1) which of the following accounts balance will change between the adjusted trial
balance and the post-closing trial balance?
a.common stock
b.prepaid rent
c.unearned service revenue
d.retained earnings
2) the following information pertains to bell company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the price earnings ratio for this company?
a.6 times
b.2.5 times
c.8 times
d.4 times
3) the following information is provided for nguyen company and northwest
corporation.
what is nguyen’s return on assets for 2012?
a.400%
b.136%
c.25%
d.73%
4) (a)faster company purchased equipment in 2005 for $92,000 and estimated an $8,000
salvage value at the end of the equipment’s 10-year useful life. at december 31, 2011,
there was $58,800 in the accumulated depreciation account for this equipment using the
straight-line method of depreciation. on march 31, 2012, the equipment was sold for
$21,000.
prepare the appropriate journal entries to remove the equipment from the books of
faster company on march 31, 2012.
(b)lewis company sold equipment for $11,000. the equipment originally cost $25,000 in
2009 and $6,000 was spent on a major overhaul in 2012 (charged to the equipment
account). accumulated depreciation on the equipment to the date of disposal was
$20,000.
prepare the appropriate journal entry to record the disposition of the equipment.
prepare the appropriate journal entry to record the disposition of the equipment.
5) (a)in general, what are the requirements for the financial statement presentation of
long-term liabilities?
(b)what ratios may be computed to evaluate a company’s liquidity and solvency?
6) the first required step in the accounting cycle is:
a.adjusting entries
b.journalizing transactions
c.analyzing transactions
d.posting transactions
7) under the equity method of accounting for investments in common stock, when a
dividend is received from the investee company
a.the dividend revenue account is credited
b.the stock investments account is increased
c.the stock investments account is decreased
d.no entry is necessary
8) goll clothing store had a balance in the accounts receivable account of $820,000 at
the beginning of the year and a balance of $880,000 at the end of the year. net credit
sales during the year amounted to $7,310,000. the average collection period of the
receivables in terms of days was
a.44 days
b.42.4 days
c.365 days
d.41 days
9) if the board of directors authorizes a $100,000 restriction of retained earnings for a
future plant expansion, the effect of this action is to
a.decrease total assets and total stockholders equity
b.increase stockholders equity and to decrease total liabilities
c.decrease total retained earnings and increase total liabilities
d.reduce the amount of retained earnings available for dividend declarations
10) the following ledger accounts are used by the heartland race track:
accounts receivable
prepaid printing
prepaid rent
unearned admissions revenue
admissions revenue
concessions revenue
printing expense
rent expense
instructions:
for each of the following transactions below, prepare the journal entry (if one is
required) to record the initial transaction and then prepare the adjusting entry, if any,
required on november 30, the end of the fiscal year.
(a)on november 1, paid rent on the track facility for three months, $90,000.
(b)on november 1
so ld season tickets for admission to the racetrack. the racing season is year-round with
25 racing days each month. season ticket sales totaled $960,000.
(c)on november 1, borrowed $120,000 from first national bank by issuing a 6% note
payable due in three months.
(d)on november 5, schedules for 20 racing days in november, 25 racing days in
december and 15 racing days in january were printed for $3,600.
(e)the accountant for the concessions company reported that gross receipts for
november were $140,000. ten percent is due to heartland and will be remitted by
december 10.
11) warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest
dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest
method of amortization is to be used. what amount of discount (to the nearest dollar)
should be amortized for the first interest period?
a.$45,084
b.$21,808
c.$29,108
d.$14,554
12) the information to prepare the statement of cash flows comes from all of the
following sources except
a.comparative balance sheets
b.additional transaction data about cash provided or used during the period
c.adjusted trial balance
d.current income statement
13) ron’s quik shop bought equipment for $50,000 on january 1, 2011. joe estimated the
useful life to be 5 years with no salvage value, and the straight-line method of
depreciation will be used. on january 1, 2012, ron decides that the business will use the
equipment for a total of 6 years. what is the revised depreciation expense for 2012?
a.$8,000
b.$4,000
c.$6,667
d$10,000
14) the convergence issue that will be most difficult to resolve in the area of inventory
accounting is:
a.fifo
b.lifo
c.ownership of goods
d.costs to include in inventory
15) indicate whether each of the following expenditures should be classified as land (l),
land improvements (li), buildings (b), equipment (e), or none of these (x).
1> parking lots
2> electricity used by a machine
3> excavation costs
4> interest on building construction loan
5> cost of trial runs for machinery
6> drainage costs
7> cost to install a machine
8> fences
9> unpaid (past) property taxes assumed
10> cost of tearing down a building when land and a building on it are purchased
16) one item is omitted in each of the following summaries of balance sheet and income
statement data for three different corporations, a, b, and c.
determine the amounts of the missing items, identifying each corporation by letter.
17) when a year-end adjustment is made to reduce the available for sale securities
portfolio to market, what effect, if any, will the adjustment have on the balance sheet
and the income statement?
18) using the indirect method, which of the following adjustments to convert net
income to net cash provided by operating activities is correct?
19) use the following income statement for the year 2011 for haggrad ltd. to prepare
entries to close the revenue and expense accounts for the company.
20) revenue received before it is earned and expenses paid before being used or
consumed are both initially recorded as liabilities.
21) a note that is not paid on the maturity date is said to be ______________.
22) if prepaid costs are initially recorded as an asset, no adjusting entries will be
required in the future.