1) on january 2, 2013, tylor co. issued a 4-year, $750,000 note at 6% fixed interest,
interest payable semiannually. tylor now wants to change the note to a variable rate
note. as a result, on january 2, 2013, tylor co. enters into an interest rate swap where it
agrees to receive 6% fixed and pay libor of 5.6% for the first 6 months on $750,000. at
each 6-month period, the variable interest rate will be reset. the variable rate is reset to
6.6% on june 30, 2013.
instructions
(a)compute the net interest expense to be reported for this note and related swap
transaction as of june 30, 2013.
(b)compute the net interest expense to be reported for this note and related swap
transaction as of december 31, 2013.
2) which of the following is not considered cash for financial reporting purposes?
a.petty cash funds and change funds
b.money orders, certified checks, and personal checks
c.coin, currency, and available funds
d.postdated checks and i.o.u.’s
3) which of the following basic elements of financial statements is more associated with
the balance sheet than the income statement?
a.equity
b.revenue
c.gains
d.expenses
4) an example of a permanent difference is
a.proceeds from life insurance on officers
b.interest expense on money borrowed to invest in municipal bonds
c.insurance expense for a life insurance policy on officers
d.all of these
5) which of the following is not a part of generally accepted accounting principles?
a.fasb interpretations
b.cap accounting research bulletins
c.apb opinions
d.all of these are part of generally accepted accounting principles.
6) the single-step income statement emphasizes
a.the gross profit figure
b.total revenues and total expenses
c.extraordinary items and accounting changes more than these are emphasized in the
multiple-step income statement
d.the various components of income from continuing operations
7) a limitation of the balance sheet that is not also a limitation of the income statement
is
a.the use of judgments and estimates
b.omitted items
c.the numbers are affected by the accounting methods employed
d.valuation of items at historical cost
8) downing company issues $3,000,000, 6%, 5-year bonds dated january 1, 2012 on
january 1, 2012. the bonds pay interest semiannually on june 30 and december 31. the
bonds are issued to yield 5%. what are the proceeds from the bond issue?
a.$3,000,000
b.$3,129,896
c.$3,131,285
d.$3,130,385
9) which of the following should be reported as a prior period adjustment?
change in estimated liveschange from unaccepted
of depreciable assetsprinciple to accepted principle
a.yesyes
b.noyes
c.yesno
d.nono
10) lyons company deducts insurance expense of $105,000 for tax purposes in 2012,
but the expense is not yet recognized for accounting purposes. in 2013, 2014, and 2015,
no insurance expense will be deducted for tax purposes, but $35,000 of insurance
expense will be reported for accounting purposes in each of these years. lyons company
has a tax rate of 40% and income taxes payable of $90,000 at the end of 2012. there
were no deferred taxes at the beginning of 2012.
assuming that income tax payable for 2013 is $120,000, the income tax expense for
2013 would be what amount?
a.$162,000
b.$134,000
c.$120,000
d.$106,000
11) which of the following practices may not be an acceptable deviation from
recognizing revenue at the point of sale?
a.upon receipt of cash
b.during production
c.upon receipt of order
d.end of production
12) the residual interest in a corporation belongs to the
a.management
b.creditors
c.common stockholders
d.preferred stockholders
13) muckenthaler company sells product 2005wsc for $30 per unit. the cost of one unit
of 2005wsc is $27, and the replacement cost is $26. the estimated cost to dispose of a
unit is $6, and the normal profit is 40%. at what amount per unit should product
2005wsc be reported, applying lower-of-cost-or-market?
a.$12
b.$24
c.$26
d.$27
14) moon co. records all sales using the installment method of accounting. installment
sales contracts call for 36 equal monthly cash payments. according to the fasb’s
conceptual framework, the amount of deferred gross profit relating to collections 12
months beyond the balance sheet date should be reported in the
a.current liabilities section as a deferred revenue
b.noncurrent liabilities section as a deferred revenue
c.current assets section as a contra account
d.noncurrent assets section as a contra account