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When a bond issue is retired early, the amount of unamortized discount or premium is
not considered in the calculation of a gain or loss.
a. True
b. False
Match each of the following terms pertaining to liabilities to their definitions.
a. Current liability
b. Accounts payable
c. Notes payable
d. Discount on notes payable
e. Current maturities of long-term liabilities
f. Accrued liabilities
g. Contingent liability
h. Estimated liability
Accounts that will be satisfied within one year or the next operating cycle.
Book value indicates the rights that stockholders have, based on recorded values, to the
net assets in the event of liquidation.
a. True
b. False
Checks presented for payment and paid by the bank are known as
a. Canceled checks
b. Certified checks
c. NSF checks
d. Outstanding checks
Winslet Corp. prepares monthly bank reconciliations of its checking account balance.
The bank statement for May, 2014, indicated the following:
An analysis of canceled checks and deposits and the records of Winslet Corp. revealed
the following items:
The correct amount of check #4456 is $760. It was recorded as a cash disbursement of
$670 by mistake. The check was issued to pay for merchandise purchases. The check
appeared on the bank statement correctly. A) Prepare a bank reconciliation schedule at
May 31, 2014 in proper form. B) Explain how checking accounts, bank statements, and
bank reconciliations are used by Winslet to control its cash.
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations. The present
value of $7,000 to be received in 7 years at 7% compounded annually is
a. $3,430
b. $6,657
c. $4,361
d. $7,000
Hopper,Inc.
Use the information from Hopper Inc. to answer the following question(s).
Read the information about Hopper, Inc. Which ratio are you able to calculate given
only the information provided by Hopper?
a. Profit margin
b. Current ratio
c. Working capital
d. Gross profit percentage
Significant influence of one company over another has been defined by the accounting
profession as the ownership of what minimum percent of the second company's stock?
a. 30%
b. 50%
c. 100%
d. 20%
In which of the following countries do significant differences exist between accounting
income and taxable income?
a. Japan
b. The United States
c. Germany
d. France
Segregation and rotation of duties is most effective in
a. increasing cost of goods sold.
b. assisting management in overriding controls.
c. preventing collusion.
d. misappropriating company assets.
Assume the current ratio is 2 to 1. Payment on accrued salaries payable would cause the
current ratio to
a. increase
b. decrease
c. be unchanged since the effects offset one another
d. be unchanged since it has no impact on any current accounts
Waxman Company purchased a patent for $170,000 at the beginning of 2013, and
estimated that its expected useful life was 10 years. The patent has a legal life of 17
years. What amount should be recorded as amortization expense for the patent in 2013?
a. $ -0-
b. $ 7,000
c. $10,000
d. $17,000
