1) when bonds are retired before maturity,
a.only a loss on redemption can be recorded
b.only a gain on redemption can be recorded
c.either a gain or a loss on redemption can be recorded
d.neither a gain nor a loss on redemption can be recorded
2) free cash flow provides an indication of a companys ability to
a.generate cash to invest in new capital expenditures
b.generate net income
c.generate cash to pay dividends
d.both (a) and (c)
3) which of the following is the first step in preparing the statement of cash flows?
a.determine the net cash provided by operating activities
b.determine the net income
c.determine net cash provided by investing and financing activities
d.determine the net increase (decrease) in cash
4) douglas company has a $51,000 note that carries an annual interest rate of 10%. if
the amount of the total interest on the note is equal to $4,250, then what is the duration
of the note in months?
a.4 months
b.5 months
c.12 months
d.10 months
5) mortons courier service recorded a loss of $4,500 when it sold a van that originally
cost $42,000 for $7,500. accumulated depreciation on the van must have been
a.$39,000
b.$12,000
c.$37,500
d.$30,000
6) 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,
common stock issued for cash would be classified.
a.operating activities section
b.investing activities section
c.financing activities section
d.does not represent a cash flow
7) the primary purpose of the statement of cash flows is to report
a.a company’s investing transactions
b.a company’s financing transactions
c.information about cash receipts and cash payments of a company
d.the net increase or decrease in cash
8) richards, inc. has the following income statement (in millions):
using vertical analysis, what percentage is assigned to cost of goods sold?
a.67%
b.33%
c.100%
d.none of the above
9) johnson company reports the following for the month of june.
(a)compute the cost of the ending inventory and the cost of goods sold under (1) fifo,
(2) lifo, and (3) average cost.
(b)which costing method gives the highest ending inventory? the highest cost of goods
sold? why?
(c)how do the average-cost values for ending inventory and cost of goods sold relate to
ending inventory and cost of goods sold for fifo and lifo?
10) the primary purpose of the trial balance is to
a.disclose the complete effect of a transaction in one place.
b.make sure a journal entry is not posted twice.
c.transfer journal entries to the ledger accounts.
d.prove the equality of the debit and credit amounts after posting.
11) adjusting entries can be classified as:
a.postponements and advances
b.accruals and deferrals
c.deferrals and postponements
d.accruals and advances
12) holden packaging corporation began business in 2012 by issuing 60,000 shares of
$5 par common stock for $8 per share and 15,000 shares of 6%, $10 par preferred stock
for par. at year end, the common stock had a market value of $10. on its december 31,
2012 balance sheet, holden packaging would report
a.common stock of $600,000
b.common stock of $300,000
c.common stock of $480,000
d.paid-in capital of $450,000
13) a company had net income of $242,000. depreciation expense is $26,000. during the
year, accounts receivable and inventory increased $15,000 and $40,000, respectively.
prepaid expenses and accounts payable decreased $2,000 and $4,000, respectively.
there was also a loss on the sale of equipment of $3,000. how much cash was provided
by operating activities?
a.$214,000
b.$207,000
c.$274,000
d.$295,000
14) management could determine the amounts due from customers by examining which
ledger account?
a.service revenue
b.accounts payable
c.accounts receivable
d.supplies
15) jackson company recorded the following cash transactions for the year:
paid $135,000 for salaries.
paid $60,000 to purchase office equipment.
paid $15,000 for utilities.
paid $6,000 in dividends.
collected $225,000 from customers.
what was jacksons net cash provided by operating activities?
a.$75,000
b.$15,000
c.$90,000
d.$69,000
16) bonds that are subject to retirement at a stated dollar amount prior to maturity at the
option of the issuer are called
a.callable bonds
b.early retirement bonds
c.options
d.debentures
17) a 90-day note dated april 30, 2012, would mature on:
a.july 30, 2012
b.july 29, 2012
c.july 31, 2012
d.august 1, 2012
18) which of the following statements is true?
a.debits increase assets and increase liabilities.
b.credits decrease assets and decrease liabilities.
c.credits decrease assets and increase liabilities.
d.debits increase liabilities and decrease assets.
19) which of the following accounts is classified as a contra revenue account?
a.sales revenue
b.cost of goods sold
c.sales returns and allowances
d.purchase discounts
20) dividends in arrears on cumulative preferred stock
a.are considered to be a non-current liability
b.are considered to be a current liability
c.only occur when preferred dividends have been declared
d.should be disclosed in the notes to the financial statements