1) at a recent executive committee meeting, the controller for marino company
remarked, with only a single key difference between u.s. gaap and ifrs for property,
plant, and equipment, it should be smooth sailing for the fasb and iasb to converge their
standards in this area. prepare a response to the controller.
2) a company is not required to report a per share amount on the face of the income
statement for which of the following items?
a.net income
b.prior period adjustment
c.extraordinary item
d.discontinued operations
3) given the historical cost of product z is $80, the selling price of product z is $95,
costs to sell product z are $11, the replacement cost for product z is $83, and the normal
profit margin is 40% of sales price, what is the market value that should be used in the
lower-of-cost-or-market comparison?
a.$80
b.$84
c.$83
d.$46
4) the total payroll of teeter company for the month of october, 2012 was $600,000, of
which $150,000 represented amounts paid in excess of $106,800 to certain employees.
$500,000 represented amounts paid to employees in excess of the $7,000 maximum
subject to unemployment taxes. $150,000 of federal income taxes and $15,000 of union
dues were withheld. the state unemployment tax is 1%, the federal unemployment tax is
.8%, and the current f.i.c.a. tax is 7.65% on an employees wages to $106,800 and
1.45% in excess of $106,800. what amount should teeter record as payroll tax expense?
a.$197,700
b.$188,400
c.$38,400
d.$47,400
5) on december 31, 2012, patel co. purchased equity securities as trading securities.
pertinent data are as follows:
on december 31, 2013, patel transferred its investment in security c from trading to
available-for-sale because patel intends to retain security c as a long-term investment.
what total amount of gain or loss on its securities should be included in patel’s income
statement for the year ended december 31, 2013?
a.$3,000 gain
b.$17,000 loss
c.$20,000 loss
d.$35,000 loss
6) in preparing its may 31, 2012 bank reconciliation, catt co. has the following
information available:
the correct balance of cash at may 31, 2012 is
a.$40,400
b.$34,250
c.$35,500
d.$36,750
7) ringler corporation exchanges one plant asset for a similar plant asset and gives cash
in the exchange. the exchange is not expected to cause a material change in the future
cash flows for either entity. if a gain on the disposal of the old asset is indicated, the
gain will
a.be reported in the other revenues and gains section of the income statement
b.effectively reduce the amount to be recorded as the cost of the new asset
c.effectively increase the amount to be recorded as the cost of the new asset
d.be credited directly to the owner’s capital account
8) according to statement of financial accounting concepts no. 2, neutrality is an
ingredient of the fundamental quality of
relevance faithful representation
a. yes yes
b. no yes
c. yes no
d. no no
9) when an item of expense is paid and recorded in advance, it is normally called a(n)
a.prepaid expense
b.accrued expense
c.estimated expense
d.cash expense
10) on may 1, 2012, ziek corp. declared and issued a 10% common stock dividend.
prior to this dividend, ziek had 100,000 shares of $1 par value common stock issued
and outstanding. the fair value of ziek ‘s common stock was $20 per share on may 1,
2012. as a result of this stock dividend, ziek’s total stockholders’ equity
a.increased by $200,000
b.decreased by $200,000
c.decreased by $10,000
d.did not change
11) harding corporation reports the following information:
harding should report cash provided by operating activities of
a.$250,000
b.$370,000
c.$530,000
d.$650,000
12) ernst company purchased equipment that cost $1,500,000 on january 1, 2012. the
entire cost was recorded as an expense. the equipment had a nine-year life and a
$60,000 residual value. ernst uses the straight-line method to account for depreciation
expense. the error was discovered on december 10, 2014. ernst is subject to a 40% tax
rate.
ernsts net income for the year ended december 31, 2012, was understated by
a.$804,000
b.$900,000
c.$1,340,000
d.$1,500,000