1) if pratt company issues 3,000 shares of $5 par value common stock for $210,000, the
account
a.common stock will be credited for $195,000
b.paid-in capital in excess of par value will be credited for $210,000
c.paid-in capital in excess of par value will be credited for $225,000
d.cash will be debited for $210,000
2) mays corporation reported net income $24,000; net sales $400,000; and average
assets $600,000 for 2012. what is the 2012 profit margin?
a.6%
b.12%
c.40%
d.200%
3) noise makers inc has the following inventory data:
a
physical count of merchandise inventory on july 30 reveals that there are 40 units on
hand. using the average cost method, the value of ending inventory is
a.$780
b.$800
c.$813
d.$820
4) *the work sheet does not contain columns for the:
a.income statement
b.statement of retained earnings
c.balance sheet
d.adjusted trial balance
5) a plant asset was purchased on january 1 for $27,000 with an estimated salvage value
of $3,000 at the end of its useful life. the current year’s depreciation expense is $3,000
calculated on the straight-line basis and the balance of the accumulated depreciation
account at the end of the year is $15,000. the remaining useful life of the plant asset is
a.10 years
b.8 years
c.5 years
d.3 years
6) in a period of rising prices, which of the following inventory methods generally
results in the lowest net income figure?
a.average cost method
b.lifo method
c.fifo method
d.need more information to answer
7) simonic retailers accepted $75,000 of citibank visa credit card charges for
merchandise sold on july 1. citibank charges 4% for its credit card use. the entry to
record this transaction by simonic retailers will include a credit to sales of $75,000 and
a debit(s) to:
a.cash $72,000 and service charge expense $3,000
b.accounts receivable $72,000 and service charge expense $3,000
c.cash $72,000 and interest expense $3,000
d.accounts receivable $75,000
8) ferman corporation had net income of $200,000 and paid dividends of $50,000 to
common stockholders and $20,000 to preferred stockholders in 2012. ferman
corporations common stockholders equity at the beginning and end of 2012 was
$870,000 and $1,130,000, respectively. ferman corporations payout ratio for 2012 was
a.$5 per share
b.35%
c.25%
d.10%
9) which of the following activities involves collecting the necessary funds to support
the business?
a.operating
b.investing
c.financing
d.delivering
10) winrow company received proceeds of $377,000 on 10-year, 8% bonds issued on
january 1, 2011. the bonds had a face value of $400,000, pay interest annually on
december 31st, and have a call price of 101. winrow uses the straight-line method of
amortization. what is the amount of interest expense winrow will show with relation to
these bonds for the year ended december 31, 2012?
a.$32,000
b.$30,160
c.$34,300
d.$29,700
11) the acquisition of land by issuing common stock is
a.a noncash transaction that is not reported in the body of a statement of cash flows
b.a cash transaction and would be reported in the body of a statement of cash flows
c.a noncash transaction and would be reported in the body of a statement of cash flows
d.only reported if the statement of cash flows is prepared using the direct method
12) prepare the journal entries to record the following transactions for reese company,
which has a calendar year end and uses the straight-line method of depreciation.
(a)on september 30, 2012, the company sold old equipment for $36,000. the equipment
was purchased on january 1, 2010, for $76,000 and was estimated to have a $16,000
salvage value at the end of its 5-year life. depreciation on the equipment has been
recorded through december 31, 2011
(b)on june 30, 2012, the company sold old equipment for $24,000. the equipment
originally cost $36,000 and had accumulated depreciation to the date of disposal of
$15,000.
13) goodwill can be recorded
a.when customers keep returning because they are satisfied with the company’s
products
b.when the company acquires a good location for its business
c.when the company has exceptional management
d.only when there is an exchange transaction involving the purchase of an entire
business
14) the current ratio would be of most interest to
a.short-term creditors
b.long-term creditors
c.stockholders
d.customers
15) all of the following statements regarding changes in accounting principles are true
except which of the following?
a.most changes in accounting principles are only reported in current periods when the
principle change takes place
b.changes in accounting principles are allowed when new principles are preferable to
old ones
c.most changes in accounting principles are retroactively reported
d.consistency is one of the biggest concerns when a change in accounting principle is
undertaken
16) overnight delivery specializes in the overnight transportation of medical equipment
and laboratory specimens. the company has selected the following information from its
most recent annual report to be the subject of an immediate press release.
17) martin corporation sells 300 shares of common stock being held as an investment.
the shares were acquired six months ago at a cost of $50 a share. martin sold the shares
for $40 a share. the entry to record the sale is:
18) _____________, ______________, and _______________ have debit normal
account balances whereas _______________, ______________, ______________, and
________________ have credit normal account balances.
19) in recording the purchase of a business, goodwill should be recorded for the excess
of ________________ over the _________________ of the net assets acquired.
20) closing entries result in the transfer of net income or net loss into the retained
earnings account.
21) stockholders generally have the right to share in corporate _______________ and in
______________ upon liquidation.
22) asset prepayments become expenses when they expire.
23) the cost of a patent should be amortized over its __________________ life or its
_______________ life, whichever is shorter.
24) the principle of internal control that prevents one individual from being responsible
for all the related activities of a given task is ______________.
25) the book value of a plant asset is obtained by subtracting ______________ from the
______________ of the plant asset.