1) cash and supplies are both classified as current assets.
2) a liability is classified as a current liability if it is to be paid within the coming year.
3) allowance for doubtful accounts is a contra account that is deducted from accounts
receivable on the balance sheet.
4) operating activities include the cash effects of transactions that create revenues and
expenses.
5) the concept of materiality requires a large company to record the purchase of a $10
wastepaper basket as an asset and depreciate it over its useful life.
6) horizontal, vertical, and circular analyses are the basic tools of financial statement
analysis.
7) the basic formula for computing interest on an interest-bearing note is face value of
note x annual interest rate x time in terms of one year = interest.
8) ifrs sometimes refers to allowances as
a.revenues
b.discounts
c.provisions
d.reserves
9) notes to the financial statements
a.are optional
b.help clarify information presented in the financial statements
c.are generally brief and few in number
d.need not be read in detail if an unqualified opinion accompanies the financial
statements
10) gross profit equals the difference between sales and
a.operating expenses
b.cost of goods sold
c.net income
d.cost of goods sold plus operating expenses
11) under the allowance method, when a year-end adjustment is made for estimated
uncollectible accounts
a.total assets decrease
b.total assets are unchanged
c.net income is unchanged
d.liabilities decrease
12) fehr company sells merchandise on account for $2,500 to kelly company with credit
terms of 2/10, n/30. kelly company returns $500 of merchandise that was damaged,
along with a check to settle the account within the discount period. what is the amount
of the check?
a.$2,450
b.$2,460
c.$2,000
d.$1,960
13) equipment with a cost of $150,000 has an estimated salvage value of $10,000 and
an estimated life of 4 years or 10,000 hours. it is to be depreciated by the straight-line
method. what is the amount of depreciation for the first full year, during which the
equipment was used 2,700 hours?
a.$37,500
b.$35,000
c.$37,800
d.$36,250
14) adams company reported the following on its income statement:
an analysis of the income statement revealed that interest expense was $60,000. adams
company’s times interest earned was
a.6 times
b.7 times
c.8 times
d.5 times
15) information that is presented in a clear fashion
so that reasonably informed users of that information can interpret it is an example of
a.relevance
b.faithful representation
c.understandability
d.comparability
16) each of the following is a feature of internal control except
a.limited access to assets
b.independent internal verifications
c.authorization of transactions
d.generic design of documents
17) accrued expenses are:
a.incurred but not yet paid or recorded
b.paid and recorded in an asset account after they are used or consumed
c.paid and recorded in an asset account before they are used or consumed
d.incurred and already paid or recorded
18) the following data are taken from the financial statements of mackey company:
instructions
(a)compute the receivables turnover ratio and the average collection period for both
years.
(b)what conclusion can an analyst draw about the management of the accounts
receivable?
19) bluing corporation issued a one-year 9% $200,000 note on april 30, 2011. interest
expense for the year ended december 31, 2011 was:
a.$18,000
b.$13,500
c.$12,000
d.$10,500
20) scribner company issued $200,000 of 8%, 5-year bonds at 106. assuming
straight-line amortization and annual interest payments, how much bond interest
expense is recorded on the next interest date?
a.$16,000
b.$18,400
c.$13,600
d.$2,400
21) cash equivalents do not include
a.money market accounts
b.commercial paper
c.u.s. treasury bills
d.long-term investment
22) the following data is available for box corporation at december 31, 2012:
based on the data, how many shares of common stock are issued?
a.30,000
b.20,000
c.29,920
d.19,920
23) a post-closing trial balance will show:
a.zero balances for all accounts
b.zero balances for balance sheet accounts
c.only balance sheet accounts
d.only income statement accounts
24) hogan industries had the following inventory transactions occur during 2012:
the company sold 51 units at $63 each and has a tax rate of 30%. assuming that a
periodic inventory system is used, what is the companys gross profit using fifo?
(rounded to whole dollars)
a.$2,441
b.$2,365
c.$848
d.$772
25) the requirements for accounting for and reporting of inventories under ifrs,
compared to gaap, tend to be more
a.detailed
b.rules-based
c.principles-based
d.full of disclosure requirements
26) sielert corporation borrowed $600,000 from national bank on may 31, 2011. the
three-year, 7% note required annual payments of $228,630 beginning may 31, 2012. the
total amount of interest to be paid over the life of the loan is
a.$42,000
b.$85,890
c.$167,602
d.$126,000
27) the current cash debt coverage ratio is computed by dividing net cash provided by
operating activities by _________________ liabilities.
28) broadway corporations stockholders equity equals one-fourth of the companys total
assets. the companys liabilities are $270,000. what is the amount of the companys
stockholders equity?
29) define par value, and discuss its significance in accounting.
30) als bookstore has collected $750 in sales taxes during april. if sales taxes must be
remitted to the state government monthly, what entry will al’s bookstore make to show
the april remittance?
31)
during october, guiding light company experiences the following transactions in
establishing a petty cash fund.
instructions
journalize the entries in october that pertain to the petty cash fund.
32) the stockholders equity section of fleming corporation at december 31, 2011,
included the following:
dividends were not declared on the preferred stock in 2011 and are in arrears.
on september 15, 2012, the board of directors of fleming corporation declared dividends
on the preferred stock to stockholders of record on october 1, 2012, payable on october
15, 2012.
on november 1, 2012, the board of directors declared a $2 per share dividend on the
common stock, payable november 30, 2012, to stockholders of record on november 15,
2012.
instructions
prepare the journal entries that should be made by fleming corporation on the dates
indicated below:
33) analyze the transactions of a business organized as a corporation described below
and indicate their effect on the basic accounting equation. use a plus sign (+) to indicate
an increase and a minus sign (-) to indicate a decrease.
34) match the items below by entering the appropriate code letter in the space provided.
1>valuation allowance account.
2>amount for which a security could be sold.
3>ownership of more than 50% of another company’s common stock.
4>securities that may be sold in the future.
5>investments that are not readily marketable.
6>financial statements that present the assets and liabilities controlled by the parent and
the aggregate profitability of the affiliated companies.
7>the stock investments account is adjusted for net income and dividends received.
8>purchase of a company in the same industry but involved in a different activity.
9>entity whose stock is owned by the parent company.
10>an account that is reported in the stockholders’ equity section.