1) a stockholder who receives a stock dividend would
a.expect the market price per share to increase
b.own more shares of stock
c.expect retained earnings to increase
d.expect the par value of the stock to change
2) merchandising companies that sell to retailers are known as
a.brokers
b.corporations
c.wholesalers
d.service firms
3) management usually wants ________ financial statements and the irs requires all
businesses to file _________ tax returns.
a.annual, annual
b.monthly, annual
c.quarterly, monthly
d.monthly, monthly
4) peterson company billed its customers a total of $735,000 for the month of
november. the total includes a 5% state sales tax.
instructions
(a)determine the proper amount of revenue to report for the month.
(b)prepare the general journal entry to record the revenue and related liabilities for the
month.
5) denova real estate signed a four-month note payable in the amount of $6,000 on
september 1. the note requires interest at an annual rate of 6%. the amount of interest to
be accrued at the end of september is:
a.$360
b.$90
c.$30
d.$60
6) the financial statement that summarizes the changes in retained earnings for a
specific period of time is the
a.balance sheet
b.income statement
c.statement of cash flows
d.retained earnings statement
7) ifrs
a.implies that receivables with different characteristics should be reported separately
b.requires that receivables with different characteristics should be reported separately
c.implies that receivables with different characteristics should be reported as one
unsegregated amount
d.requires that receivables with different characteristics should be reported as one
unsegregated amount
8) the accountant at patton company has determined that income before income taxes
amounted to $11,000 using the fifo costing assumption. if the income tax rate is 30%
and the amount of income taxes paid would be $300 greater if the lifo assumption were
used, what would be the amount of income before taxes under the lifo assumption?
a.$11,300
b.$12,000
c.$10,000
d.$10,700
9) the most important information needed to determine if companies can pay their
current obligations is the
a.net income for this year
b.projected net income for next year
c.relationship between current assets and current liabilities
d.relationship between short-term and long-term liabilities
10) identify whether each of the following items would be (a) added to the book
balance, or (b) deducted from the book balance in a bank reconciliation.
1> eft transfer to a supplier.
2> bank service charge.
3> check printing charge.
4> error recording check # 214 which was written for $230 but recorded for $320.
5>collection of note and interest by bank on companys behalf.
11) in a recent year garvey corporation had net income of $130,000, interest expense of
$20,000, and tax expense of $30,000. what was garvey corporations times interest
earned ratio for the year?
a.6.50
b.7.50
c.8.00
d.9.00
12) bolton company’s gross profit rate last year was 32.0% and this year it is 28.4%.
which of the following would not be a possible cause for this decline in the gross profit
rate?
a.bolton must pay higher prices to suppliers without passing these costs on to customers
b.bolton may have begun selling products with a higher markup
c.bolton’s average margin between selling price and inventory cost is decreasing
d.bolton may have seen a decline in total gross profit while maintaining net sales
13) echo sound company just began business and made the following four inventory
purchases in june:
a physical count of merchandise inventory on june 30 reveals that there are 250 units on
hand. the inventory method which results in the highest gross profit for june is
a.the fifo method
b.the lifo method
c.the weighted average unit cost method
d.not determinable
14) the usual sequence of steps in the recording process is to
a.analyze each transaction, enter the transaction in the journal, and transfer the
information to the ledger accounts.
b.analyze each transaction, enter the transaction in the ledger, and transfer the
information to the journal.
c.analyze each transaction, enter the transaction in the book of accounts, and transfer
the information to the journal.
d.analyze each transaction, enter the transaction in the book of original entry, and
transfer the information to the journal.
15)
the following stockholders’ equity accounts, arranged alphabetically, are in the ledger of
marvel corporation at december 31, 2012.
instructions
prepare the stockholders equity section of the balance sheet at december 31, 2012.
16) the interest on a $6,000, 10%, 1-year note receivable is
a.$6,000
b.$50
c.$600
d.$6,600
17) which of the following would not be reported under “other revenues and gains” on
the income statement?
a.unrealized gain on available-for-sale securities
b.dividend revenue
c.interest revenue
d.gain on sale of debt investments
18) at december 31, 2012 lowery company had retained earnings of $2,184,000. during
2012 they issued stock for $98,000, and paid dividends of $34,000. net income for 2012
was $402,000. the retained earnings balance at the beginning of 2012 was:
a.$2,552,000
b.$1,816,000
c.$1,914,000
d.$2,454,000
19) a patent should
a.be amortized over a period of 20 years
b.not be amortized
c.be amortized over its useful life or 20 years, whichever is longer
d.be amortized over its useful life or 20 years, whichever is shorter
20) samson company had the following transactions.
1>issued 4,000 shares of $100 par preferred stock at $107 for cash.
2>issued 8,000 share of common stock with a par value of $10 for $110,000.
3>purchased 500 shares of treasury common stock for $12,000.
prepare the journal entries to record the above stock transactions.
21) what is the formula for the payout ratio? what does it indicate?
22) on january 1, waters company purchased as an investment a $1,000, 6% bond for
$1,060. the bond pays interest on january 1 and july 1. the bond is sold on september 1
for $1,200 plus accrued interest. interest has not been accrued since the last interest
payment date. what is the entry to record the cash proceeds at the time the bond is sold?
23) the difference between unearned revenue and accrued revenue is that accrued
revenue has been recorded and needs adjusting and unearned revenue has never been
recorded.
24) the board of directors of lauber corporation are considering two plans for financing
the purchase of new plant equipment. plan #1 would require the issuance of $5,000,000,
7%, 20-year bonds at face value. plan #2 would require the issuance of 200,000 shares
of $5 par value common stock that is selling for $25 per share on the open market.
lauber corporation currently has 100,000 shares of common stock outstanding and the
income tax rate is expected to be 30%. assume that income before interest and income
taxes is expected to be $600,000 if the new factory equipment is purchased.
instructions
prepare a schedule that shows the expected net income after taxes and the earnings per
share on common stock under each of the plans that the board of directors is
considering.
25) the accounts in the ledger of dependable delivery service contain the following
balances on july 31, 2014 .
instructions
prepare a trial balance with the accounts arranged as illustrated in the chapter, and fill in
the missing amount for cash.
26) distinguishing normal levels of income from irregular items is of interest for the
27) if accounts receivable increase during a period, revenues on an accrual basis are
______________ than revenues on a cash basis.