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1) when the average cost method is applied in a perpetual inventory system, the sale of
goods will change the unit cost that remains in inventory.
2) transactions are recorded in alphabetical order in a journal.
3) under the double-declining-balance method, the depreciation rate used each year
remains constant.
4) the petty cash fund eliminates the need for a bank checking account.
5) the fifo reserve is a required disclosure for companies that use fifo.
6) if the market rate of interest at the date of issuance of a bond is greater than the stated
interest rate, the bond will be issued at a premium.
7) under the periodic inventory system, acquisitions of merchandise are not recorded in
the inventory account.
8) cash equivalents include money market accounts, commercial paper, and u.s. treasury
bills held for ninety days or less.
9) liquidity ratios measure the ability of the enterprise to survive over a long period of
time.
10) if the straight-line method of amortization is used, the amount of yearly interest
expense will increase as the bonds approach maturity.
11) analysts are interested in sustainable income, which is equal to the past years net
income.
12) in a trial balance, all debits are listed before all credits.
13) hilton company reported net income of $90,000 for the year. during the year,
accounts receivable increased by $21,000, accounts payable decreased by $9,000 and
depreciation expense of $15,000 was recorded. net cash provided by operating activities
for the year is
a.$75,000
b.$135,000
c.$87,000
d.$90,000
14) if a loss of $20,000 is incurred in selling (for cash) office equipment having a book
value of $80,000, the total amount reported in the cash flows from investing activities
section of the statement of cash flows is
a.$60,000
b.$80,000
c.$100,000
d.$20,000
15) under ifrs, income statement items are generally described as
a.administration, distribution, manufacturing, etc
b.salaries, depreciation, utilities, etc
c.administration, depreciation, manufacturing, etc
d.salaries, distribution, utilities, etc
16) masterfalls corporation purchased a one-year insurance policy in january 2010 for
$60,000. the insurance policy is in effect from march 2010 through february 2011. if the
company neglects to make the proper year-end adjustment for the expired insurance:
a.net income and assets will be understated by $50,000
b.net income and assets will be overstated by $50,000
c.net income and assets will be understated by $10,000
d.net income and assets will be overstated by $10,000
17) kingston company has these data at december 31, 2012:
the available-for-sale securities are held as a long-term investment.
instructions
(a)prepare the adjusting entries to report each class of securities at fair value.
(b)indicate the statement presentation of each class of securities and the related
unrealized gain (loss) accounts.
18) which one of the following questions is most likely asked by an internal human
resources director for the company?
a.which product line is most profitable?
b.what price for our product will maximize the company income?
c.what average pay raise is affordable for employees this year?
d.should any product lines be eliminated?
19) the statement of cash flows begins with cash flows from
a.financing activities
b.investing activities
c.operating activities
d.solvent activities
20) foley company issued $400,000 of 6%, 5-year bonds at 98, which pays interest
annually. assuming straight-line amortization, what is the total interest cost of the
bonds?
a.$120,000
b.$128,000
c.$112,000
d.$116,000
21) goods held on consignment are
a.never owned by the consignee
b.included in the consignees ending inventory
c.kept for sale on the premises of the consignor
d.included as part of no ones ending inventory
22) nicholson company purchased equipment on january 1, 2010, for 20,000 with an
estimated residual value of 5,000 and estimated useful life of 8 years. on january 1,
2012, nicholson decided the equipment will last 12 years from the date of purchase. the
residual value is still estimated at 5,000. using the straight-line method the new annual
depreciation will be:
a.1,125
b.1,250
c.1,500
d.1,667
23) on a classified balance sheet, marketable securities are classified as
a.an intangible asset
b.property, plant, and equipment
c.a current asset
d.a long-term investment
24) the ledger accounts are typically arranged in
a.chronological order.
b.alphabetical order.
c.financial statement order.
d.order of appearance in the journal.
25) common stock dividends distributable is classified as a(n)
a.asset account
b.stockholders equity account
c.expense account
d.liability account
26) anderson corporation issues an 8%, 9-year mortgage note on january 1 2012, to
obtain financing for new equipment. the terms provide for semiannual installment
payments of $65,800. the following values related to the time value of money were
available to anderson to help them with their planning process and compounded interest
decisions.
to the closest dollar, what were the cash proceeds received from the issuance of the
note?
a.$411,046
b.$473,760
c.$832,982
d.$821,682
27) if one company owns more than 50% of the common stock of another company
a.the cost method should be used to account for the investment
b.a partnership exists
c.a parent-subsidiary relationship exists
d.the company whose stock is owned must be liquidated
28) the _____________ is a required disclosure for companies that use lifo.
29) prepare a trial balance from the ledger accounts of swisher company as of january
31, 2014 .
30) on january 1, 2012, the borth company purchased at face value, a $1,000, 6%, bond
that pays interest on january 1 and july 1. borth company has a calendar year end. the
entry for the receipt of interest on january 1, 2013 is
31) the earnings per share value is calculated by dividing net income preferred stock
dividends by _______________ ______________ ______________.
32) one thousand bonds with a face value of $1,000 each, are sold at 97. the entry to
record the issuance is
33) cost of goods sold is deducted from net sales revenue for the period in order to
arrive at ________________.
