1) the times interest earned ratio is computed by dividing
a.net income by interest expense
b.income before taxes by interest expense
c.income before income taxes and interest expense by interest expense
d.net income and interest expense by interest expense
2) which of the following does not relate to relevance?
a.materiality
b.predictive value
c.confirmatory value
d.all of these
3) grimm company has 2,000,000 shares of common stock outstanding on december 31,
2012. an additional 150,000 shares of common stock were issued on july 1, 2013, and
300,000 more on october 1, 2013. on april 1, 2013, grimm issued 6,000, $1,000 face
value, 8% convertible bonds. each bond is convertible into 40 shares of common stock.
no bonds were converted into common stock in 2013. what is the number of shares to
be used in computing basic earnings per share and diluted earnings per share,
respectively, for the year ended december 31, 2013?
a.2,150,000 and 2,330,000
b.2,150,000 and 2,150,000
c.2,150,000 and 2,390,000
d.2,450,000 and 2,630,000
4) which of the following is often reported as an extraordinary item?
a.amortization expense
b.impairment losses for intangible assets
c.research and development costs
d.none of the above
5) horton co. was organized on january 2, 2012, with 500,000 authorized shares of $10
par value common stock. during 2012, horton had the following capital transactions:
january 5issued 375,000 shares at $14 per share.
july 27purchased 25,000 shares at $11 per share.
november 25sold 20,000 shares of treasury stock at $13 per share.
horton used the cost method to record the purchase of the treasury shares. what would
be the balance in the paid-in capital from treasury stock account at december 31, 2012?
a.$0
b.$20,000
c.$40,000
d.$60,000
6) on january 2, 2012, indian river groves began construction of a new citrus processing
plant. the automated plant was finished and ready for use on september 30, 2013.
expenditures for the construction were as follows:
indian river groves borrowed $1,650,000 on a construction loan at 12% interest on
january 2, 2012. this loan was outstanding during the construction period. the company
also had $6,000,000 in 9% bonds outstanding in 2012 and 2013.
what were the weighted-average accumulated expenditures for 2013 by the end of the
construction period?
a.$585,000
b.$2,452,500
c.$2,979,000
d.$2,079,000
7) on january 1, 2012, graham company purchased a new machine for $2,800,000. the
new machine has an estimated useful life of nine years and the salvage value was
estimated to be $100,000. depreciation was computed on the sum-of-the-years’-digits
method. what amount should be shown in graham’s balance sheet at december 31, 2013,
net of accumulated depreciation, for this machine?
a.$2,260,000
b.$1,780,000
c.$1,742,221
d.$1,659,000
8) which of the following must be disclosed relative to long-term debt maturities and
sinking fund requirements?
a.the present value of future payments for sinking fund requirements and long-term debt
maturities during each of the next five years
b.the present value of scheduled interest payments on long-term debt during each of the
next five years
c.the amount of scheduled interest payments on long-term debt during each of the next
five years
d.the amount of future payments for sinking fund requirements and long-term debt
maturities during each of the next five years
9) which of the following is false?
a.the future value of a deferred annuity is the same as the future value of an annuity not
deferred
b.a deferred annuity is an annuity in which the rents begin after a specified number of
periods
c.to compute the present value of a deferred annuity, we compute the present value of
an ordinary annuity of 1 for the entire period and subtract the present value of the rents
which were not received during the deferral period
d.if the first rent is received at the end of the sixth period, it means the ordinary annuity
is deferred for six periods
10) goodwill may be recorded when:
a.it is identified within a company
b.one company acquires another in a business combination
c.the fair value of a companys assets exceeds their cost
d.a company has exceptional customer relations
11) felton co. sells major household appliance service contracts for cash. the service
contracts are for a one-year, two-year, or three-year period. cash receipts from contracts
are credited to unearned service contract revenues. this account had a balance of
$720,000 at december 31, 2011 before year-end adjustment. service contract costs are
charged as incurred to the service contract expense account, which had a balance of
$180,000 at december 31, 2011. outstanding service contracts at december 31, 2011
expire as follows:
what amount should be reported as unearned service contract revenues in felton’s
december 31, 2011 balance sheet?
a.$540,000
b.$495,000
c.$360,000
d.$330,000
12) at the end of two years, what will be the balance in a savings account paying 6%
annually if $10,000 is deposited today? the future value of one at 6% for one period is
1.06.
a.$10,000
b.$10,600
c.$11,200
d.$11,236
13) for the year ended december 31, 2012, transformers inc. reported the following:
what would transformers report as its ending balance of accumulated other
comprehensive income?
a.$12,000
b.$10,000
c.$8,000
d.$2,000