On July 1, 2015, Jenks Company purchased the copyright to Jackson Computer
tutorials for $324,000. It is estimated that the copyright will have a useful life of 5 years
with an estimated salvage value of $24,000. The amount of Amortization Expense
recognized for the year 2015 would be
a. $64,800.
b. $30,000.
c. $60,000.
d. $32,400.
Answer:
Match the following external users of financial accounting information with the type of
decision that user will make with the information.
a. Creditor
b. Investor
c. Regulatory Agency
d Internal Revenue Service
_______ (1) Is the company operating within prescribed guidelines?
_______ (2) Is the company complying with tax laws?
_______ (3) Is the company able to pay its debts?
_______ (4) Is the company a good investment?
Answer:
A cash discount is usually granted to all of the following except
a. retail customers.
b. retailers.
c. wholesalers.
d. All of these answers are correct.
Answer:
Generally, the most important category on the statement of cash flows is cash flows
from
a. operating activities.
b. investing activities.
c. financing activities.
d. significant noncash activities.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $312,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (ii)?
a. $32,400
b. $27,600
c. $31,200
d. $28,800
Answer:
If a company sells its accounts receivables to a factor,
a. the seller pays a commission to the factor.
b. the factor pays a commission to the seller.
c. there is a gain on the sale of the receivables.
d. the seller defers recognition of sales revenue until the account is collected.
Answer:
A typical investment to house excess cash until needed is
a. stocks of companies in a related industry.
b. debt securities.
c. low-risk, highly liquid securities.
d. stock securities.
Answer:
Which one of the following columns in a cash receipts journal is not posted in total to
an account in the general ledger?
a. Cash column
b. Sales Discounts column
c. Accounts Receivable column
d. Other Accounts column
Answer:
Which of the following is not a right or preference associated with preferred stock?
a. The right to vote
b. First claim to dividends
c. Preference to corporate assets in case of liquidation
d. To receive dividends in arrears before common stockholders receive dividends
Answer:
Monthly and quarterly time periods are called
a. calendar periods.
b. fiscal periods.
c. interim periods.
d. quarterly periods.
Answer:
On January 1, Edison Corporation had 1,000,000 shares of $10 par value common stock
outstanding. On March 31, the company declared a 20% stock dividend. Market value
of the stock was $18/share. As a result of this event,
a. Edison’s Paid-in Capital in Excess of Par account increased $1,600,000.
b. Edison’s total stockholders’ equity was unaffected.
c. Edison’s Stock Dividends account increased $3,600,000.
d All of these answers are correct.
Answer:
If $30,000 is deposited in a savings account at the end of each year and the account
pays interest of 5% compounded annually, what will be the balance of the account at
the end of 10 years?
a. $48,867
b. $315,000
c. $377,337
d. $450,000
Answer:
Under IFRS, the proceeds from the issuance of convertible debt are reported as
a. debt only.
b. equity only.
c. debt or equity depending on the circumstances.
d. both debt and equity.
Answer:
Yates Corporation has the following stockholders’ equity accounts on January 1, 2015:
The company uses the cost method to account for treasury stock transactions. During
2015, the following treasury stock transactions occurred:
Instructions
(a) Journalize the treasury stock transactions for 2015.
(b) Prepare the Stockholders’ Equity section of the balance sheet for Yates Corporation
at December 31, 2015. Assume net income was $110,000 for 2015.
Answer:
Magneto Company had net credit sales during the year of $1,350,000 and cost of goods
sold of $810,000. The balance in accounts receivable at the beginning of the year was
$180,000, and the end of the year it was $120,000. What was the accounts receivable
turnover?
a. 5.6
b. 7.5
c. 9.0
d. 11.3
Answer:
The United States and the international standard-setting environment are primarily
driven by meeting the needs of
a. investors and creditors.
b. tax authorities.
c. central government planners.
d. academic researchers.
Answer:
Switzer, Inc. has 8 computers which have been part of the inventory for over two years.
Each computer cost $600 and originally retailed for $900. At the statement date, each
computer has a current replacement cost of $400. What value should Switzer, Inc., have
for the computers at the end of the year?
a. $2,400.
b. $3,200.
c. $4,800.
d. $7,200.
Answer:
Which of the following reasons best explains why a company that experiences seasonal
fluctuations in sales may purchase investments in debt or stock securities?
a. The company may have excess cash.
b. The company may generate a significant portion of its earnings from investment
income.
c. The company may invest for the strategic reason of establishing a presence in a
related industry.
d. The company may invest for speculative reasons to increase the value in pension
funds.
Answer:
GAAP stands for
a. Generally Accepted Auditing Procedures.
b. Generally Accepted Accounting Principles.
c. Generally Accepted Auditing Principles.
d. Generally Accepted Accounting Procedures.
Answer:
The following information pertains to Ortiz Company. Assume that all balance sheet
amounts represent both average and ending balance figures. Assume that all sales were
on credit.
What is the return on assets for Ortiz?
a. 6.0%
b. 5.0%
c. 10.0%
d. 12.0%
Answer:
The following information is for Bright Eyes Auto Supplies:
The total dollar amount of assets to be classified as investments is
a. $0.
b. $140,000.
c. $180,000.
d. $250,000.
Answer:
The following information is available for Dibble Corporation:
Instructions
Calculate each of the following for 2015:
(a) Payout ratio
(b) Return on common stockholders’ equity
Answer:
Under IFRS, the cash flow statement can be prepared using
a. the direct method only.
b. the indirect method only.
c. either the direct or indirect method.
d. the T-account method only.
Answer:
Flite Company reported income before taxes of $900,000 and an extraordinary loss of
$250,000. Assume that the company’s tax rate is 35%. What amounts will be reported
on the income statement for income before irregular items and extraordinary items,
respectively?
a. $585,000 and $250,000
b. $585,000 and $162,500
c. $650,000 and $250,000
d. $650,000 and $162,500
Answer:
Inventory turnover measures the number of times on the average the inventory was sold
during the period.
Answer:
The adjusted trial balance of J. W. Hatch Company appears below.
Instructions
Using the information given, prepare the year-end closing entries.
Answer:
Variations among companies in the application of generally accepted accounting
principles may reduce quality of earnings.
Answer:
Gorman Mining invested $960,000 in a mine estimated to have 1,200,000 tons of ore
with no salvage value. During the first year, 200,000 tons of ore were mined and sold.
Instructions
Prepare the journal entry to record depletion expense.
Answer:
Queen Company issued bonds with a face amount of $2,000,000 in 2012. As of January
1, 2015, the balance in Discount on Bonds Payable is $6,000. At that time, Queen
redeemed the bonds at 102.
Instructions
Assuming that no interest is payable, make the entry to record the redemption.
Answer:
Adjusting entries are not necessary if the trial balance debit and credit column balances
are equal.
Answer:
An aging schedule is prepared only for old accounts receivables that have been past due
for more than one year.
Answer: