Finnegan Company plans to invest in a new operating plant that is expected to cost
$500,000. The projected incremental income from the investment is as follows:
The unadjusted rate of return on the initial investment would be approximately:
A.8.0%.
B.6.0%.
C.16.7%.
D.48.0%.
Benton Corporation acquired real estate that contained land, building and equipment.
The property cost Benton $825,000. Benton paid $175,000 in cash and issued a Note
Payable for the remainder of the cost. An appraisal of the property reported the
following values: Land, $85,000; Building, $625,000; and Equipment, $250,000.
What value will be recorded for the building?
A.$113,932
B.$406,901
C.$537,109
D.$625,000
The review of a capital budgeting decision to determine whether a project was accepted
that should have been rejected is referred to as:
A.an audit.
B.a preaudit.
C.a postaudit.
D.a capital review.
What are free assets?
A.assets for which net realizable value is greater than historical cost.
B.assets for which no market exists.
C.assets for which replacement cost is greater than historical cost.
D.assets available to be distributed for liabilities with priority and for other unsecured
obligations.
E.assets available to be distributed to stockholders.
Which one of the following registration statement forms is used by large issuers that
already have at least $75 million voting stock held by non-affiliates?
A.S-11.
B.S-3.
C.S-8.
D.S-4.
E.S-1.
What international organization currently promulgates IFRS?
A.IASB.
B.IASC.
C.IOSCO.
D.FASB.
E.EU.
Which method of evaluating capital investment decisions uses the concept of present
value to compute a rate of return?
A.Internal rate of return
B.Unadjusted rate of return
C.Net present value
D.Payback
The following information pertains to inventory held by a company at December 31,
2013.
What amount of inventory should be reported under IFRS?
A.$25,000
B.$21,000
C.$20,000
D.$4,000
E.$5,000
Fill in the blanks indicated by the alphabetic letters in the following financial
statements. These financial statements were prepared for the company’s first year in
operation, and all transactions were for cash.
How has the SEC exercised its power with regard to the continuing evolution of
accounting principles?
1) Issuing Financial Reporting Releases (FRRs).
2) Requiring additional disclosures in notes to financial statements.
3) Declaring a moratorium on the use of specified accounting practices.
4) Overruling the FASB.
A.1 and 4
B.1, 3, and 4
C.1 and 3
D.1, 2, and 4
E.1, 2, 3, and 4
The following balance sheet information is provided for Greene Company for 2014:
What is the company’s quick (acid-test) ratio?
A.0.7
B.1.4
C.1.3
D.3.8
Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments
of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed
to (1) interest of 10% of the beginning capital balance each year, (2) annual
compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss
in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was
$150,000 in 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use
every month during 2012 and 2013.
What was Cleary’s capital account balance at the end of 2013?
A.$163,420.
B.$151,420.
C.$139,420.
D.$100,000.
E.$142,000.
A company that was to be liquidated had the following liabilities:
Assets available for unsecured creditors after payments of liabilities with priority are
calculated to be what amount?
A.$226,000.
B.$247,050.
C.$251,000.
D.$251,275.
E.$275,000.
When must Form 8-K be filed with the SEC?
A.within forty-five days of the end of any quarter other than the fourth quarter of the
fiscal year.
B.within ninety days of the end of the fiscal year.
C.within fifteen days of the occurrence of certain significant events.
D.within sixty days of the end of the fiscal year.
E.when a relatively small company intends to issue securities.
As of December 31, 2013, Gant Corporation had a current ratio of 1.29, quick ratio of
1.05, and working capital of $18,000. The company uses a perpetual inventory system
and sells merchandise for more than it cost. On January 1, 2014, Gant purchased
merchandise on account for $4,000. Which of the following statements is true?
A.Gant’s current ratio will decrease.
B.Gant’s quick ratio will increase.
C.Gant’s working capital will increase.
D.Gant’s quick ratio will increase and its current ratio will decrease.
Rosemont Company began operations on January 1, 2013, and on that date issued stock
for $60,000 cash. In addition, Rosemont borrowed $50,000 cash from the local bank.
The company provided services to its customers during 2013 and received $35,000. It
purchased land for $70,000. During the year, it paid $10,000 cash for salaries and
$9,000 cash for supplies that were used up in its operations. Stockholders were paid
cash dividends of $8,000 during the year.
Required:
a) List the transactions from the information above (for example, issued common stock
for $60,000) and indicate in which section of the statement of cash flows each
transaction would be reported.
b) What would the amount be for net cash flows from operating activities?
c) What would be the amount of the total assets for the Rosemont Company at the end
of 2013?
d) What would the end-of-year balance be for the retained earnings account?
e) What would the end-of-year balance be for the cash account?
During which of the following activities, value is considered to be added to a product or
service takes place?
A.Process time
B.Move time
C.Inspection time
D.Rework time