1) each of the statements appearing below is descriptive of one or more of the following
depreciation methods. in the spaces below, place the letter(s) belonging to the method(s)
to which the statement best applies.
a.declining-balancee.sum-of-the-years’-digits
b.groupf.units of output
c.compositeg.working hours
d.straight-line
1>the depreciation charged by this method decreases by the same amount each year.
2>these methods are used for depreciating multiple-asset accounts.
3>these methods allocate larger shares of the cost of a plant asset to expense during the
years in which the greatest use is made of the asset.
4>these methods always allocate larger shares of the cost of a plant asset to expense
during the earlier years of its life.
5>once the depreciable base, scrap value, and life of a plant asset are determined, the
annual charges to operations under this method will be the same.
2) at december 31, 2013 and 2012, miley corp. had 180,000 shares of common stock
and 10,000 shares of 6%, $100 par value cumulative preferred stock outstanding. no
dividends were declared on either the preferred or common stock in 2013 or 2012. net
income for 2013 was $480,000. for 2013, earnings per common share amounted to
a.$2.67
b.$2.33
c.$2.11
d.$2.00
3) perez company began operations in 2011. since then, it has reported the following
gains and losses for its investments in trading securities on the income statement:
at january 1, 2014, perez owned the following trading securities:
during 2014, the following events occurred:
1>sold 5,000 shares of bkd for $170,000.
2>acquired 1,000 shares of horton common for $40 per share. brokerage commissions
totaled $1,000.
at 12/31/14, the fair values for perez’s trading securities were:
bkd common, $28 per share
lrf preferred, $110 per share
drake bonds, $1,020 per bond
horton common, $45 per share
instructions
(a)prepare a schedule which shows the balance in the fair value adjustment (trading)
account at december 31, 2013 (after the adjusting entry for 2013 is made).
(b)prepare a schedule which shows the aggregate cost and fair values for perez’s trading
securities portfolio at 12/31/14.
(c)prepare the necessary adjusting entry based upon your analysis in (b) above.
4) trade discounts are
a.not recorded in the accounts; rather they are a means of computing a price
b.used to avoid frequent changes in catalogues
c.used to quote different prices for different quantities purchased
d.all of the above
5) stuart corporation’s taxable income differed from its accounting income computed for
this past year. an item that would create a permanent difference in accounting and
taxable incomes for stuart would be
a.a balance in the unearned rent account at year end
b.using accelerated depreciation for tax purposes and straight-line depreciation for book
purposes
c.a fine resulting from violations of osha regulations
d.making installment sales during the year
6) when convertible debt is retired by the issuer, any material difference between the
cash acquisition price and the carrying amount of the debt should be
a.reflected currently in income, but not as an extraordinary item
b.reflected currently in income as an extraordinary item
c.treated as a prior period adjustment
d.treated as an adjustment of additional paid-in capital
7) assume that darcy industries had the following inventory values:
inventory cost (on december 31, 2011) = $1,500
inventory market (on december 31, 2011) = $1,350
inventory net realizable value (on december 31, 2011) = $1,320
inventory market (on june 30, 2012) = $1,560
inventory net realizable value (on june 30, 2012) = $1,570
under ifrs, what is the inventory carrying value on june 30, 2012?
a.$1,500
b.$1,560
c.$1,570
d.$1,320
8) the occurrence that most likely would have no effect on 2012 net income is the
a.sale in 2012 of an office building contributed by a stockholder in 1961
b.collection in 2012 of a dividend from an investment
c.correction of an error in the financial statements of a prior period discovered
subsequent to their issuance
d.stock purchased in 1996 deemed worthless in 2012
9) a correct valuation is
a.available-for-sale at amortized cost
b.held-to-maturity at amortized cost
c.held-to-maturity at fair value
d.none of these
10) which of the following earnings per share figures must be disclosed on the face of
the income statement?
a.eps for income before taxes
b.the effect on eps from unusual items
c.eps for gross profit
d.eps for income from continuing operations
11) given the acquisition cost of product z is $64, the net realizable value for product z
is $58, the normal profit for product z is $5, and the market value (replacement cost) for
product z is $60, what is the proper per unit inventory price for product z?
a.$64
b.$60
c.$53
d.$58
12) remington corporation had accounts receivable of $100,000 at 1/1. the only
transactions affecting accounts receivable were sales of $750,000 and cash collections
of $700,000. the accounts receivable turnover is
a.5.0
b.5.5
c.6.0
d.7.5
13) investments in debt securities are generally recorded at
a.cost including accrued interest
b.maturity value
c.cost including brokerage and other fees
d.maturity value with a separate discount or premium account
14) the following data concerning the retail inventory method are taken from the
financial records of welch company.
if the ending inventory is to be valued at approximately the lower of cost or market, the
calculation of the cost to retail ratio should be based on goods available for sale at (1)
cost and (2) retail, respectively of
a.$558,000 and $820,000
b.$558,000 and $792,000
c.$558,000 and $780,000
d.$546,000 and $780,000