1) in accounting for investments in debt securities that are classified as trading
securities,
a.a discount is reported separately
b.a premium is reported separately
c.any discount or premium is not amortized
d.none of these
2) at december 31, 2012, the following information was available from kohl co.’s
accounting records:
sales for the year totaled $1,150,000. markdowns amounted to $10,000. under the
lower-of-cost-or-market method, kohl’s inventory at december 31, 2012 was
a.$294,000
b.$175,000
c.$182,000
d.$168,000
3) use of the sum-of-the-years’-digits method
a.results in salvage value being ignored
b.means the denominator is the years remaining at the beginning of the year
c.means the book value should not be reduced below salvage value
d.all of these
4) some of the initial franchise fee may be allocated to
a.continuing franchise fees
b.interest revenue on the future installments
c.options to purchase the franchisee’s business
d.all of these may reduce the amount of the initial franchise fee that is recognized as
revenue
5) the income statement of dolan corporation for 2012 included the following items:
the following balances have been excerpted from dolan corporation’s balance sheets:
the cash paid for salaries during 2012 was
a.$179,400
b.$160,600
c.$161,600
d.$187,800
6) the debit and credit analysis of a transaction normally takes place
a.before an entry is recorded in a journal
b.when the entry is posted to the ledger
c.when the trial balance is prepared
d.at some other point in the accounting cycle
7) why did the
a.the sec disbanded the previous standard setting organization
b.the previous standard setting organization did not provide a structured set of
accounting principles
c.no such organization existed in the past
d.none of the above
8) explain the following terms.
(a) lifo layer (b) lifo reserve(c) lifo effect
9) on january 2, 2010, stacy company acquired equipment to be used in its
manufacturing operations. the equipment has an estimated useful life of 10 years and an
estimated salvage value of $30,000. the depreciation applicable to this equipment was
$140,000 for 2013, computed under the sum-of-the-years’-digits method. what was the
acquisition cost of the equipment?
a.$1,070,000
b.$1,130,000
c.$1,100,000
d.$1,083,333
10) which method may be used to record cash discounts a company receives for paying
suppliers promptly?
a.net method
b.gross method
c.average method
d.a and b
11) foley corporation has the following capital structure at the beginning of the year:
instructions
(a)record the following transactions which occurred consecutively (show all
calculations).
1>a total cash dividend of $90,000 was declared and payable to stockholders of record.
record dividends payable on common and preferred stock in separate accounts.
2>a 15% common stock dividend was declared. the average fair value of the common
stock is $18 a share.
3>assume that net income for the year was $120,000 (record the closing entry) and the
board of directors appropriated $70,000 of retained earnings for plant expansion.
(b)construct the stockholders’ equity section incorporating all the above information.
12) balance sheet information is useful for all of the following except
a.assessing a company’s risk
b.evaluating a company’s liquidity
c.evaluating a company’s financial flexibility
d.determining free cash flows
13) in a statement of cash flows, receipts from sales of property, plant, and equipment
and other productive assets should generally be classified as cash inflows from
a.operating activities
b.financing activities
c.investing activities
d.selling activities
14) which of the following items would be reported net of tax on the face of the income
statement?
a.prior period adjustment
b.unusual gain
c.cumulative effect of a change in an accounting principle
d.discontinued operations
15) zook incorporated, had net income for 2013 of $4,000,000. additional information
is as follows:
what should be the net cash provided by operating activities in the statement of cash
flows for the year ended december 31, 2013, based solely on the above information?
a.$5,820,000
b.$5,870,000
c.$5,740,000
d.$5,840,000
16) starfish company (a company using u.s. gaap and lifo inventory method) is
considering changing to ifrs and the fifo inventory method. how would a comparison of
these methods affect starfish’s financials?
a.during a period of inflation, the current ratio would decrease when ifrs and the fifo
inventory method are used as compared to u.s. gaap and lifo
b.during a period of inflation, the taxes will decrease when ifrs and the fifo inventory
method are used as compared to u.s. gaap and lifo
c.during a period of inflation, net income would be greater if ifrs and the fifo inventory
method are used as compared to u.s.gaap and lifo
d.during a period of inflation, working capital would decrease when ifrs and the fifo
inventory method are used as compared to u.s. gaap and lifo
17) black, inc. is a calendar-year corporation whose financial statements for 2012 and
2013 included errors as follows:
assume that purchases were recorded correctly and that no correcting entries were made
at december 31, 2012, or at december 31, 2013. ignoring income taxes, by how much
should black’s retained earnings be retroactively adjusted at january 1, 2014?
a.$149,000 increase
b.$41,000 increase
c.$14,000 decrease
d.$13,000 increase