1) if year 1 equals $600, year 2 equals $650, and year 3 equals $780, the percentage to
be assigned for year 1 in a trend analysis, assuming that year 1 is the base year, is
a.100%
b.89%
c.105%
d.112%
2) a supplier to a company would be most interested in the
a.asset turnover ratio
b.profit margin ratio
c.current ratio
d.earnings per share
3) the final step in the recording process is to transfer the journal information to the
a.trial balance.
b.financial statements.
c.ledger.
d.file cabinets.
4) internal controls are concerned with
a.only manual systems of accounting
b.the extent of government regulations
c.safeguarding assets
d.preparing income tax returns
5) use the following information for boxter, inc., clifford company, danforth industries,
and evans services to answer the question using the lifo reserve adjustment, which
company would has the strongest liquidity position for 2012 as expressed by the current
ratio?
a.boxter
b.clifford
c.danforth
d.evans
6) the primary difference between a periodic and perpetual inventory system is that a
periodic system
a.keeps a record showing the inventory on hand at all time
b.provides better control over inventories
c.records the cost of the sale on the date the sale is made
d.determines the inventory on hand only at the end of the accounting period
7) the cost of goods sold during the year was $330,000. merchandise inventory
increased by $12,000 during the year and accounts payable decreased by $6,000 during
the year. using the direct method of reporting cash flows from operating activities, cash
payments for merchandise total
a.$336,000
b.$324,000
c.$312,000
d.$348,000
8) expenditures that add to the utility of plant assets for more than one accounting
period are
a.committed expenditures
b.revenue expenditures
c.current expenditures
d.capital expenditures
9) hopson company incurred $450,000 of research and development costs in its
laboratory to develop a new product. it spent $60,000 in legal fees for a patent granted
on january 2, 2012. on july 31, 2012, hopson paid $45,000 for legal fees in a successful
defense of the patent. what is the total amount that should be debited to patents through
july 31, 2012?
a.$450,000
b.$105,000
c.$555,000
d.some other amount
10) under the cash basis of accounting, an amount received from a customer in advance
of providing the services would be reported as a(n):
a.revenue
b.liability
c.expense
d.prepaid expense
11) the two key parties to a promissory note are the
a.maker and a bank
b.debtor and the payee
c.maker and the payee
d.sender and the receiver
12) in vertical analysis, the base amount for salaries and wages expense is generally
a.net sales
b.salary & wages expense in a previous year
c.gross profit
d.net income
13) the rowland clinic purchased a new surgical laser for $74,000. the estimated salvage
value is $4,000. the laser has a useful life of five years and the clinic expects to use it
10,000 hours. it was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in
year 3; 1,900 hours in year 4; 2,000 hours in year 5.
instructions
(a)compute the annual depreciation for each of the five years under each of the
following methods:
(1)straight-line.
(2)units-of-activity.
(b)which method would result in the lower reported income in the first year? which
method would result in the lower total reported income over the five-year period?
14) an accounting time period that is one year in length is called:
a.a fiscal year
b.an interim period
c.the time period assumption
d.a reporting period
15) the issuance of debt to purchase assets would be classified as a(n)
a.operating activity
b.investing activity
c.financing activity
d.none of the above
16) if total liabilities decreased by $45,000 and stockholders equity decreased by
$15,000 during a period of time, then total assets must change by what amount and
direction during that same period?
a.$60,000 increase
b.$30,000 decrease
c.$60,000 decrease
d.$30,000 decrease