1) the inventory turnover ratio is computed by dividing the cost of goods sold by the
ending inventory on hand.
2) deferred gross profit is generally treated as an unearned revenue and classified as a
current liability.
3) intraperiod tax allocation relates the income tax expense of the period to the specific
items that give rise to the amount of the tax provision.
4) the present value of an ordinary annuity is the present value of a series of equal rents
withdrawn at equal intervals.
5) if a company transfers held-to-maturity securities to available-for-sale securities, the
unrealized gain or loss is recognized in income.
6) internally generated goodwill should not be capitalized in the accounts.
7) unrealized holding gains and losses are recognized in net income for
available-for-sale debt securities.
8) international accounting standards are no longer considered part of ifrs because they
have been replaced by international financial reporting standards.
9) when prepaid expenses decrease during a period, expenses on the accrual-basis are
lower than they are on a cash-basis.
10) one issue that the iasb and fasb must resolve in developing a common conceptual
framework is how control should be defined with regard to the definition of an asset.
11) all long-term debt maturing within the next year must be classified as a current
liability on the balance sheet.
12) many companies use lifo for both tax and internal reporting purposes.
13) the market value method is used to account for the exercise of convertible preferred
stock.
14) the statement of cash flows provides information to help investors and creditors
assess the cash and noncash investing and financing transactions during the period.
15) when companies make changes that result in different reporting entities, the change
is reported prospectively.
16) gardner corporation purchased a truck at the beginning of 2012 for $90,000. the
truck is estimated to have a salvage value of $3,600 and a useful life of 120,000 miles.
it was driven 18,000 miles in 2012 and 32,000 miles in 2013. what is the depreciation
expense for 2013?
a.$24,000
b.$36,000
c.$23,040
d.$38,400
17) dividends representing a return of capital to stockholders are not uncommon among
companies which
a.use accelerated depreciation methods
b.use straight-line depreciation methods
c.recognize both functional and physical factors in depreciation
d.none of these
18) the following is true of depreciation accounting.
a.it is not a matter of valuation
b.it is part of the matching of revenues and expenses
c.it retains funds by reducing income taxes and dividends
d.all of these
19) under the equity method of accounting for investments, an investor recognizes its
share of the earnings in the period in which the
a.investor sells the investment
b.investee declares a dividend
c.investee pays a dividend
d.earnings are reported by the investee in its financial statements
20) in january, 2012, yoder corporation purchased a mineral mine for $5,100,000 with
removable ore estimated by geological surveys at 2,000,000 tons. the property has an
estimated value of $300,000 after the ore has been extracted. the company incurred
$1,500,000 of development costs preparing the mine for production. during 2012,
500,000 tons were removed and 400,000 tons were sold. what is the amount of
depletion that yoder should expense for 2012?
a.$960,000
b.$1,200,000
c.$1,260,000
d.$1,680,000
21) on january 1, 2012, culver corporation had 110,000 shares of its $5 par value
common stock outstanding. on june 1, the corporation acquired 10,000 shares of stock
to be held in the treasury. on december 1, when the market price of the stock was $8,
the corporation declared a 15% stock dividend to be issued to stockholders of record on
december 16, 2012. what was the impact of the 15% stock dividend on the balance of
the retained earnings account?
a.$750,000 decrease
b.$120,000 decrease
c.$132,000 decrease
d.no effect
22) james, inc. incurred the following infrequent losses during 2012:
a $140,000 write-down of equipment leased to others.
a $80,000 adjustment of accruals on long-term contracts.
a $120,000 write-off of obsolete inventory.
in its 2012 income statement, what amount should james report as total infrequent
losses that are not considered extraordinary?
a.$340,000
b.$260,000
c.$220,000
d.$200,000
23) the floor to be used in applying the lower-of-cost-or-market method to inventory is
determined as the
a.net realizable value
b.net realizable value less normal profit margin
c.replacement cost
d.selling price less costs of completion and disposal
24) when is a contingent liability recorded?
a.when the amount can be reasonably estimated
b.when the future events are probable to occur and the amount can be reasonably
estimated
c.when the future events are probable to occur
d.when the future events will possibly occur and the amount can be reasonably
estimated
25) which of the following should be reported under the other expenses and losses
section of the income statement?
a.goodwill impairment losses
b.trade name amortization expense.
c.patent impairment losses
d.none of the above
26) during 2012 the dld company had a net income of $55,000. in addition, selected
accounts showed the following changes:
what was the amount of cash provided by operating activities?
a.$54,500
b.$55,000
c.$56,500
d.$64,500
27) an executive pays no taxes at time of exercise in a(an)
a.stock appreciation rights plan
b.incentive stock option plan
c.nonqualified stock option plan
d.taxes would be paid in all of these
28) what is disclosed in an income statement? be specific.
29) one significant difference between a balance sheet prepared using ifrs rather than
u.s. gaap is that long-term tangible assets will be reported at fair value rather than
historical cost.
30) if lawson, inc. uses the composite method and its composite rate is 7.5% per year,
what entry should it make when plant assets that originally cost $80,000 and have been
used for 10 years are sold for $24,000?
31) a correction of an error in prior periods’ income will be reported
32)