1) Renfro Corporation will invest $70,000 every December 31st for the next six years
(2014 2019). If Renfro will earn 12% on the investment, what amount will be in the
investment fund on December 31, 2019?
a.$287,798
b.$322,336
c.$568,063
d.$636,230
2) In accounting for investments in debt securities that are classified as trading
securities,
a.a discount is reported separately
b.a premium is reported separately
c.any discount or premium is not amortized
d.None of these answers are correct
3) Selected information from Dinkel Company’s 2015 accounting records is as follows:
Proceeds from issuance of common stock$ 600,000
Proceeds from issuance of bonds1,800,000
Cash dividends on common stock paid220,000
Cash dividends on preferred stock paid90,000
Purchases of treasury stock180,000
Sale of stock to officers and employees not included above150,000
Dinkel’s statement of cash flows for the year ended December 31, 2015, would show
net cash provided (used) by financing activities of
a.$90,000
b.$(310,000)
c.$220,000
d.$2,020,000
4) On January 1, 2014, Jacobs Company sold property to Dains Company which
originally cost Jacobs $1,330,000. There was no established exchange price for this
property. Danis gave Jacobs a $2,100,000 zero-interest-bearing note payable in three
equal annual installments of $700,000 with the first payment due December 31, 2014 .
The note has no ready market. The prevailing rate of interest for a note of this type is
10%. The present value of a $2,100,000 note payable in three equal annual installments
of $700,000 at a 10% rate of interest is $1,740,900. What is the amount of interest
income that should be recognized by Jacobs in 2014, using the effective-interest
method?
a.$0
b.$70,000
c.$174,090
d.$210,000
5) On January 7, 2013, Yoder Corporation acquired machinery at a cost of $2,100,000.
Yoder adopted the sum-of-the-years-digits method of depreciation for this machine and
had been recording depreciation over an estimated life of five years, with no residual
value. At the beginning of 2015, a decision was made to change to the straight-line
method of depreciation for this machine. Assuming a 30% tax rate, the cumulative
effect of this accounting change, net of tax, is
a.$0
b.$280,000
c.$294,000
d.$420,000
6) Davis Company purchased a new piece of equipment on July 1, 2014 at a cost of
$1,800,000. The equipment has an estimated useful life of 5 years and an estimated
salvage value of $150,000. The current year end is 12/31/15. Davis records depreciation
to the nearest month.
What is double-declining-balance depreciation for 2015?
a.$432,000
b.$576,000
c.$660,000
d.$720,000
7) Peter invests $100,000 in a 3-year certificate of deposit earning 3.5% at his local
bank. Which time value concept would be used to determine the maturity value of the
certificate?
a.Present value of one
b.Future value of one
c.Present value of an annuity due
d.Future value of an ordinary annuity
8) Match the approach and location where gains and losses from available-for-sale
securities are reported:
Location where gains/
Approachlosses reported_ __
a. GAAP Equity
b. IFRS Equity
c. GAAP Income
d. IFRSComprehensive income
9) In a lease that is recorded as a sales-type lease by the lessor, interest revenue
a.should be recognized in full as revenue at the leases inception
b.should be recognized over the period of the lease using the straight-line method
c.should be recognized over the period of the lease using the effective interest method
d.does not arise
10) Porter Resources Company acquired a tract of land containing an extractable
natural resource. Porter is required by its purchase contract to restore the land to a
condition suitable for recreational use after it has extracted the natural resource.
Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and
that the land will have a value of $1,000,000 after restoration. Relevant cost
information follows:
Land$7,500,000
Estimated restoration costs1,500,000
If Porter maintains no inventories of extracted material, what should be the charge to
depletion expense per ton of extracted material?
a.$3.25
b.$3.75
c.$4.00
d.$4.50
11) Which of the following items should not be included in the Cash caption on the
balance sheet?
a.Coins and currency in the cash register
b.Checks from other parties presently in the cash register
c.Amounts on deposit in checking account at the bank
d.Postage stamps on hand
12) What is imputed interest?
a.Interest based on the stated interest rate
b.Interest based on the implicit interest rate
c.Interest based on the average interest rate
d.Interest based on the coupon rate
13) Which of the following tables would show the largest value for an interest rate of
10% for 8 periods?
a.Future amount of 1 table
b.Present value of 1 table
c.Future amount of an ordinary annuity of 1 table
d.Present value of an ordinary annuity of 1 table