1) on january 1, 2012, ermler company, a calendar-year company, issued $800,000 of
notes payable, of which $200,000 is due on january 1 for each of the next four years.
the proper balance sheet presentation on december 31, 2012, is
a.current liabilities, $800,000
b.long-term debt , $800,000
c.current liabilities, $400,000; long-term debt, $400,000
d.current liabilities, $200,000; long-term debt, $600,000
2) ferguson company is preparing a cash budget for september. the companys cash
balance on september 1 is $11,600. the company anticipates cash receipts of $55,900
and cash disbursements of $58,660. if ferguson desires a cash balance of $12,000, it
must
a.acquire financing of $400
b.acquire financing of $3,160
c.acquire financing of $2,360
d.acquire financing of $9,240
3) wilton corporation had beginning retained earnings of $764,000 and ending retained
earnings of $833,000. during the year they issued common stock totaling $47,000. what
was their net income for the year?
a.$69,000
b.$22,000
c.$116,000
d.$91,000
4) which pair of accounts follows the rules of debit and credit in relation to increases
and decreases in the same manner?
a.dividends payable and rent expense
b.utilities expense and notes payable
c.prepaid insurance and advertising expense
d.service revenue and equipment
5) which of the following statements is true?
a.publicly traded u.s. companies must provide an annual report to their shareholders
when operating conditions change significantly.
b.an unqualified independent auditors report must be included in the annual report.
c.notes to the financial statements do not need to be included in the annual report
because that information is only for internal users.
d.all of the statements are false.
6) all of the following statements regarding retained earnings are true except
a.retained earnings represents a claim on cash
b.a debit balance in retained earnings indicates a deficit
c.some companies may restrict availability of retained earnings for dividends
d.retained earnings is net income that a company retains in a business
7) the periodicity assumption states that:
a.a transaction can only affect one period of time
b.estimates should not be made if a transaction affects more than one time period
c.adjustments to the enterprise’s accounts can only be made in the time period when the
business terminates its operations
d.the economic life of a business can be divided into artificial time periods
8) external users of accounting information include all of the following except
a.the shareholders of air italy
b.the management of pirelli
c.a potential customer of olivetti
d.all of the above are external users of accounting information
9) the income statement for the edmiston company for the year ended december 31,
2012, appears below.
*includes $25,000 of interest expense and $20,000 of income tax expense.
additional information:
1>common stock outstanding on january 1, 2012, was 50,000 shares. on july 1, 2012,
10,000 more shares were issued.
2>the market price of edmiston’s stock was $18 at the end of 2012.
3>cash dividends of $35,000 were paid, $5,000 of which were paid to preferred
stockholders.
instructions
compute the following ratios for 2012:
(a)earnings per share.
(b)price-earnings.
(c)times interest earned.
10) an extraordinary item must meet which of the following two criteria?
a.foreseeable and material
b.infrequent and unusual
c.substantial and measurable
d.unusual and measurable
11) the heading on the statement of cash flows identifies all of the following except:
a.the preparer of the statement
b.the company
c.the time period covered by the statement
d.the type of statement
12) ashleys accessory shop started the year with total assets of $70,000 and total
liabilities of $40,000. during the year the business recorded $110,000 in revenues,
$55,000 in expenses, and dividends of $20,000. stockholders equity at the end of the
year was
a.$60,000
b.$55,000
c.$65,000
d.$35,000
13) an account is a part of the financial information system and is described by each
one of the following except
a.an account has a debit and credit side.
b.an account is a source document.
c.an account consists of three parts.
d.an account has a title.
14) electronic funds transfer (eft) is a disbursement system that transfers cash from one
location to another using
a.a telephone
b.a telegraph
c.a computer
d.all of these
15) a check written by the company for $167 is incorrectly recorded by a company as
$176. on the bank reconciliation, the $9 error should be
a.added to the balance per books
b.deducted from the balance per books
c.added to the balance per bank
d.deducted from the balance per bank
16) in the table below the information for four companies is provided.
if garner’s net credit sales are $290,000, what are its average net receivables?
a.$11,508
b.$20,000
c.$42,050
d.$73,080
17) the assets turnover ratio measures
a.how often a company replaces its assets
b.how efficiently a company uses its assets to generate sales
c.the portion of the assets that have been financed by creditors
d.the overall rate of return on assets
18) an asset that cannot be sold individually in the market place is
a.a patent
b.goodwill
c.a copyright
d.a trade name
19) condensed financial data of sauder company appear below:
additional information:
1>new plant assets costing $85,000 were purchased for cash in 2012.
2>old plant assets costing $25,000 were sold for $5,000 cash when book value was
$13,000.
3>bonds with a face value of $20,000 were converted into $20,000 of common stock.
4>a cash dividend of $24,000 was declared and paid during the year.
5>accounts payable pertain to merchandise purchases.
instructions
1>prepare a statement of cash flows for the year using the direct method.
2>compute the following cash basis ratios:
a.current cash debt coverage ratio
b.cash debt coverage ratio
