1) which table would show the largest factor for an interest rate of 8% for five periods?
a.future value of an ordinary annuity of 1
b.present value of an ordinary annuity of 1
c.future value of an annuity due of 1
d.present value of an annuity due of 1
2) an amount is deposited for eight years at 8%. if compounding occurs quarterly, then
the table value is found at
a.8% for eight periods
b.2% for eight periods
c.8% for 32 periods
d.2% for 32 periods
3) according to statement of financial accounting concepts no. 2, completeness is an
ingredient of the fundamental quality of
relevance faithful representation
a. yes no
b. yes yes
c. no no
d. no yes
4) which of the following may be a current liability?
a.withheld income taxes
b.deposits received from customers
c.deferred revenue
d.all of these
5) on january 2, 2013, worth co. issued at par $1,000,000 of 7% convertible bonds. each
$1,000 bond is convertible into 20 shares of common stock. no bonds were converted
during 2013. worth had 200,000 shares of common stock outstanding during 2013.
worths 2013 net income was $300,000 and the income tax rate was 30%. worths diluted
earnings per share for 2013 would be (rounded to the nearest penny):
a.$1.74
b.$1.59
c.$1.50
d.$1.68
6) what is due process in the context of standard setting at the fasb?
a.fasb operates in full view of the public
b.public hearings are held on proposed accounting standards
c.interested parties can make their views known
d.all of the above
7) hager company sold some of its plant assets during 2013. the original cost of the
plant assets was $750,000 and the accumulated depreciation at date of sale was
$700,000. the proceeds from the sale of the plant assets were $185,000. the information
concerning the sale of the plant assets should be shown on hager’s statement of cash
flows (indirect method) for the year ended december 31, 2013, as a(n)
a.subtraction from net income of $35,000 and a $50,000 increase in cash flows from
financing activities
b.addition to net income of $35,000 and a $85,000 increase in cash flows from
investing activities
c.subtraction from net income of $35,000 and a $85,000 increase in cash flows from
investing activities
d.addition of $85,000 to net income
8) the journal entries for a bank reconciliation
a.are taken from the “balance per bank” section only
b.may include a debit to office expense for bank service charges
c.may include a credit to accounts receivable for an nsf check
d.may include a debit to accounts payable for an nsf check
9) watts corporation made a very large arithmetical error in the preparation of its
year-end financial statements by improper placement of a decimal point in the
calculation of depreciation. the error caused the net income to be reported at almost
double the proper amount. correction of the error when discovered in the next year
should be treated as
a.an increase in depreciation expense for the year in which the error is discovered
b.a component of income for the year in which the error is discovered, but separately
listed on the income statement and fully explained in a note to the financial statements
c.an extraordinary item for the year in which the error was made
d.a prior period adjustment
10) on june 30, 2013, omara co. had outstanding 8%, $4,000,000 face amount, 15-year
bonds maturing on june 30, 2023. interest is payable on june 30 and december 31. the
unamortized balances in the bond discount and deferred bond issue costs accounts on
june 30, 2013 were $140,000 and $40,000, respectively. on june 30, 2013, omara
acquired all of these bonds at 94 and retired them. what net carrying amount should be
used in computing gain or loss on this early extinguishment of debt?
a.$3,960,000
b.$3,860,000
c.$3,820,000
d.$3,760,000
11) steinert company has the following items at year-end:
steinert should report cash and cash equivalents of
a.$35,000
b.$35,500
c.$43,700
d.$45,800
12) stockholders’ equity is generally classified into two major categories:
a.contributed capital and appropriated capital
b.appropriated capital and retained earnings
c.retained earnings and unappropriated capital
d.earned capital and contributed capital
13) watt co. purchased $300,000 of bonds for $315,000. if watt intends to hold the
securities to maturity, the entry to record the investment includes
a.a debit to held-to-maturity securities at $300,000
b.a credit to premium on investments of $15,000
c.a debit to held-to-maturity securities at $315,000
d.none of these
14) the accounts receivable turnover ratio is computed by dividing
a.gross sales by ending net receivables
b.gross sales by average net receivables
c.net sales by ending net receivables
d.net sales by average net receivables
15) how should earned but unbilled revenues at the balance sheet date on a long-term
construction contract be disclosed if the percentage-of-completion method of revenue
recognition is used?
a.as construction in process in the current asset section of the balance sheet
b.as construction in process in the noncurrent asset section of the balance sheet
c.as a receivable in the noncurrent asset section of the balance sheet
d.in a note to the financial statements until the customer is formally billed for the
portion of work completed
16) of the approaches to record cash discounts related to accounts receivable, which is
more theoretically correct?
a.net approach
b.gross approach
c.allowance approach
d.all three approaches are theoretically correct
17) which of the following is not a characteristic of a noncompensatory stock option
plan?
a.substantially all full-time employees may participate on an equitable basis
b.the plan offers no substantive option feature
c.unlimited time period permitted for exercise of an option as long as the holder is still
employed by the company
d.discount from the market price of the stock no greater than would be reasonable in an
offer of stock to stockholders or others
18) which of the following elements of financial statements is not a component of
compre-hensive income?
a.revenues
b.distributions to owners
c.losses
d.expenses
19) 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