1) information about different companies and about different periods of the same
company can be prepared and presented in a similar manner. comparability and
consistency are related to which of these objectives?
comparability consistency
a. companies companies
b. companies periods
c. periods companies
d. periods periods
2) palmer co. had a deferred tax liability balance due to a temporary difference at the
beginning of 2012 related to $800,000 of excess depreciation. in december of 2012, a
new income tax act is signed into law that lowers the corporate rate from 40% to 35%,
effective january 1, 2014. if taxable amounts related to the temporary difference are
scheduled to be reversed by $400,000 for both 2013 and 2014, palmer should increase
or decrease deferred tax liability by what amount?
a.decrease by $40,000
b.decrease by $20,000
c.increase by $20,000
d.increase by $40,000
3) antidilutive securities
a.should be included in the computation of diluted earnings per share but not basic
earnings per share
b.are those whose inclusion in earnings per share computations would cause basic
earnings per share to exceed diluted earnings per share
c.include stock options and warrants whose exercise price is less than the average
market price of common stock
d.should be ignored in all earnings per share calculations
4) dole company, with an applicable income tax rate of 30%, reported net income of
$350,000. included in income for the period was an extraordinary loss from flood
damage of $50,000 before deducting the related tax effect. the company’s income
before income taxes and extraordinary items was
a.$400,000
b.$500,000
c.$550,000
d.$385,000
5) under which of the following conditions would material flood damage be considered
an extraordinary item for financial reporting purposes?
a.only if floods in the geographical area are unusual in nature and occur infrequently
b.only if the flood damage is material in amount and could have been reduced by
prudent management
c.under any circumstances as an extraordinary item
d.flood damage should never be classified as an extraordinary item
6) the figure .94232 is taken from the column marked 2% and the row marked three
periods in a certain interest table. from what interest table is this figure taken?
a.future value of 1
b.future value of annuity of 1
c.present value of 1
d.present value of annuity of 1
7) moorman corporation reports the following information:
correction of understatement of depreciation expense
in prior years, net of tax$ 645,000
dividends declared480,000
net income1,500,000
retained earnings, 1/1/12, as reported3,000,000
moorman should report retained earnings, 1/1/12, as adjusted at
a.$2,355,000
b.$3,000,000
c.$3,645,000
d.$4,665,000
8) why are inventories stated at lower-of-cost-or-market?
a.to report a loss when there is a decrease in the future utility
b.to be conservative
c.to report a loss when there is a decrease in the future utility below the original cost
d.to permit future profits to be recognized
9) equestrain roads sold $80,000 of goods and accepted the customer’s $80,000 10%
1-year note receivable in exchange. assuming 10% approximates the market rate of
return, what would be the debit in this journal entry to record the sale?
a.no journal entry until cash is collected
b.debit notes receivable for $80,000
c.debit accounts receivable for $80,000
d.debit notes receivable for $72,000
10) checkers uses the periodic inventory system. for the current month, the beginning
inventory consisted of 2,400 units that cost $12 each. during the month, the company
made two purchases: 1,000 units at $13 each and 4,000 units at $13.50 each. checkers
also sold 4,300 units during the month. using the lifo method, what is the ending
inventory?
a.$40,146
b.$37,200
c.$41,850
d.$37,900
11) in 2012, linz corporation reported an extraordinary loss of $1,000,000, net of tax. it
declared and paid preferred stock dividends of $100,000 and common stock dividends
of $300,000. during 2012, linz had a weighted average of 400,000 common shares
outstanding. compute the effect of the extraordinary loss, net of tax, on earnings per
share.
a.$1.50
b.$1.75
c.$2.25
d.$2.50
12) hanson co. had 200,000 shares of common stock, 20,000 shares of convertible
preferred stock, and $1,000,000 of 7.5% convertible bonds outstanding during 2013. the
preferred stock is convertible into 40,000 shares of common stock. during 2013, hanson
paid dividends of $.90 per share on the common stock and $3 per share on the preferred
stock. each $1,000 bond is convertible into 45 shares of common stock. the net income
for 2013 was $600,000 and the income tax rate was 30%.
diluted earnings per share for 2013 is (rounded to the nearest penny)
a.$2.08
b.$2.11
c.$2.29
d.$2.50
13) sawyer furniture company concluded its first year of operations in which it made
sales of $900,000, all on installment. collections during the year from down payments
and installments totaled $300,000. purchases for the year totaled $620,000; the cost of
merchandise on hand at the end of the year was $80,000.
instructions
using the installment-sales method, make summary entries to record:
(a)the installment sales and cash collections;
(b)the cost of installment sales;
(c)the unrealized gross profit;
(d)the realized gross profit.
14) what would be an advantage of having all countries adopt and follow the same
accounting standards?
a.consistency
b.comparability
c.lower preparation costs
d.b and c
15) which of the following is an ingredient of relevance?
a.verifiability
b.neutrality
c.timeliness
d.materiality
16) what is the relationship between present value and the concept of a liability?
a.present values are used to measure certain liabilities
b.present values are not used to measure liabilities
c.present values are used to measure all liabilities
d.present values are only used to measure long-term liabilities.
17) held-to-maturity securities are reported at
a.acquisition cost
b.acquisition cost plus amortization of a discount
c.acquisition cost plus amortization of a premium
d.fair value