1) jamison company purchased the assets of booker company at an auction for
$2,800,000. an independent appraisal of the fair value of the assets is listed below:
assuming that specific identification costs are impracticable and that jamison allocates
the purchase price on the basis of the relative fair values, what amount would be
allocated to the trucks?
a.$933,333
b.$1,400,000
c.$1,680,000
d.$1,700,000
2) when a patent is amortized, the credit is usually made to
a.the patent account
b.an accumulated amortization account
c.a deferred credit account
d.an expense account
3) in which account are post-dated checks received classified?
a.receivables
b.prepaid expenses
c.cash
d.payables
4) the most common method of recording depletion for accounting purposes is the
a.percentage depletion method
b.decreasing charge method
c.straight-line method
d.units-of-production method
5) a major distinction between temporary and permanent differences is
a.permanent differences are not representative of acceptable accounting practice
b.temporary differences occur frequently, whereas permanent differences occur only
once
c.once an item is determined to be a temporary difference, it maintains that status;
however, a permanent difference can change in status with the passage of time
d.temporary differences reverse themselves in subsequent accounting periods, whereas
permanent differences do not reverse
6) neutrality means that information
a.provides benefits which are at least equal to the costs of its preparation
b.can be compared with similar information about an enterprise at other points in time
c.would have no impact on a decision maker
d.cannot favor one set of interested parties over another
7) logan corp.’s trial balance of income statement accounts for the year ended december
31, 2012 included the following:
other information:
logan’s income tax rate is 30%. finished goods inventory:
on logan’s multiple-step income statement for 2012,
cost of goods manufactured is
a.$126,000
b.$120,000
c.$86,000
d.$80,000
8) indicate for each of the following what should be disclosed on a statement of cash
flows (indirect method). if not disclosed, write “not shown.” there may be more than
one answer for some items. for an item that is added to net income, write “add,” and for
an item that is deducted from net income, write “deduct.” show financing and investing
outflows in parentheses. for example, an answer might be: deduct $4,700 or investing
($31,000). if the item is a noncash transaction that should be disclosed separately, write
“noncash.”
(a)the deferred tax liability increased $10,000.
(b)the balance in investment in hoyt co. stock increased $12,000 as a result of using the
equity method.
(c)issuance of a stock dividend increased common stock $40,000 and paid-in capital
$16,000.
(d)amortization of bond discount, $1,600.
(e)machinery that cost $100,000 and had accumulated depreciation of $48,000 was sold
for $53,000.
(f)issued 8,000 shares of common stock ($10 par) with a market value of $15 per share
for machinery. (show the amount, too.)
(g)amortization of patents, $3,000.
(h)cash dividends paid, $60,000.
9) in january 2012, fehr mining corporation purchased a mineral mine for $6,300,000
with removable ore estimated by geological surveys at 2,500,000 tons. the property has
an estimated value of $600,000 after the ore has been extracted. fehr incurred
$1,725,000 of development costs preparing the property for the extraction of ore. during
2012, 340,000 tons were removed and 300,000 tons were sold. for the year ended
december 31, 2012, fehr should include what amount of depletion in its cost of goods
sold?
a.$775,200
b.$684,000
c.$891,000
d.$1,009,800
10) which of the following is a change in accounting principle?
a.a change in the estimated service life of machinery
b.a change from fifo to lifo
c.a change from straight-line to double-declining-balance
d.a change from fifo to lifo and a change from straight-line to double-declining- balance
11) which statement is true about the retail inventory method?
a.it may not be used to estimate inventories for interim statements
b.it may not be used to estimate inventories for annual statements
c.it may not be used by auditors
d.none of these
12) lanier company began operations on january 1, 2012, and uses the fifo method in
costing its raw material inventory. management is contemplating a change to the lifo
method and is interested in determining what effect such a change will have on net
income. accordingly, the following information has been developed:
based upon the above information, a change to the lifo method in 2013 would result in
net income for 2013 of
a.$490,000
b.$550,000
c.$570,000
d.$610,000
13) stockholders equity is not affected by all
a.cash receipts
b.dividends
c.revenues
d.expenses