1) underwood company maintains its accounting records using ifrs. the company
recently signed a lease for a new office building, for a lease period of 10 years. under
the lease agreement, a security deposit of $20,000 is made, with the deposit to be
returned at the expiration of the lease, with interest compounded at 10% per year. what
amount will the company receive at the time the lease expires?
a.$51,875
b.$40,000
c.$122,892
d.$27,711
2) what does the current ratio inform you about a company?
a.the extent of slow-moving inventories
b.the efficient use of assets
c.the company’s liquidity
d.the company’s profitability
3) given the historical cost of product dominoe is $43, the selling price of product
dominoe is $60, costs to sell product dominoe are $11, the replacement cost for product
dominoe is $40, and the normal profit margin is 20% of sales price, what is the amount
that should be used to value the inventory under the lower-of-cost-or-market method?
a.$43
b.$37
c.$40
d.$49
4) with respect to accounting for inventories, which of the following is a difference that
exists for ifrs, as opposed to u.s. gaap?
a.there is required recognition of certain development costs
b.the fifo method of inventories is prohibited
c.the specific identification method of inventories is only allowed when goods are
interchangeable
d.the weighted average method of inventories is prohibited
5) which of the following is not an acceptable major asset classification?
a.current assets
b.long-term investments
c.property, plant, and equipment
d.deferred charges
6) the balance sheet contributes to financial reporting by providing a basis for all of the
following except
a.computing rates of return
b.evaluating the capital structure of the enterprise
c.determining the increase in cash due to operations
d.assessing the liquidity and financial flexibility of the enterprise
7) when a plant asset is disposed of, a gain or loss may result. the gain or loss would be
classified as an extraordinary item on the income statement if it resulted from
a.an involuntary conversion and the conditions of the disposition are unusual and
infrequent in nature
b.a sale prior to the completion of the estimated useful life of the asset
c.the sale of a fully depreciated asset
d.an abandonment of the asset
8) during 2013, oldham corporation, which uses the allowance method of accounting
for doubtful accounts, recorded a provision for bad debt expense of $30,000 and in
addition it wrote off, as uncollectible, accounts receivable of $10,000. as a result of
these transactions, net cash flows from operating activities would be calculated (indirect
method) by adjusting net income with a
a.$30,000 increase
b.$10,000 increase
c.$20,000 increase
d.$20,000 decrease
9) on january 1, 2012, haley co. issued ten-year bonds with a face amount of
$3,000,000 and a stated interest rate of 8% payable annually on january 1. the bonds
were priced to yield 10%. present value factors are as follows:
the total issue price of the bonds was
a.$3,000,000
b.$2,940,000
c.$2,760,000
d.$2,632,800
10)
11) link co. purchased machinery that cost $1,350,000 on january 4, 2011. the entire
cost was recorded as an expense. the machinery has a nine-year life and a $90,000
residual value. the error was discovered on december 20, 2013. ignore income tax
considerations.
link’s income statement for the year ended december 31, 2013, should show the
cumulative effect of this error in the amount of
a.$1,210,000
b.$1,070,000
c.$930,000
d.$0
12) which of the following is not acceptable treatment for the presentation of current
liabilities?
a.listing current liabilities in order of maturity
b.listing current liabilities according to amount
c.offsetting current liabilities against assets that are to be applied to their liquidation
d.showing current liabilities immediately below current assets to obtain a presentation
of working capital
13) holcomb corpsssoration owns machinery with a book value of $285,000. it is
estimated that the machinery will generate future cash flows of $300,000. the
machinery has a fair value of $210,000. holcomb should recognize a loss on impairment
of
a.$ -0-
b.$15,000
c.$75,000
d.$90,000