1) june corp. sells one product and uses a perpetual inventory system. the beginning
inventory consisted of 20 units that cost $20 per unit. during the current month, the
company purchased 120 units at $20 each. sales during the month totaled 90 units for
$43 each. what is the number of units in the ending inventory?
a.20 units
b.30 units
c.50 units
d.140 units
2) which of the following inventories carried by a manufacturer is similar to the
merchandise inventory of a retailer?
a.raw materials
b.work-in-process
c.finished goods
d.supplies
3) which of the following is not a principal purpose of an unadjusted trial balance?
a.it proves that debits and credits of equal amounts are in the ledger
b.it is the basis for any adjustments to the account balances
c.it supplies a listing of open accounts and their balances
d.it proves that debits and credits were properly entered in the ledger accounts
4) 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
5) in the context of dollar-value lifo, what is a lifo layer?
a.the difference between the lifo inventory and the amount used for internal reporting
purposes
b.the lifo value of the inventory for a given year
c.the inventory in base year dollars
d.the lifo value of an increase in the inventory for a given year
6) olmsted company has the following items: common stock, $900,000; treasury stock,
$105,000; deferred taxes, $125,000 and retained earnings, $454,000. what total amount
should olmsted company report as stockholders equity?
a.$1,124,000
b.$1,249,000
c.$1,374,000
d.$1,499,000
7) froelich company reported the following data:
what is froelichs asset turnover for 2013?
a.1.68
b.1.72
c.1.95
d.2.33
8) in preparing a statement of cash flows, sale of treasury stock at an amount greater
than cost would be classified as a(n)
a.operating activity
b.financing activity
c.extraordinary activity
d.investing activity
9) a characteristic of generally accepted accounting principles include the following:
a.common set of standards and principles
b.standards and principles are based federal statutes
c.acceptance requires an affirmative vote of certified public accountants
d.practices that become accepted for at least a year by all industry members
10) which of the following is a current asset?
a.cash surrender value of a life insurance policy of which the company is the
bene-ficiary
b.investment in equity securities for the purpose of controlling the issuing company
c.cash designated for the purchase of tangible fixed assets
d.trade installment receivables normally collectible in 18 months
11) mcglone corporation had a 1/1/12 balance in the allowance for doubtful accounts of
$25,000. during 2012, it wrote off $18,000 of accounts and collected $5,250 on
accounts previously written off. the balance in accounts receivable was $500,000 at 1/1
and $600,000 at 12/31. at 12/31/12, mcglone estimates that 5% of accounts receivable
will prove to be uncollectible. what should mcglone report as its allowance for doubtful
accounts at 12/31/12?
a.$12,000
b.$12,250
c.$17,250
d.$30,000
12) the iasb’s standard-setting structure includes all of the following except
a.standing interpretations committee
b.standards advisory council
c.standards comparison committee
d.trustees
13) simpson company applies revaluation accounting to plant assets with a carrying
value of $1,600,000, a useful life of 4 years, and no salvage value. depreciation is
calculated on the straight-line basis. at the end of year 1, independent appraisers
determine that the asset has a fair value of $1,500,000.
the entry to record depreciation for this same asset in year two will include a
a.debit to accumulated depreciation for $400,000
b.debit to depreciation expense for $500,000
c.credit to accumulated depreciation for $300,000
d.debit to depreciation expense for $400,000
14) in order to be classified as an extraordinary item in the income statement, an event
or transaction should be
a.unusual in nature, infrequent, and material in amount
b.unusual in nature and infrequent, but it need not be material
c.infrequent and material in amount, but it need not be unusual in nature
d.unusual in nature and material, but it need not be infrequent
15) under the allowance method of recognizing uncollectible accounts, the entry to
write off an uncollectible account
a.increases the allowance for uncollectible accounts
b.has no effect on the allowance for uncollectible accounts
c.has no effect on net income
d.decreases net income
16) u.s. gaap allows all of the following statement formats to be used for reporting
comprehensive income except
a.statement of recognized income and expense
b.single income statement
c.combined income statement of comprehensive income
d.statement of stockholders’ equity
17) myers company acquired machinery on january 1, 2007 which it depreciated under
the straight-line method with an estimated life of fifteen years and no salvage value. on
january 1, 2012, myers estimated that the remaining life of this machinery was six years
with no salvage value. how should this change be accounted for by myers?
a.as a prior period adjustment
b.as the cumulative effect of a change in accounting principle in 2012
c.by setting future annual depreciation equal to one-sixth of the book value on january
1, 2012
d. by continuing to depreciate the machinery over the original fifteen year life
18) fryman furniture uses the installment-sales method. no further collections could be
made on an account with a balance of $36,000. it was estimated that the repossessed
furniture could be sold as is for $10,800, or for $12,600 if $600 were spent
reconditioning it. the gross profit rate on the original sale was 40%. the loss on
repossession was
a.$9,600
b.$9,000
c.$24,000
d.$25,200
19) which of the following situations does not base an accounting measure on present
values?
a.pensions
b.prepaid insurance
c.leases
d.sinking funds
20) what happens when inventory in base year dollars decreases?
a.lifo reserve increases
b.lifo layer is created
c.lifo layer is liquidated
d.lifo price index decreases