Lakeland, Inc. has 25,000 shares of 6%, $100 par value, noncumulative preferred stock
and 50,000 shares of $1 par value common stock outstanding at December 31, 2015.
There were no dividends declared in 2014. The board of directors declares and pays a
$250,000 dividend in 2015. What is the amount of dividends received by the common
stockholders in 2015?
a. $0
b. $150,000
c. $250,000
d. $100,000
Answer:
IFRS sometimes refers to allowances as
a. revenues.
b. discounts.
c. provisions.
d. reserves.
Answer:
Units-of-activity is an appropriate depreciation method to use when
a. it is impossible to determine the productivity of the asset.
b. the asset’s use will be constant over its useful life.
c. the productivity of the asset varies significantly from one period to another.
d. the company is a manufacturing company.
Answer:
In performing a vertical analysis, the base for sales returns and allowances is
a. sales.
b. sales discounts.
c. net sales.
d. total revenues.
Answer:
Under a perpetual inventory system, acquisition of merchandise for resale is debited to
the
a. Inventory account.
b. Purchases account.
c. Supplies account.
d. Cost of Goods Sold account.
Answer:
The following selected account balances appear on the December 31, 2015 balance
sheet of Superchunk Co.
What is the total amount of property, plant, and equipment that will be reported on the
balance sheet?
a. $1,210,000
b. $1,435,000
c. $1,510,000
d. $1,850,000
Answer:
A prior period adjustment
a. appears on the income statement as an extraordinary item.
b. is a correction of an error, made directly to retained earnings.
c. is made when preferred dividends in arrears are finally paid.
d. is made to reverse an adjusting entry.
Answer:
Accrual-basis accounting is allowed under
a. GAAP but not IFRS.
b. IFRS but not GAAP.
c. both IFRS and GAAP.
d. neither IFRS nor GAAP.
Answer:
The amount of stockholders’ equity in a business is not affected by
a. The percentage of total assets held in cash.
b. Assets consumed in the process of earning revenues.
c. The profitability of the business.
d. The amount of dividends declared and paid to stockholders.
Answer:
Unrealized loss on available-for-sale securities appears as a deduction
a. on the income statement as an expense.
b. from total assets on the balance sheet.
c. from revenues on the income statement.
d. from stockholders’ equity on the balance sheet.
Answer:
A trial balance is a listing of
a. transactions in a journal.
b. the chart of accounts.
c. general ledger accounts and balances.
d. the totals from the journal pages.
Answer:
A company just starting business made the following four inventory purchases in June:
A physical count of merchandise inventory on June 30 reveals that there are 250 units
on hand.
The inventory method which results in the highest gross profit for June is
a. the FIFO method.
b. the LIFO method.
c. the weighted average unit cost method.
d. not determinable.
Answer:
Closing entries
a. are prepared before the financial statements.
b. reduce the number of permanent accounts.
c. cause the revenue and expense accounts to have zero balances.
d. summarize the activity in every account.
Answer:
The accounting process involves all of the following except
a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.
Answer:
The trial balances of Orton Company follow with the accounts arranged in alphabetic
order. Analyze the data and prepare [a) the adjusting entries and [b) the closing entries
made by Orton Company.
Answer:
Quayle Mining Company purchased land containing an estimated 15 million tons of ore
at a cost of $4,200,000. The land without the ore is estimated to be worth $600,000. The
company expects to operate the mine for 12 years. Buildings costing $600,000 are
erected on the site and are expected to last for 25 years. Equipment costing $300,000
with an estimated life of 15 years is installed. The buildings and the equipment possess
no salvage value after the mine is closed. During the first year of operations, the mining
company mined and sold 2 million tons of ore.
Instructions
(a) Compute the depletion charge per ton.
(b) Compute the depletion expense for the first year.
(c) Compute the appropriate first year’s depreciation expense for the buildings.
(d) Compute the appropriate first year’s depreciation expense for the equipment.
(e) Prepare journal entries to record depletion and depreciation expenses for the year.
Answer:
Net income does not appear in the numerator of the
a. profit margin.
b. return on assets.
c. return on common stockholders’ equity.
d. payout ratio.
Answer:
Effie Company uses a periodic inventory system. Details for the inventory account for
the month of January, 2015 are as follows:
An end of the month (1/31/15) inventory showed that 160 units were on hand. If the
company uses LIFO, what is the value of the ending inventory?
a. $800
b. $832
c. $848
d. $868
Answer:
The present value of $10,000 to be received in 5 years will be smaller if the discount
rate is
a. increased.
b. decreased.
c. not changed.
d. equal to the stated rate of interest.
Answer:
Matador Company purchases $1,300 of equipment from Danger Mouse Inc. for cash.
The effect on the components of the basic accounting equation of Matador Company is
a. an increase in assets and liabilities.
b. a decrease in assets and liabilities.
c. no change in total assets.
d. an increase in assets and a decrease in liabilities.
Answer:
Which costing method cannot be used to determine the cost of inventory items before
lower-of-cost-or-market is applied?
a. Specific identification
b. FIFO
c. LIFO
d. All of these methods can be used.
Answer:
If no-par stock is issued without a stated value, then
a. the par value is automatically $1 per share.
b. the entire proceeds are considered to be legal capital.
c. there is no legal capital.
d. the corporation is automatically in violation of its state charter.
Answer:
In a period of rising prices, the costs allocated to ending inventory may be understated
in the
a. average-cost method.
b. FIFO method.
c. gross profit method.
d. LIFO method.
Answer:
All reconciling items in determining the adjusted cash balance per books require the
depositor to make adjusting journal entries to the Cash account.
Answer:
Instructions: Complete the partial worksheet presented below, inserting additional
labels as needed.
MILTON SERVICES AGENCY
Partial Worksheet
For the Month Ended September 30, 2015
‘”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”’”
Answer:
Collection of a note receivable will result in a credit to ______________ for the face
value of the note and a credit to ______________.
Answer:
Using these data from the comparative balance sheet of Banner Company, perform
vertical analysis.
Answer:
The lower the ______________ to ______________ ratio, the more equity “buffer”
there is available to the creditors.
Answer:
When the allowance method is used to account for uncollectible accounts, the
______________ is credited when an account is determined to be uncollectible.
Answer:
The renting of an apartment is an example of a capital lease.
Answer: