1) the average cost inventory method relies on a simple average calculation.
2) horizontal analysis is a technique for evaluating a financial statement item in the
current year with other items in the current year.
3) payments to owners are operating activities.
4) liabilities are increased with debits and decreased with credits.
5) the heading for the income statement might include the line as of december 31, 20xx.
6) in accordance with the cost principle, brokerage fees should be added to the cost of
an investment.
7) as an adjustment to operating expenses per the income statement, an increase in
accrued liabilities would be added to operating expenses to determine cash payments
for operating expenses.
8) the cost of a patent should be amortized over its legal life or useful life, whichever is
shorter.
9) certain types of leases, called capital leases, allow the lessee to account for the
transaction as a rental.
10) common stock is reported on the
a.statement of cash flows
b.retained earnings statement
c.income statement
d.balance sheet
11) a trial balance would only help in detecting which one of the following errors?
a.a transaction that is not journalized
b.a journal entry that is posted twice
c.offsetting errors made in recording the transaction
d.a transposition error when transferring the debit side of journal entry to the ledger
12) the following information pertains to lance company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the receivables turnover for this company?
a.2.1 times
b.2 times
c.9.6 times
d.4.8 times
13) a sales returns and allowances account is not debited if a customer
a.returns defective merchandise
b.receives a credit for merchandise of inferior quality
c.utilizes a prompt payment incentive
d.returns goods that are not in accordance with specifications
14) a merchandiser will earn an operating income of exactly $0 when
a.net sales equals cost of goods sold
b.cost of goods sold equals gross margin
c.operating expenses equal net sales
d.gross profit equals operating expenses
15) if $120,000 of bonds are issued during the year but $200,000 of old bonds are
retired during the year, the statement of cash flows will show a(n)
a.net increase in cash of $80,000
b.net decrease in cash of $80,000
c.increase in cash of $120,000 and a decrease in cash of $200,000
d.net loss on retirement of bonds of $80,000
16) the following information was available for camara company at december 31, 2012:
beginning inventory $80,000; ending inventory $120,000; cost of goods sold $840,000;
and sales $1,200,000. camaras inventory turnover ratio in 2012 was
a.12.0 times
b.10.0 times
c.8.4 times
d.7.0 times
17) assume that milner inc.s trading securities have a total cost of $200,000 and a total
fair value of $215,000 at year end. the related adjusting entry would include a debit to
a.unrealized gain for $15,000
b.market adjustment – trading for $15,000
c.no adjustment since only realized gains are recorded
d.market adjustment – trading for $215,000
18) the chief accounting officer in a company is known as the
a.controller
b.treasurer
c.vice-president
d.president
19) a bond with a face value of $200,000 and a quoted price of 102 has a selling price
of
a.$240,450
b.$204,050
c.$200,450
d.$204,500
20) the cost of successfully defending a patent in an infringement suit should be
a.charged to legal expenses
b.deducted from the book value of the patent
c.added to the value of the patent
d.recognized as a loss in the current period
21) the major advantages of the corporate form of organization include (1) limited
_________________ of stockholders, (2) continuous ____________________ and (3)
ease of transferring ___________________.
22) which is part of ifrs accounting for financial instruments?
23)
on january 1, ott company purchased a 25% equity investment in fife company for
$300,000. at december 31 fife declared and paid a $20,000 dividend and reported net
income of $100,000.
instructions
journalize the transactions
determine the amount to be reported as an investment in fife stock at december 31.
24) the following selected accounts appear in the adjusted trial balance for blender
company. identify the accounts that would be included in the post-closing trial balance.
25) the ________________ ratio provides an indication of a companys ability to meet
interest payments as they come due.
26) prepare adjusting entries for the following transactions. omit explanations.
1>depreciation on equipment is $800 for the accounting period.
2>there was no beginning balance of supplies and purchased $600 of office supplies
during the period. at the end of the period $80 of supplies were on hand.
3>prepaid rent had a $1,000 normal balance prior to adjustment. by year end $400 was
unexpired.