Peter, Roberts, and Dana have the following capital balances; $80,000, $100,000 and
$60,000, respectively. The partners share profits and losses 20%, 40%, and 40%
respectively.
Roberts retires and is paid $160,000 based on an independent appraisal of the business.
If the goodwill method is used, what is the capital balance of Dana?
A.$20,000.
B.$60,000.
C.$110,000.
D.$120,000.
E.$230,000.
Mandich Co. had the following amounts for its assets, liabilities, and stockholders’
equity accounts just before filing a bankruptcy petition and requesting liquidation:
Of the salaries payable, $30,000 was owed to an officer of the company. The remaining
amount was owed to salaried employees who had not been paid within the previous 80
days: John Webb was owed $10,600, Samantha Jones was owed $15,000, Sandra
Johnson was owed $11,900, and Dennis Roberts was owed $2,500. The maximum
owed for any one employee’s claims for contributions to benefit plans was $800.
Estimated expense for administering the liquidation amounted to $40,000.
On a statement of financial affairs, what amount would have been shown as assets
available to pay liabilities with priority and unsecured creditors?
A.$390,000.
B.$445,000.
C.$495,000.
D.$660,000.
E.$795,000.
Which statement is false regarding the Public Company Accounting Oversight Board
(PCAOB)?
A.regulates audit standards and independent audit firms.
B.has five members appointed by the SEC.
C.allows all members to be accountants, past or present.
D.is under the oversight and enforcement of the SEC.
E.is funded by fees levied on all publicly traded companies.
Peter, Roberts, and Dana have the following capital balances; $80,000, $100,000 and
$60,000, respectively. The partners share profits and losses 20%, 40%, and 40%
respectively.
Roberts retires and is paid $160,000 based on an independent appraisal of the business.
If the goodwill method is used, what is the capital balance of Peter?
A.$20,000.
B.$60,000.
C.$110,000.
D.$120,000.
E.$230,000.
Which of the following statements about financial statements is incorrect?
A.The net margin ratio is a profitability ratio.
B.The current ratio is a liquidity ratio.
C.The debt to assets ratio is a liquidity ratio.
D.The dividend yield is a stock market ratio.
What is the minimum net worth of those who are considered accredited investors?
A.$200,000.
B.$400,000.
C.$500,000.
D.$1,000,000.
E.$2,000,000.
Which topic was not covered by FASB under the short-term convergence project?
A.Inventory costs.
B.Asset exchanges.
C.Liability transfers.
D.Accounting changes.
E.Earnings-per-share.
The following information relates to Marshall Manufacturing’s 2013 accounting period:
Based on this information, what is the company’s net income for 2013?
A.$40,000
B.$70,000
C.$30,000
D.$42,000
Which of the following items would be reported directly on the income statement as a
period cost?
A.Selling and administrative salaries
B.Cost of lubricant for oiling machinery
C.Wages paid to machine operators
D.All of these.
What information needs to be included in Form 10-Q?
1) Income statements for the most recent quarter and for the year to date as well as for
the comparative periods in the previous year.
2) Income statements for the most recent quarter and for the year to date as well as for
the comparative periods in the previous two years.
3) A statement of cash flows is mandatory, but only for the year to date as well as for
the corresponding period in the preceding year.
4) Two balance sheets: one for the end of the most recent quarter and one showing the
company’s financial position at the end of the previous fiscal year.
A.1 and 3
B.2, 3, and 4
C.1 and 2
D.1, 3, and 4
E.2 and 4
Petras Company engaged in the following transactions during 2012, its first year in
operations: (Assume all transactions are cash transactions)
1) Acquired $950 cash from the issue of common stock.
2) Borrowed $420 from a bank.
3) Earned $600 of revenues.
4) Paid expenses of $250.
5) Paid a $50 dividend.
During 2013, Petras engaged in the following transactions: (Assume all transactions are
cash transactions)
1) Issued an additional $325 of common stock.
2) Repaid $220 of its debt to the bank.
3) Earned revenues of $750.
4) Incurred expenses of $360.
5) Paid dividends of $100.
The amount of assets on Petras’s 2013 balance sheet is
A.$2,165.
B.$390.
C.$2,065.
D.$395.
The IASB and FASB are working on several joint projects. What is the purpose of the
Revenue Recognition Project?
A.to provide guidance on the application of the acquisition method.
B.to enhance the usefulness of information in assessing the financial performance of the
reporting enterprise.
C.to develop a common comprehensive standard on revenue recognition.
D.to develop a common conceptual framework that both boards can use as a basis for
future standard-setting.
E.to agree upon financial statement titles that will have no differentiation after
translation to various languages.
Which one of the following requires the maintenance of accounting records and
adequate internal accounting controls?
A.The Securities Act of 1933
B.The Securities Exchange Act of 1934
C.The Investment Company Act of 1940
D.The Foreign Corrupt Practices Act of 1977
E.The Sarbanes-Oxley Act of 2002
For each of the following situations, select the best answer concerning information
forms filed with the SEC:
(A) Form 10-K
(B) Form 10-Q
(C) Form 8-K
(D) Not required
___ 1) A unique or significant happening.
___ 2) Annual information required by Regulation S-X.
___ 3) Changes in control of the registrant.
___ 4) Interim financial statements.
___ 5) Fourth quarter income statement.
___ 6) Bankruptcy.
___ 7) Annual information required by Regulation S-K.
___ 8) Income statement for the current quarter, year-to-date, and comparative periods
in the previous year.
___ 9) Changes in bookkeeping staff.
___ 10) Changes in the registrant’s external auditor.
Who must accept and confirm the Reorganization plan?
Bazley Co. had severe financial difficulties and was considering the possibility of filing
a bankruptcy petition. At that time, the company had the following assets (stated at net
realizable value) and liabilities.
In a liquidation, total assets available to pay liabilities with priority and unsecured
creditors are calculated to be what amount?
Describe the two parts of the SEC registration statement.
Is McDonald’s a manufacturing company or a service company? How do they record
the cost of materials, labor, and overhead?
Gamma Company and Chi Company are similar and similar-sized companies operating
in the same industry. At the end of the most recent year, Gamma’s price/earnings ratio
was 22.0, and Chi’s price/earnings ratio was 14.2. What conclusion would you draw
based on the difference in price/earnings ratios for the two companies?
What is the IOSCO?
What events cause the dissolution of a partnership?