1) the preparation of a bank reconciliation is an important cash control procedure. if a
company deposits cash receipts daily and makes all cash disbursements by check,
explain why the cash balance per books might not agree with the cash balance shown
on the bank statement. identify specific examples that may cause differences between
the cash balance per books and the cash balance per bank.
2) a useful measure of solvency is the
a.current ratio
b.earnings per share
c.return on assets ratio
d.debt to total assets ratio
3) the maturity value of a $4,000, 6%, 60-day note receivable dated february 10th is
a.$4,040
b.$4,020
c.$4,000
d.$4,240
4) dole industries had the following inventory transactions occur during 2012:
the company sold 153 units at $126 each and has a tax rate of 30%. assuming that a
periodic inventory system is used, and operating expenses of $2,000, what is the
companys after-tax income using lifo? (rounded to whole dollars)
a.$2,632
b.$3,242
c.$2,162
d.$1,842
5) if a company is given credit terms of 2/10, n/30, it should
a.hold off paying the bill until the end of the credit period, while investing the money at
10% annual interest during this time
b.pay within the discount period and recognize a savings
c.pay within the credit period but don’t take the trouble to invest the cash while waiting
to pay the bill
d.recognize that the supplier is desperate for cash and withhold payment until the end of
the credit period while negotiating a lower sales price
6) foyle company purchased a new van for floral deliveries on january 1, 2012. the van
cost $40,000 with an estimated life of 5 years and $10,000 salvage value at the end of
its useful life. the double-declining-balance method of depreciation will be used. what
is the depreciation expense for 2012?
a.$8,000
b.$6,000
c.$12,000
d.$16,000
7) all of the following statements are true regarding the declining-balance method of
depreciation except
a.the declining-balance method ignores salvage value when calculating depreciation
b.the declining-balance method produces lower depreciation expense in the early years
as opposed to the later years
c.the declining-balance method is compatible with the matching principle
d.the declining-balance method is appropriate when assets lose their usefulness rapidly
8) inventory costing methods place primary reliance on assumptions about the flow of
a.goods
b.costs
c.resale prices
d.values
9) if a plant asset is retired and is fully depreciated
a.a gain on disposal will be recorded
b.phantom depreciation must be taken as though the asset were still on the books
c.a loss on disposal will be recorded
d.no gain or loss on disposal will be recorded
10) the downtown company accumulates the following adjustment data at december 3
1>revenue of $1,100 collected in advance has been earned.
2>salaries of $600 are unpaid.
3>prepaid rent totaling $450 has expired.
4>supplies of $550 have been used.
5>revenue earned but unbilled totals $750.
6>utility expenses of $300 are unpaid.
7>interest of $250 has accrued on a note payable.
instructions:
(a)for each of the above items indicate:
1>the type of adjustment (prepaid expense, unearned revenue, accrued revenue, or
accrued expense).
2>the account relationship (asset/liability, liability/revenue, etc.).
3>the status of account balances before adjustment (understatement or overstatement).
4>the adjusting entry.
(b)assume net income before the adjustments listed above was $24,500. what is the
adjusted net income?
prepare your answer in the tabular form presented below.
11) which of the following items has no effect on retained earnings?
a.expense
b.dividends
c.land purchase
d.revenue
12) in computing depreciation, salvage value is
a.the fair value of a plant asset on the date of acquisition
b.subtracted from accumulated depreciation to determine the plant asset’s depreciable
cost
c.an estimate of a plant asset’s value at the end of its useful life
d.ignored in all the depreciation methods
13) the amount you must deposit now in your savings account paying 5% interest, in
order to accumulate $3,000 for your first tuition payment when you start college in 3
years is
a.$2,670.00
b.$2,591.52
c.$2,518.86
d.$2,657.88
14) which one of the following is not an ownership right of a stockholder in a
corporation?
a.to vote in the election of directors
b.to declare dividends on the common stock
c.to share in assets upon liquidation
d.to share in corporate earnings