1) corporations invest in other companies for all of the following reasons except to
a.house excess cash until needed
b.generate earnings
c.meet strategic goals
d.increase trading of the other companies stock
2) which statement about an account is true?
a.in its simplest form, an account consists of two parts.
b.an account is an individual accounting record of increases and decreases in specific
asset, liability, and stockholders equity items.
c.there are separate account for specific assets and liabilities but only one account for
stockholders equity items.
d.the left side of an account is the credit or decrease side.
3) if a bond has a contract rate of 10% and is discounted at 10%, then the proceeds
received at issuance will be
a.equal to the face value of the bonds
b.greater than the face value of the bonds
c.less than the face value of the bonds
d.zero
4) an adjusting entry is not required for
a.outstanding checks
b.collection of a note by the bank
c.nsf checks
d.bank service charges
5) a dishonored note receivable
a.is no longer negotiable
b.must be written off by the lender
c.creates a claim against the maker for the amount of principal only
d.is one that is not paid in full within 10 days of maturity
6) the contractual interest rate on a bond is often referred to as the:
a.callable rate
b.the maturity rate
c.market rate
d.stated rate
7) an adjusting entry made to record accrued interest on a note receivable due next year
consists of a:
a.debit to interest expense and a credit to interest payable
b.debit to interest receivable and a credit to interest earned
c.debit to interest expense and a credit to notes payable
d.debit to interest expense and a credit to cash
8) the sales returns and allowances account is classified as a(n)
a.asset account
b.contra asset account
c.expense account
d.contra revenue account
9) whitman corporation sells six different products. the following information is
available on december 31:
when applying the lower of cost or market rule to each item, what will whitman’s total
ending inventory balance be?
a.$86,500
b.$83,100
c.$83,275
d.$83,200
10) assume the following cost of goods sold data for a company:
if 2011 is the base year, what is the percentage increase in cost of goods sold from 2011
to 2013?
a.150%
b.50%
c.67%
d.20%
11) sams pest control products has the following information available.
what is the current cash debt coverage ratio?
a.1.333 times
b..600 times
c..833 times
d..369 times
12) at the end of the first year of operations, the total cost of the trading securities
portfolio is $240,000. total fair value is $250,000. the financial statements should show
a.an addition to an asset of $10,000 and a realized gain of $10,000
b.an addition to an asset of $10,000 and an unrealized gain of $10,000 in the
stockholders equity section
c.an addition to an asset of $10,000 in the current assets section and an unrealized gain
of $10,000 in other revenues and gains.
d.an addition to an asset of $10,000 in the current assets section and a realized gain of
$10,000 in other revenues and gains.
13) return on common stockholders equity ratio is most closely related to
a.gross profit rate and operating expenses to sales ratio
b.profit margin and free cash flow
c.times interest earned and debt to stockholders equity ratio
d.return on asset ratio and leverage (debt to total assets ratio)
14) jamison, inc. is a regional air cargo carrier. jamison made a $4,500 improvement to
one of its airplanes. if jamison’s accountant expensed this amount, which of the
following statements is true?
a.the entry will improperly understate net income for the year
b.the entry will improperly overstate net income for the year
c.the entry is the correct treatment
d.the entry will overstate the balance sheet for the year
15) a payment of a portion of an accounts payable will
a.not affect total assets.
b.increase liabilities.
c.not affect stockholders equity.
d.decrease net income.