1) internal users of accounting information include
a.the shareholders of royal dutch shell
b.the internal revenue service
c.the chief financial officer of credit suisse
d.the international accounting standards board
2) cash from operations and net income are approximately the same during the
a.introductory phase
b.growth phase
c.maturity phase
d.decline phase
3) serene stereos has the following inventory data:
a physical count of merchandise inventory on november 30 reveals that there are 100
units on hand. cost of goods sold under fifo is
a.$876
b.$1,692
c.$842
d.$1,726
4) harden corporation engaged in the following transaction. assume that the harden
corporation uses the indirect method to depict cash flows. indicate where, if at all, stock
issued for equipment would be classified on the statement of cash flows.
a.operating activities section
b.investing activities section
c.financing activities section
d.does not represent a cash flow
5) interest expense on an interest-bearing note is
a.always equal to zero
b.accrued over the life of the note
c.only recorded at the time the note is issued
d.only recorded at maturity when the note is paid
6) a stock split will
a.have no effect on retained earnings
b.increase total paid-in capital
c.increase the total par value of the stock
d.have no effect on the par value per share of stock
7) all of the following statements about preferred stock are true except
a.preferred stock will have a paid-in capital account that is separate from other stock
b.preferred stock is presented first on the stockholder’s equity section
c.preferred stock can be either par value or no-par value
d.there can be only one class of preferred stock
8) multiple-step income statements show
a.gross profit but not income from operations
b.neither gross profit nor income from operations
c.both income from operations and gross profit
d.income from operations but not gross profit
9) the december 31, 2011, balance sheet of the kramer company had accounts
receivable of $650,000 and a credit balance in allowance for doubtful accounts of
$33,000. during 2012, the following transactions occurred: sales on account
$1,450,000; sales returns and allowances, $100,000; collections from customers,
$1,250,000; accounts written off, $35,000; previously written off accounts of $8,000
were collected.
(a)journalize the 2012 transactions.
(b)if the company uses the percentage of receivables basis to estimate bad debt expense
and determines that uncollectible accounts are expected to be 6% of accounts
receivable, what is the adjusting entry at december 31, 2012?
10) using the percentage of receivables method for recording bad debts expense,
estimated uncollectible accounts are $20,000. if the balance of the allowance for
doubtful accounts is $4,000 credit before adjustment what is the amount of bad debt
expense for that period?
a.$20,000
b.$16,000
c.$24,000
d.$4,000
11) dawson corporation has the following information available for 2011:
based on this information, what is dawson’s retained earnings balance at the end of the
year?
a.$630
b.$480
c.$370
d.$555
12) if a corporation declares a 10% stock dividend on its common stock, the account to
be debited on the date of declaration is
a.common stock dividends distributable
b.common stock
c.paid-in capital in excess of par
d.stock dividends
13) aber company sells merchandise on account for $1,500 to borth company with
credit terms of 2/10, n/30. borth company returns $250 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.$1,220
b.$1,230
c.$1,225
d.$1,125
14) which statement is incorrect?
a.the sales account is used to record the sales of goods held for resale to customers
b.sales discounts are recorded as debits to the sales account
c.the sales account is a revenue account
d.the sales account has a normal credit balance and is closed at the end of the
accounting period
15) which activities involve acquiring the resources to run the business?
a.delivering
b.financing
c.investing
d.operating
16) according to some u.s. companies what gives foreign firms a competitive advantage
in the capital market?
a.the foreign companies dont have standards similar to gaap
b.the foreign companies dont have strict ethical codes
c.the sarbanes-oxley act which requires more stringent internal controls on u.s. firms
d.the foreign companies dont have to be audited
17) investing activities include
a.collecting cash on loans made
b.obtaining cash from creditors
c.obtaining capital from owners
d.repaying money previously borrowed
18) if a corporation issued $6,000,000 in bonds which pay 5% annual interest, what is
the annual net cash cost of this borrowing if the income tax rate is 30%?
a.$3,000,000
b.$90,000
c.$300,000
d.$210,000
19) in calculating cash flows from operating activities using the indirect method, a loss
on the sale of equipment will appear as a(n)
a.subtraction from net income
b.addition to net income
c.addition to cash flow from investing activities
d.subtraction from cash flow from investing activities
20) if a company buys a $700 machine on credit, this transaction will affect the
a.income statement and retained earnings statement only.
b.income statement only.
c.income statement, retained earnings statement, and balance sheet.
d.balance sheet only.