Norris Company experienced the following transactions during 2013, its first year in
operation.
1) Issued $6,000 of common stock to stockholders.
2) Provided $2,300 of services on account.
3) Paid $1,600 cash for operating expenses.
4) Collected $1,900 of cash from accounts receivable.
5) Paid a $100 cash dividend to stockholders.
The total amount of assets shown on Norris Company’s December 31, 2013 balance
sheet is:
A.$6,200.
B.$6,600.
C.$6,700.
D.None of these.
Which of the following is not a factor in explaining why the present value of a future
dollar is less than one dollar?
A.Inflation
B.Interest
C.Risk of failure to receive expected cash inflows
D.Historic cost
Darden Company has cash of $40,000, accounts receivable of $60,000, inventory of
$32,000, and equipment of $100,000. Assuming current liabilities of $48,000, this
company’s working capital is:
A.$12,000.
B.$52,000.
C.$144,000.
D.$84,000.
Indicate whether each of the following statements about liabilities is true or false.
_______ a) A net loss on the income statement decreases liabilities.
_______ b) The acquisition of a bank loan increases both assets and liabilities.
_______ c) The accounting equation requires that liabilities be equal to equity.
_______ d) The amount of a company’s liabilities is equal to (assets – equity).
_______ e) Liabilities are reported on the statement of cash flows of a business.
Which of the following is NOT an asset use transaction?
A.Paying cash to purchase land
B.Paying cash expenses
C.Paying off the principal of a loan
D.All of these are asset use transactions
Which of the following statements is correct?
A.A postaudit should be conducted at the time a capital investment is purchased.
B.The postaudit of a capital investment project should be made using the same
analytical technique that was used in deciding to make the investment.
C.The purpose of postaudits is to improve a company’s cost-volume-profit analysis.
D.The postaudit process uses expected cash flows and the company’s cost of capital.
Which of the following best represents a characteristic of managerial accounting?
A.Information is historically based and reported annually.
B.Information is based on estimates and is bounded by relevance and timeliness.
C.Information is regulated by the Securities and Exchange Commission.
D.Information is characterized by reliability and objectivity.
Which one of the following forms is used in connection with employee stock plans?
A.S-8.
B.S-3.
C.S-4.
D.S-1.
E.S-11.
Manufacturing costs that cannot be traced to specific units of product in a cost-effective
manner are:
A.depreciation on production equipment.
B.direct material.
C.indirect labor.
D.Both depreciation on production equipment and indirect labor.
Norris Company experienced the following transactions during 2013, its first year in
operation.
1) Issued $6,000 of common stock to stockholders.
2) Provided $2,300 of services on account.
3) Paid $1,600 cash for operating expenses.
4) Collected $1,900 of cash from accounts receivable.
5) Paid a $100 cash dividend to stockholders.
The amount of net cash flow from operating activities shown on Norris Company’s
2013 statement of cash flows is
A.$200.
B.$300.
C.$700.
D.$600.
Which of the following are not present value methods of analyzing capital investment
proposals?
A.Internal rate of return and payback
B.Unadjusted rate of return and net present value
C.Net present value and payback
D.Payback and unadjusted rate of return
A partnership began its first year of operations with the following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary assigned to
Thurman.
Each partner was to be attributed with interest equal to 10% of the capital balance as of
the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman,
respectively.
Each partner withdrew $13,000 per year.
Assume that the net loss for the first year of operations was $26,000 with net income of
$52,000 in the second year.
What was the balance in Thurman’s Capital account at the end of the second year?
A.$133,380.
B.$84,760.
C.$105,690.
D.$132,860.
E.$71,760.
Steuben Company produces dog houses. During 2013, Steuben Company incurred the
following costs:
Based on the above information, the amount of period costs shown on Steuben’s
12/31/2013 income statement is:
A.$430,000
B.$150,000
C.$30,000
D.$180,000
The statement of financial affairs should be prepared
A.under the going concern assumption.
B.under the concept of conservatism.
C.under the assumption that liquidation will occur.
D.under the continuity concept.
E.only for a company in Chapter 7 bankruptcy.
Flagstone Company was founded on January 1, 2013. During 2013, the company
experienced the following events:
1) earned cash revenue of $25,000
2) paid cash expenses of $20,500
3) issued common stock for $15,000 cash
4) paid cash dividend of $1,000 to owners.
Required:
a) Write an accounting equation and record effects of each accounting event under
appropriate general ledger account headings, showing dollar amounts of increases and
decreases and totals at the end of the year.
b) Prepare the 2013 income statement and balance sheet for Flagstone Company.
As of December 31, 2012, Montross Company had $400 cash. During 2013, Montross
earned $1,200 of cash revenue and paid $800 of cash expenses. The amount of cash
shown on the 2013 balance sheet would be
A.$300.
B.$800.
C.$1,100.
D.$2,400.
Vandever Company’s balance sheet reported assets of $42,000, liabilities of $15,000
and common stock of $12,000 as of December 31, 2012. If Retained Earnings on the
December 31, 2013 balance sheet is $18,000 and Vandever paid a $14,000 dividend
during 2013, then the amount of net income for 2013 was which of the following?
A.$17,000
B.$15,000
C.$3,000
D.None of these
P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who
share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively,
when they agree to admit C for a 20% interest.
C contributes $10,000 to the partnership and the goodwill method is used. What will be
the result of the goodwill calculation?
A.Goodwill of $15,000; split among the original partners
B.Goodwill of $15,000; all to C
C.Goodwill of $15,000; split among all four partners: P, L, O, and C
D.Goodwill of $12,000; all to C
E.Goodwill of $12,000; split among original partners
As a Certified Management Accountant, Derek is bound by the standards of ethical
conduct issued by the Institute of Management Accountants. According to the
standards, Derek has a responsibility to:
A.inform subordinates that they should protect confidential information.
B.ensure that financial accounting records are maintained as per the governing
guidelines.
C.monitor the activities of subordinates to assure that confidentiality is maintained.
D.inform subordinates that they should protect confidential information and monitor the
activities of subordinates to assure that confidentiality is maintained.
Norr and Caylor established a partnership on January 1, 2012. Norr invested cash of
$100,000 and Caylor invested $30,000 in cash and equipment with a book value of
$40,000 and fair value of $50,000. For both partners, the beginning capital balance was
to equal the initial investment. Norr and Caylor agreed to the following procedure for
sharing profits and losses:
– 12% interest on the yearly beginning capital balance
– $10 per hour of work that can be billed to the partnership’s clients
– the remainder divided in a 3:2 ratio
The Articles of Partnership specified that each partner should withdraw no more than
$1,000 per month.
For 2012, the partnership’s income was $70,000. Norr had 1,000 billable hours, and
Caylor worked 1,400 billable hours. In 2013, the partnership’s income was $24,000, and
Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner
withdrew $1,000 per month throughout 2012 and 2013.
Determine the amount of net income allocated to each partner for 2013. (Round all
calculations to the nearest whole dollar).
What accounting topics were covered under the FASB short-term convergence project?
Describe the purpose of the closing process.
The ABCD Partnership has the following balance sheet at January 1, 2012, prior to the
admission of new partner, Eden.
Eden acquired a 20% interest in the partnership by contributing a total of $71,500
directly to the other four partners. Goodwill is to be recorded. Profits and losses have
previously been split according to the following percentages: Adams, 15%; Barnes,
35%; Cordas, 30%; and Davis, 20%. After Eden made his investment, what were the
individual capital balances?
James, Keller, and Rivers have the following capital balances; $48,000, $70,000 and
$90,000 respectively. Because of a cash shortage James invests an additional $12,000
on June 1st. Each partner withdraws $1,000 per month. James, Keller, and Rivers
receive a salary of $13,000, $15,000 and $20,000, respectively, for work done during
the year. Each partner receives interest of 8% on their weighted average capital balance
without regard to normal drawings. Any remaining profits are split 20%, 30%, and 50%
respectively. The net income for the year is $30,000. What are the ending capital
balances for each partner?
What are the responsibilities of the SEC’s Division of Corporation Finance?
Briefly describe Regulation S-K. What is its purpose?