is a primary user of accounting information with a direct
financial interest in the business?
a.taxing authority
b.creditor
c.regulatory agency
d.labor union
19) accounts often need to be adjusted because:
a.there are never enough accounts to record all the transactions
b.many transactions affect more than one time period
c.there are always errors made in recording transactions
d.management can’t decide what they want to report
20) a retail store credited the sales account for the sales price and the amount of sales
tax on sales. if the sales tax rate is 5% and the balance in the sales account amounted to
$189,000, what is the amount of the sales taxes owed to the taxing agency?
a.$180,000
b.$189,000
c.$9,450
d.$9,000
21) hanlin company uses the periodic inventory system to account for inventories.
information related to hanlin company’s inventory at january 31 is given below:
instructions
1>show computations to value the ending inventory using the fifo cost assumption if
650 units remain on hand at january 31.
2>show computations to value the ending inventory using the weighted-average cost
method if 650 units remain on hand at january 31.
3>show computations to value the ending inventory using the lifo cost assumption if
650 units remain on hand at january 31.
22) for the accounts listed below, indicate if the normal balance of the account is a debit
or credit.
23) reinhardts carpet cleaning has the following balance sheet items:
24) the cost of paving, fencing, and lighting a new company parking lot is charged to a
______________ account.
25) ordinary repairs that maintain operating efficiency and expected productive life are
called _______________.
26) on january 1, 2012, dunbar company purchased at face value, a $1,000 5%, bond
that pays interest annually on january 1. dunbar company has a calendar year end. the
adjusting entry on june 30, 2012, is
27) the ________________ is current assets divided by current liabilities.
28) when the terms of sale are fob ______________, ownership of the goods passes to
the buyer when the public carrier accepts the goods from the seller.
29) prepare adjusting entries for the following transactions. omit explanations.
1>unrecorded interest accrued on savings bonds is $200.
2>property taxes incurred but not paid or recorded amount to $900.
3>salaries incurred by year end but not yet paid or recorded amounted to $600.
30) if a company has a current ratio of 1.2:1, what respective effects will the borrowing
of cash by short-term debt and collection of accounts receivable have on the ratio?