1) on the statement of cash flows using the indirect method, patent amortization
expense will
a.be added to net income in the operating section
b.be deducted from net income in the operating section
c.appear as an inflow of cash in the investing section
d.appear as an outflow of cash in the investing section
2) a bond with a face value of $100,000 and a quoted price of 104 has a selling price of
a.$104,250
b.$104,025
c.$100,425
d.$104,000
3) redeker company had the following records:
what is redekers average days in inventory for 2012? (rounded)
a.62.39 days
b.64.95 days
c.61.76 days
d.2,147 days
4) sue cole is a new accountant with simon company. simon purchased merchandise on
account for $5,000. the credit terms are 1/10, n/30. sue has talked with the company’s
banker and knows that she could earn 6% on any money invested in the company’s
savings account.
instructions
(a)should sue pay the invoice within the discount period or should she keep the $5,000
in the savings account and pay at the end of the credit period? support your
recommendation with a calculation showing which action would be best.
(b)if sue forgoes the discount, it may be viewed as paying an interest rate of 1% for the
use of $5,000 for 20 days. calculate the annual rate of interest that this is equivalent to.
5) gregor company reported income before taxes of $800,000 and an extraordinary loss
of $200,000. assume that the companys tax rate is 30%. what amounts will be reported
on the income statement for income before irregular items and extraordinary items,
respectively?
a.$560,000 and $200,000
b.$560,000 and $140,000
c.$660,000 and $200,000
d.$660,000 and $140,000
6) the retained earnings statement
a.summarizes the changes in retained earnings for a specific period of time
b.reports the changes in assets, liabilities, and stockholders equity over a period of time
c.reports the assets, liabilities, and stockholders equity at a specific date
d.presents the revenues and expenses for a specific period of time
7) use the following information regarding black company and red company to answer
the question which of the following is red company’s “cost of goods sold” for 2012 (to
the closest dollar)?
a.$222,684
b.$235,125
c.$214,035
d.$224,580
8) if equal amounts are added to the numerator and the denominator of the current ratio
and the ratio is over one, the ratio will always
a.increase
b.decrease
c.stay the same
d.equal zero
9) the following information is from the income statement of the dirt poor laundry
service:
the entry to close the income summary includes a:
a.credit to income summary for $2,950.
b.debit to income summary for $2,950.
c.debit to retained earnings for $2,950.
d.credit to common stock for $2,950.
10) all of the following are required steps in the accounting cycle except:
a.journalizing and posting closing entries
b.preparing an adjusted trial balance
c.preparing a post-closing trial balance
d.preparing a work sheet
11) a revenue account
a.is increased by debits.
b. is decreased by credits.
c.has a normal balance of a debit.
d.is increased by credits.
12) in periods of rising prices, which is an advantage of using the lifo inventory costing
method?
a.ending inventory will include latest (most recent) costs and thus be more realistic
b.cost of goods sold will include latest (most recent) costs and thus will be more
realistic
c.net income will be the highest and thus reflect the prosperity of the company
d.phantom profits are reported
13) the ratios that are used to determine a company’s short-term debt paying ability are
a.asset turnover, times interest earned, current ratio, and receivables turnover
b.times interest earned, inventory turnover, current ratio, and receivables turnover
c.times interest earned, receivables turnover ratio, current ratio, and inventory turnover
d.current ratio, current debt coverage ratio, receivables turnover, and inventory turnover
14) treasury stock is
a.stock issued by the u.s. treasury department
b.stock purchased by a corporation and held as an investment in its treasury
c.corporate stock issued by the treasurer of a company
d.a corporations own stock, which has been reacquired and held for future use
15) the manager of weiser is given a bonus based on net income before taxes. the net
income after taxes is $11,900 for fifo and $9,800 for lifo. the tax rate is 30%. the bonus
rate is 20%. how much higher is the manager’s bonus if fifo is adopted instead of lifo?
a.$3,000
b.$4,200
c.$600
d.$2,100
16) which of the following statements about dividends is not accurate?
a.dividends are generally reported quarterly as a dollar amount per share
b.low dividends may mean high stock returns
c.the board of directors is obligated to declare dividends
d.payment of dividends from legal capital is illegal in many states