1) *the work sheet starts with two columns for the:
a.adjustments
b.financial statements
c.trial balance
d.adjusted trial balance
2) on january 1, weatherholt inc. issued $3,000,000, 9% bonds for $2,817,000. the
market rate of interest for these bonds is 10%. interest is payable annually on december
31. jean loptein uses the effective-interest method of amortizing bond discount. at the
end of the first year, weatherholt should report unamortized bond discount of
a.$164,700
b.$171,300
c.$154,830
d.$153,000
3) recording depreciation each period is necessary in accordance with the
a.going concern principle
b.cost principle
c.expense recognition principle
d.asset valuation principle
4) the retained earnings statement would not show
a.the retained earnings beginning balance
b.revenues and expenses
c.dividends
d.the ending retained earning balance
5) a company just starting in business purchased three merchandise inventory items at
the following prices. first purchase $80; second purchase $95; third purchase $85. if the
company sold two units for a total of $240 and used fifo costing, the gross profit for the
period would be
a.$65
b.$75
c.$60
d.$50
6) foyle company purchased a new van for floral deliveries on january 1, 2011. 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 balance of the accumulated depreciation account at the end of 2012?
a.$6,400
b.$19,200
c.$25,600
d.$9,600
7) an asset was purchased for $60,000. it had an estimated salvage value of $15,000 and
an estimated useful life of 10 years. after 5 years of use, the estimated salvage value is
revised to $12,000 but the estimated useful life is unchanged. assuming straight-line
depreciation, depreciation expense in year 6 would be
a.$9,000
b.$6,375
c.$5,100
d.$7,500
8) suppose you have a winning lottery ticket and you are given the option of accepting
$5,000,000 three years from now or taking the present value of the $5,000,000 now. the
sponsor of the prize uses a 6% discount rate. if you elect to receive the present value of
the prize now, the amount you will receive is
a.$4,198,100
b.$4,319,200
c.$4,450,000
d.$5,000,000
9) at december 31, 2012, the trading securities for mayfair, inc. are as follow
mayfair should report the following amount related to the securities transactions in its
2012 income statement
a.$2,000 gain
b.$10,000 realized loss
c.$10,000 unrealized loss
d.$12,000 unrealized loss
10) a liquidity ratio measures the
a.income or operating success of an enterprise over a period of time
b.ability of the enterprise to survive over a long period of time
c.short-term ability of the enterprise to pay its maturing obligations and to meet
unexpected needs for cash
d.number of times interest is earned
11) financial information is presented below:
the profit margin ratio would be
a..70
b..10
c..30
d..40
12) bonds that mature at a single specified future date are called _________________
bonds, whereas bonds that mature in installments are called __________________
bonds.
13) 1>name at least three advantages of a corporation.
2>corporations acquire treasury stock for a variety of purposes. name three reasons why
a corporation may acquire treasury stock.
14) identify the internal control procedures applicable to cash disbursements followed
by tolan company in each of the following cases.
1> company checks are pre-numbered.
2> only the treasurer is authorized to sign checks.
3> bonding of employees that handle cash.
4> blank checks are stored in a locked safe.
5> the bookkeeper, not the treasurer, records cash disbursements.
15) your office is on the 68th floor of your building. the ceos office is on the 77th floor.
the two of you are waiting for an elevator one morning. the ceo states our prices are
rising and i want the lowest net income for tax purposes and the highest ending
inventory for external reporting purposes. which inventory method should we use?
requirement
you have three minutes to respond to the ceo. what is your response?
16) companies frequently issue both preferred stock and common stock. what are the
major differences in the rights of stockholders between these two classes of stock?
17) describe the accounting information system and the steps in the recording process.
18) holland corporation’s trading portfolio at the end of the year is as follows:
holland subsequently sells common stock b for $17,000. what entry is made to record
the sale?