1) when the periodic payments are not equal in each period, the future value can be
computed by using a future value of an annuity of 1 table.
2) treasury stock is reported as an asset on the balance sheet because treasury stock may
later be resold.
3) a higher discount rate produces a higher present value.
4) when purchasing land, the costs for clearing, draining, filling, and grading should be
charged to a land improvements account.
5) a basic principle of cash management is to increase the speed of paying liabilities.
6) checks received in the mail should be immediately stamped “nsf” to prevent
unauthorized cashing of the check.
7) salaries and wages payable is a type of expense.
8) vertical analysis is a technique for evaluating a series of financial statement data over
a period of time to determine the increase (decrease) that has taken place.
9) a very small business most likely would have to use the perpetual inventory system.
10) intracompany comparisons of the same financial statement items are often useful to
detect changes in financial relationships and significant trends.
11) a journal is not useful for
a.disclosing in one place the complete effect of a transaction.
b.preparing financial statements.
c.providing a record of transactions.
d.locating and preventing errors.
12) stockholders equity is comprised of
a.common stock and dividends
b.common stock and retained earnings
c.dividends and retained earnings
d.net income and retained earnings
13) the following information is available for bradshaw corporation and newell
corporation:
based on the information for both bradshaw and newell over the two-year period, the
earnings per share calculations (rounded to two decimals) indicate that:
a.bradshaw is seeing a greater performance improvement than newell
b.the earnings available to common stockholders is decreasing for newell and
increasing for bradshaw
c.the earnings per share calculations for both companies assume that changes in shares
between 2011 and 2012 occur in the middle of the year
d.newell is more financially stable than bradshaw
14) the convention of consistency refers to consistent use of accounting principles
a.among firms
b.among accounting periods
c.throughout the accounting periods
d.within industries
15) what is an advantage of using the multiple-step income statement?
a.it highlights the components of net income
b.gross profit is not a separate item
c.it is easier to prepare than the single-step income statement
d.net income will be higher than net income computed using the single-step income
statement
16) the amortization of a bond premium will result in reporting an amount of interest
expense for an interest period that
a.is less than the amount of cash to be paid for interest for the period
b.exceeds the amount of cash to be paid for interest for the period
c.equals the amount of cash to be paid for interest for the period
d.has no predictable relationship with the amount of cash to be paid for interest for the
period
17) based on the account balances below, what is the total of the debit and credit
columns of the adjusted trial balance?
a.$9,150
b.$10,840
c.$9,560
d.$10,430
18) at the end of the first year of operations, the total cost of the trading securities
portfolio is $180,000 and the total fair value is $174,000. what should the financial
statements show?
a.a reduction of an asset of $6,000 and a realized loss of $6,000
b.a reduction of an asset of $6,000 and an unrealized loss of $6,000 in the stockholders
equity section
c.a reduction of an asset of $6,000 in the current assets section and an unrealized loss of
$6,000 under other expenses and losses.
d.a reduction of an asset of $6,000 in the current assets section and a realized loss of
$6,000 under other expenses and losses.
19) which of the following would not create a cash flow?
a.sale of equipment at book value
b.depreciation of a delivery truck
c.payment of a cash dividend
d.the company converts bonds into common stock
20) which of the following items on a bank reconciliation would require an adjusting
entry on the companys books?
a.an error by the bank
b.outstanding checks
c.a bank service charge
d.a deposit in transit
21) ratios that measure the income or operating success of a company for a given period
of time are
a.liquidity ratios
b.profitability ratios
c.solvency ratios
d.trending ratios
22) two companies report the same cost of goods available for sale but each employs a
different inventory costing method. if the price of goods has increased during the
period, then the company using
a.lifo will have the highest ending inventory
b.fifo will have the highest cost of goods sold
c.fifo will have the highest ending inventory
d.lifo will have the lowest cost of goods sold
23) when stock dividends are distributed,
a.common stock dividends distributable is decreased
b.retained earnings is decreased
c.paid-in capital in excess of par value is debited if it is a small stock dividend
d.no entry is necessary if it is a large stock dividend
24) a gain or loss on disposal of a plant asset is determined by comparing the
a.replacement cost of the asset with the asset’s original cost
b.book value of the asset with the asset’s original cost
c.original cost of the asset with the proceeds received from its sale
d.book value of the asset with the proceeds received from its sale
25) graves company is about to issue $400,000 of 5-year bonds, with a contract rate of
interest of 8%, payable semiannually. the discount rate for such securities is 10%. how
much can graves expect to receive from the sale of these bonds?
a.$369,112
b.$400,000
c.$432,444
d.none of these
26) below is a series of cost of goods sold sections for mikey inc., nancie co., and oscar
inc.
instructions
fill in the lettered blanks to complete the cost of goods sold sections.
27) perez co. receives $1,100,000 when it issues a $1,100,000, 8%, mortgage note
payable to finance the construction of a building at december 31, 2012. the terms
provide for semiannual installment payments of $70,410 on june 30 and december 3
instructions
prepare the journal entries to record the mortgage loan and the first two installment
payments.
28) what criteria are used to determine how to record a factoring transaction?
29) beltran company receives a $150,000, 6-year note bearing interest of 6% (paid
annually) from a customer at a time when the discount rate is 8%. what is the present
value of the note received by beltran?
30) trent distributors has the following transactions related to notes receivable during
the last two months of the year.
31) what is the primary basis of accounting for inventories? what is the major objective
in accounting for inventories?
32) the _______________ price is equal to the fair market value of the asset given up or
the fair market value of the asset received.
33) before month-end adjustments are made, the september 30 trial balance of horton
enterprise contains revenue of $9,200 and expenses of $6,300. adjustments are
necessary for the following items:
depreciation for september is $300.
revenue earned but not yet billed is $2,100.
accrued interest expense is $800.
revenue collected in advance that is now earned is $3,400.
portion of prepaid insurance expired during september is $300.
instructions:
calculate the correct net income for hortons enterprise for september.
34) the following items were taken from the financial statements of hinz, inc., over a
four-year period:
item 2013 2012 2011 2010
net sales$675,000$640,000$575,000$500,000
cost of goods sold 520,000 480,000 435,000 400,000
gross profit$155,000$160,000$140,000$100,000
instructions
using horizontal analysis and 2010 as the base year, compute the trend percentages for
net sales, cost of goods sold, and gross profit. explain whether the trends are favorable
or unfavorable for each item.
35) the ratio used to assess the liquidity of accounts receivable is the ______________
ratio.