1) which of the following situations may give rise to unearned revenue?
a.providing trade credit to customers
b.selling inventory
c.selling magazine subscriptions
d.providing manufacturer warranties
2) a ‘secret reserve” will be created if
a.inadequate depreciation is charged to income
b.a capital expenditure is charged to expense
c.liabilities are understated
d.stockholders’ equity is overstated
3) which accounting assumption or principle is being violated if a company provides
financial reports in connection with a new product introduction?
a.economic entity
b.periodicity
c.revenue recognition
d.full disclosure
4) which of the following is included in the normal journal entry to record the collection
of accounts receivable previously written off when using the allowance method?
a.debit allowance for doubtful accounts, credit accounts receivable
b.debit allowance for doubtful accounts, credit bad debt expense
c.debit bad debt expense, credit allowance for doubtful accounts
d.debit accounts receivable, credit allowance for doubtful accounts
5) the trial balance before adjustment of risen company reports the following balances:
instructions
(a)prepare the entries for estimated bad debts assuming that doubtful accounts are
estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.
(b)assume that all the information above is the same, except that the allowance for
doubtful accounts has a debit balance of $2,500 instead of a credit balance. how will
this difference affect the journal entries in part (a)?
6) given the acquisition cost of product dominoe is $43.31, the net realizable value for
product dominoe is $38.49, the normal profit for product dominoe is $4.32, and the
market value (replacement cost) for product dominoe is $40.68, what is the proper
per unit inventory price for product dominoe?
a.$40.68
b.$34.18
c.$38.49
d.$43.31
7) the following data concerning the retail inventory method are taken from the
financial records of welch company.
if the foregoing figures are verified and a count of the ending inventory reveals that
merchandise actually on hand amounts to $108,000 at retail, the business has
a.realized a windfall gain
b.sustained a loss
c.no gain or loss as there is close coincidence of the inventories
d.none of these
8) companies use intraperiod tax allocation for all of the following items except
a.discontinued operations
b.extraordinary items
c.changes in accounting estimates
d.income from continuing operations
9) in preparing a statement of cash flows, cash flows from operating activities
a.are always equal to accrual accounting income
b.are calculated as the difference between revenues and expenses
c.can be calculated by appropriately adding to or deducting from net income those
items in the income statement that do not affect cash
d.can be calculated by appropriately adding to or deducting from net income those
items in the income statement that do affect cash
10) in a statement of cash flows, the cash flows from investing activities section should
report
a.the issuance of common stock in exchange for a factory building.
b.stock dividends received.
c.a major repair to machinery charged to accumulated depreciation.
d.the assignment of accounts receivable.
11) on january 1, 2013, piper co. issued ten-year bonds with a face value of $4,000,000
and a stated interest rate of 10%, payable semiannually on june 30 and december 31. the
bonds were sold to yield 12%. table values are:
instructions
(a)calculate the issue price of the bonds.
(b)without prejudice to your solution in part (a), assume that the issue price was
$3,536,000. prepare the amortization table for 2013, assuming that amortization is
recorded on interest payment dates.
12) when an enterprise is the recipient of a donated asset, the account credited may be a
a.paid-in capital account
b.revenue account
c.deferred revenue account
d.all of these
13) rogers co. had a sheet metal cutter that cost $144,000 on january 5, 2008. this old
cutter had an estimated life of ten years and a salvage value of $24,000. on april 3,
2013, the old cutter is exchanged for a new cutter with a fair value of $72,000. the
exchange lacked commercial substance. rogers also received $18,000 cash. assume that
the last fiscal period ended on december 31, 2012, and that straight-line depreciation is
used.
instructions
(a)show the calculation of the amount of the gain or loss to be recognized by rogers co.
(b)prepare all entries that are necessary on april 3, 2013. show a check of the amount
recorded for the new cutter.
14) robust inc. has the following information related to an item in its ending inventory.
acer top has a cost of $251, a replacement cost of $234, a net realizable value of $266,
and a normal profit margin of $34. what is the final lower-of-cost-or-market inventory
value for acer top?
a.$232
b.$251
c.$234
d.$266