1) if a company has no beginning inventory and the unit cost of inventory items does
not change during the year, the value assigned to the ending inventory will be the same
under lifo and average cost flow assumptions.
2) the lifo reserve is the difference between ending inventory using lifo and ending
inventory if fifo were used instead.
3) a note payable must always be paid before an account payable.
4) when investing excess cash for short periods of time, corporations invest in debt
securities and stock securities.
5) the lifo inventory method agrees with the actual physical movement of goods in most
businesses.
6) if total liabilities increased by $45,000 and stockholders equity increased by $15,000
during a period of time, then total assets must change by what amount and direction
during that same period?
a.$60,000 decrease
b.$60,000 increase
c.$75,000 increase
d.$90,000 increase
7) in 2012 the golic co. had net credit sales of $900,000. on january 1, 2012, the
allowance for doubtful accounts had a credit balance of $19,000. during 2012, $36,000
of uncollectible accounts receivable were written off. past experience indicates that the
allowance should be 10% of the balance in receivables (percentage of receivable basis).
if the accounts receivable balance at december 31 was $240,000 what is the required
adjustment to the allowance for doubtful accounts at december 31, 2012?
a.$24,000
b.$41,000
c.$43,000
d.$36,000
8) valuing assets at their fair value rather than at their cost is inconsistent with the:
a.economic entity assumption
b.cost principle
c.periodicity assumption
d.full disclosure principle
9) net credit sales for the month are $900,000. the accounts receivable balance is
$180,000. the allowance is calculated as 5% of the receivables balance using the
percentage of receivables basis. if the allowance for doubtful accounts has a credit
balance of $6,000 before adjustment, what is the balance after adjustment?
a.$ 9,000
b.$ 3,000
c.$15,000
d.$ 8,700
10) a company purchases a remote building site for computer operations. the building
will be suitable for operations after some expenditures. the wiring must be replaced to
computer specifications. the roof is leaky and must be replaced. all rooms must be
repainted and recarpeted and there will also be some plumbing work done. which of the
following statements is true?
a.the cost of the building will not include the repainting and recarpeting costs
b.the cost of the building will include the cost of replacing the roof
c.the cost of the building is the purchase price of the building, while the additional
expenditures are all capitalized as building improvements
d.the wiring is part of the computer costs, not the building cost
11) related purchasing activities include
a.ordering, receiving, paying
b.ordering, selling, paying
c.ordering, shipping, billing
d.selling, shipping, paying
12) the interest on a $4,000, 10%, 1-year note receivable is
a.$4,000
b.$400
c.$4,400
d.$4,040
13) the net amount expected to be received in cash from receivables is termed the
a.cash realizable value
b.cash-good value
c.gross cash value
d.cash-equivalent value
14) all of the following are characteristics of every accounting information system
except it is a system
a.that collects transaction data.
b.that processes transaction data.
c.that communicates financial information to decision makers.
d.of data storage hardware for the chart of accounts.
15) which of the following are in accordance with ifrs?
a.accrual basis accounting
b.cash basis accounting
c.both accrual basis and cash basis accounting
d.neither accrual basis nor cash basis accounting
16) which of the following receivables would not be classified as an “other receivable?
a.advance to an employee
b.refundable income tax
c.notes receivable
d.interest receivable
17) failure to record a liability will probably
a.result in an overstated net income
b.result in overstated total liabilities and owners equity
c.have no effect on net income
d.result in understated total assets
18) the paid-in capital section of the balance sheet consists of two classifications:
______________________ and ______________________.
19) cost and fair value data for the trading securities of clifford company at december
31, 2012, are $100,000 and $74,000, respectively. which of the following correctly
presents the adjusting journal entry to record the securities at fair value?
20) here are incomplete financial statements for brandon, inc.
instructions
calculate the missing amounts.
21) the trial balance of the gavin company shown below does not balance.
an examination of the ledger and journal reveals the following errors:
1)each of the above listed accounts has a normal balance per the general ledger.
2)cash of $350 received from a customer on account was debited to cash $530 and
credited to accounts receivable $530.
3)dividends of $300 paid to stockholders were posted as a credit to dividends, $300,
and a credit to cash $300.
4)salaries and wages expense of $300 was omitted from the trial balance.
5)the purchase of equipment on account for $700 was recorded as a debit to
maintenance and repairs expense and a credit to accounts payable for $700.
6)services were performed on account for a customer, $510, for which accounts
receivable was debited $510 and service revenue was credited $51.
7)a payment on account for $215 was credited to cash for $215 and credited to accounts
payable for $251.
instructions
prepare a correct trial balance.
22) presented below is information related to plant assets and intangible assets at year
end on december 31, 2012, for looper company:
instructions
prepare a partial balance sheet for looper company that shows how the above listed
items would be presented.
23) three major sections of a cash budget are: (1)________________,
(2)_______________, and (3)______________.
24) to encourage bookstores to buy a broader range of book titles many publishers
allow bookstores to return unsold books to the publisher. this results in very significant
returns each year. to ensure proper recognition of revenues, how should publishing
companies account for these returns?
25) a company shows a balance in salaries payable of $30,000 at the end of the month.
the next payroll amounting to $45,000 is to be paid in the following month. what will
be the journal entry to record the payment of salaries?
26) west county bank agrees to lend drake builders company $100,000 on january 1.
drake builders company signs a $100,000, 6%, 6-month note. the entry made by drake
builders company on january 1 to record the proceeds and issuance of the note is
27) compound interest is computed on the_____________ and on any
_______________ earned that has not been paid or withdrawn.