1) Which of the following is a current liability?
a.Preferred dividends in arrears
b.A dividend payable in the form of additional shares of stock
c.A cash dividend payable to preferred stockholders
d.All of these answers are correct
2) Which of the following statements is false regarding an assumption of inventory cost
flow?
a.The cost flow assumption need not correspond to the actual physical flow of goods
b.The assumption selected may be changed each accounting period
c.The FIFO assumption uses the earliest acquired prices to cost the items sold during a
period
d.The LIFO assumption uses the earliest acquired prices to cost the items on hand at the
end of an accounting period
3) Nichols Company had 400 units of Dink in its inventory at a cost of $12 each. It
purchased 600 more units of Dink at a cost of $18 each. Nichols then sold 700 units at a
selling price of $30 each. The LIFO liquidation overstated normal gross profit by
a.$ -0-
b.$ 600
c.$1,200
d.$1,800
4) Which one of the following types of losses is excluded from the determination of net
income in income statements?
a.Material losses resulting from transactions in the company’s investments account
b.Material losses resulting from unusual sales of assets not acquired for resale
c.Material losses resulting from the write-off of intangibles
d.Material losses resulting from correction of errors related to prior periods
5) IFRS requires an impairment loss for a loan receivable to be recognized when
a.its carrying amount is less than its recoverable amount
b.its recoverable amount is less than its carrying amount
c.its present value of expected future cash flows is greater than its carrying amount
d.its principal amount is less than its interest amount
6) How much must be invested now to receive $30,000 for 15 years if the first $30,000
is received today and the rate is 9%?
Present Value of
PeriodsOrdinary Annuity at 9%
147.78615
158.06069
168.31256
a.$241,821
b.$263,585
c.$450,000
d.$219,375
7) On December 31, 2015, Haden Corp. sold a machine to Ryan and simultaneously
leased it back for one year. Pertinent information at this date follows:
Sales price$900,000
Carrying amount825,000
Present value of reasonable lease rentals
($7,500 for 12 months @ 12%)85,000
Estimated remaining useful life12 years
In Hadens December 31, 2015 balance sheet, the deferred profit from the sale of this
machine should be
a.$85,000
b.$75,000
c.$10,000
d.$0
8) Which of the following would be considered research and development costs?
a.Routine efforts to refine an existing product
b.Periodic alterations to existing production lines
c.Marketing research to promote a new product
d.Construction of prototypes
9) Which of the following is never classified as an extraordinary item?
a.Losses from a major casualty
b.Losses from an expropriation of assets
c.Gain on a sale of the only security investment a company has ever owned
d.Losses from exchange or translation of foreign currencies
10) The income statement provides investors and creditors with information to predict
all of the following except the:
a.amount of future cash flows
b.sources of future cash flows
c.timing of future cash flows
d.uncertainty of future cash flows
11) Which table would you use to determine how much you would need to have
deposited three years ago at 10% compounded annually in order to have $1,000 today?
a.Future value of 1 or present value of 1
b.Future value of an annuity due of 1
c.Future value of an ordinary annuity of 1
d.Present value of an ordinary annuity of 1