1) when the discount rate is equal to the contractual rate, the present value of the bonds
will equal the bonds’ face value.
2) a corporation must be incorporated in each state in which it does business.
3) goods that have been purchased fob destination but are in transit, should be excluded
from a physical count of goods by the buyer.
4) the accounting equation can be expressed as assets – stockholders equity = liabilities.
5) the first-in, first-out (fifo) inventory method results in an ending inventory valued at
the most recent cost.
6) a corporation can be organized for the purpose of making a profit or it may be
nonprofit.
7) for accounting purposes, the method used to account for investments in common
stock is determined by
a.the amount paid for the stock by the investor
b.the extent of an investor’s influence over the operating and financial affairs of the
investee
c.whether the stock has paid dividends in past years
d.whether the acquisition of the stock by the investor was “friendly” or “hostile.”
8) bates company purchased equipment on january 1, 2011, at a total invoice cost of
$800,000. the equipment has an estimated salvage value of $20,000 and an estimated
useful life of 5 years. what is the amount of accumulated depreciation at december 31,
2012, if the straight-line method of depreciation is used?
a.$160,000
b.$320,000
c.$156,000
d.$312,000
9) stans market recorded the following events involving a recent purchase of inventory:
received goods for $60,000, terms 2/10, n/30.
returned $1,200 of the shipment for credit.
paid $300 freight on the shipment.
paid the invoice within the discount period.
as a result of these events, the companys inventory
a.increased by $57,624
b.increased by $59,100
c.increased by $57,918
d.increased by $57,924
10) a $200 petty cash fund has cash of $34 and receipts of $160. the journal entry to
replenish the account would include a
a.debit to cash for $160
b.credit to petty cash for $166
c.debit to cash over and short for $6
d.credit to cash for $160
11) prepare an income statement, a retained earnings statement, and a balance sheet for
the medical practice of linda denny, md, from the items listed below for the month of
october 2012.
t
12) a popular variation of the receivables turnover ratio is the
a.credit risk ratio
b.concentration of credit risk
c.bad debts ratio
d.average collection period
13) use the following information for boxter, inc., clifford company, danforth industries,
and evans services to answer the question using the lifo adjustment, what is boxter’s
inventory turnover ratio for 2012 (to the closest decimal place)?
a.12.3 times
b.9.3 times
c.7.5 times
d.6.4 times
14) *a $100 petty cash fund has cash of $12 and receipts of $84. the journal entry to
replenish the account would include a
a.debit to cash for $84
b.credit to petty cash for $84
c.credit to cash over and short for $4
d.credit to cash for $88
15) on april 1, holton company borrows $80,000 from west bank by signing a 6-month,
6%, interest-bearing note.
instructions
prepare the necessary entries below associated with the note payable on the books of
nolton company.
(a)prepare the entry on april 1 when the note was issued.
(b)prepare any adjusting entries necessary on june 30 in order to prepare the semiannual
financial statements. assume no other interest accrual entries have been made.
16) lankston company began the year by issuing $60,000 of common stock for cash. the
company recorded revenues of $550,000, expenses of $480,000, and paid dividends of
$30,000. what was lankstons net income for the year?
a.$40,000
b.$100,000
c.$70,000
d.$130,000
17) a computer company has $3,000,000 in research and development costs. before
accounting for these costs, the net income of the company is $2,400,000. what is the
amount of net income or loss before taxes after these research and development costs
are accounted for?
a.$600,000 loss
b.$2,400,000 net income
c.$0
d.cannot be determined from the information provided
18) during 2012 sedgewick inc. had sales on account of $176,000, cash sales of
$72,000, and collections on account of $112,000. in addition, they collected $1,950
which had been written off as uncollectible in 2011. as a result of these transactions the
change in the accounts receivable balance indicates a
a.$134,050 increase
b.$ 64,000 increase
c.$ 62,050 increase
d.$136,000 increase
19) which of the following is not true of ordinary repairs?
a.they primarily benefit the current accounting period
b.they can be referred to as revenue expenditures
c.they maintain the expected productive life of the asset
d.they increase the productive capacity of the asset
20) the cost of assets consumed or services used is also known as
a.a revenue
b.an expense
c.a liability
d.an asset
21) the basic format of a journal would not include a(n)
a.brief explanation.
b.account title column.
c.t-account.
d.date column.
22) given the following account balances at year end, compute the total intangible
assets on the balance sheet of janssen enterprises.
a.$11,500,000
b.$7,500,000
c.$5,500,000
d.$9,500,000
23) a check returned by the bank marked “nsf” means
a.no service fee
b.no signature found
c.not satisfactorily filled out
d.not sufficient funds
24)
better publications
so ld annual subscriptions to their magazine for $36,000 in december, 2010. the magazine
is published monthly. the new subscribers received their first magazine in january, 201
1>what adjusting entry should be made in january if the subscriptions were originally
recorded as a liability?
2>what amount will be reported on the january 2011 balance sheet for unearned revenue?
25)
26) in a manufacturing company, goods that are ready to be sold to customers are
referred to as ________________, whereas in a merchandising company they are
generally referred to as _______________.
27) the option to value inventory at fair value exists under
28) at december 31, 2012, greson inc. has these data on its security investments
if the available-for-sale securities are held as long-term investments, which of the
following will be recorded to adjust the securities to fair value?
29) sandy lang and mandy starr, two salespersons in adjoining territories, regularly
compete for bonuses. during the last month, their dollar volume of sales, on which the
bonuses are based, was nearly equal. on may 30, 2012, each made a large sale. both
orders were shipped on may 31, 2012, the last day of the month, and both were received
by the customers on june 5, 2012. sandy’s sale was fob shipping point (ownership
passes to buyer at time of shipping), and mandy’s was fob destination (ownership passes
to buyer at time of receipt). the printed policy of the company states that sales “count”
for purposes of calculating bonuses on the date that ownership passes to the purchaser.
sandy’s sale was therefore counted in her may monthly total of sales while mandy’s sale
was not. mandy is quite upset. she has asked you to just include it, or to take sandy’s off
as well. she also has told you that you are being unethical for allowing sandy to get a
bonus just for choosing a particular shipping method.
as the accounting manager write a memo to mandy on june 15, 2012, and explain your
position.
30) a merchandising company frequently has a need to use contra accounts related to
the sale of goods. identify the contra accounts that have normal debit balances and
explain why they are not considered expenses.
31) if a $1 million, 10%, 10-year bond issue was sold at 97, the cash proceeds from the
issuance of the bonds amounted to $________________.
32)
on february 1, the acts tax service received a $2,800 cash retainer for tax preparation
services to be provided rateably over the next 4 months. the full amount was credited to the
liability account unearned revenue. assuming that the revenue is earned rateably over the 4
month period, what balance would be reported on the february 28 balance sheet for
unearned revenue?
33) selected information from the comparative financial statements of francona
company for the year ended december 31 appears below:
instructions
answer the following questions relating to the year ended december 31, 2012. show
computations.