1) when preparing a statement of cash flows (indirect method), an increase in ending
inventory over beginning inventory will result in an adjustment to reported net earnings
because
a.cash was increased while cost of goods sold was decreased
b.cost of goods sold on an accrual basis is lower than on a cash basis
c.acquisition of inventory is an investment activity
d.inventory purchased during the period was less than inventory sold resulting in a net
cash increase
2) presented below is the stockholders’ equity section of oaks corporation at december
31, 2012:
during 2013, the following transactions occurred relating to stockholders’ equity:
3,000 shares were reacquired at $28 per share.
3,000 shares were reacquired at $35 per share.
1,800 shares of treasury stock were sold at $30 per share.
for the year ended december 31, 2013, oaks reported net income of $450,000. assuming
oaks accounts for treasury stock under the cost method, what should it report as total
stockholders’ equity on its december 31, 2013, balance sheet?
a.$1,765,000
b.$1,761,400
c.$1,757,800
d.$1,315,000
3) why are inventories included in the computation of net income?
a.to determine cost of goods sold
b.to determine sales revenue
c.to determine merchandise returns
d.inventories are not included in the computation of net income
4) when a company has acquired a “passive interest” in another corporation, the
acquiring company should account for the investment
a.by using the equity method
b.by using the fair value method
c.by using the effective interest method
d.by consolidation
5) what might a manager do during the last quarter of a fiscal year if she wanted to
improve current annual net income?
a.increase research and development activities
b.relax credit policies for customers
c.delay shipments to customers until after the end of the fiscal year
d.delay purchases from suppliers until after the end of the fiscal year
6) acceptable depreciation methods under ifrs include
a.straight-line
b.accelerated
c.units-of-production
d.all of the above
7) the numerator of the acid-test ratio consists of
a.total current assets
b.cash and marketable securities
c.cash and net receivables
d.cash, marketable securities, and net receivables
8) on may 1, 2013, tv inc. consigned 80 tvs to ed’s tv. the tvs cost $360. freight on the
shipment paid by eds tv was $800. on july 10, tv inc. received an account sales and
$17,200 from ed’s tv. thirty tvs had been sold and the following expenses were
deducted:
the total sales price of the tvs sold by ed’s tv was
a.$20,500
b.$21,500
c.$21,850
d.$23,500
9) the basis for classifying assets as current or noncurrent is the period of time normally
required by the accounting entity to convert cash invested in
a.inventory back into cash, or 12 months, whichever is shorter
b.receivables back into cash, or 12 months, whichever is longer
c.tangible fixed assets back into cash, or 12 months, whichever is longer
d.inventory back into cash, or 12 months, whichever is longer
10) a loss on impairment of an intangible asset is the difference between the assets
a.carrying amount and the expected future net cash flows
b.carrying amount and its fair value
c.fair value and the expected future net cash flows
d.book value and its fair value
11) the following data concerning the retail inventory method are taken from the
financial records of welch company.
assuming that the lifo inventory method were used in conjunction with the data and that
the inventory at retail had increased during the period, then the computation of retail in
the cost to retail ratio would
a.exclude both markups and markdowns and include beginning inventory
b.include markups and exclude both markdowns and beginning inventory
c.include both markups and markdowns and exclude beginning inventory
d.exclude markups and include both markdowns and beginning inventory
12) on january 2, 2012, klein co. bought a trademark from royce, inc. for $1,200,000. an
independent research company estimated that the remaining useful life of the trademark
was 10 years. its unamortized cost on royces books was $900,000. in kleins 2012
income statement, what amount should be reported as amortization expense?
a.$120,000
b.$ 90,000
c.$ 60,000
d.$ 45,000