1) most companies pay current liabilities
a.out of current assets
b.by issuing interest-bearing notes payable
c.by issuing stock
d.by creating long-term liabilities
2) pinson company began the year with retained earnings of $550,000. during the year,
the company recorded revenues of $600,000, expenses of $380,000, and paid dividends
of $140,000. what was pinsons retained earnings at the end of the year?
a.$910,000
b.$630,000
c.$1,010,000
d.$480,000
3) an aging of a company’s accounts receivable indicates that $4,000 are estimated to be
uncollectible. if allowance for doubtful accounts has a $1,600 credit balance, the
adjustment to record bad debts for the period will require a
a.debit to bad debts expense for $4,000
b.debit to allowance for doubtful accounts for $2,400
c.debit to bad debts expense for $2,400
d.credit to allowance for doubtful accounts for $4,000
4) when a note is dishonored, the payees entry includes a
a.debit to interest revenue
b.credit to accounts receivable
c.debit to interest expense
d.credit to notes receivable
5) financial information is presented below:
the profit margin ratio would be
a..43
b..20
c..07
d..08
6) debt securities sold to investors that must be repaid at a particular date some years in
the future are called
a.accounts payable
b.notes receivable
c.taxes payable
d.bonds payable
7) consolidated financial statements are useful to all of the following except
a.creditors of subsidiary companies
b.management of the parent company
c.stockholders of the parent company
d.board of directors of the parent company
8)
during 2012, the following stock transactions occurred:
instructions
(a)prepare the journal entries to record the above stock transactions.
(b)prepare the stockholders equity section of the balance sheet for piper corporation at
december 31, 2012. assume that net income for the year was $150,000 and that no
dividends were declared.
9) which of the following is the best definition of sustainable income?
a.sustainable income is a measure of solvency that does not include capital expenditure
b.sustainable income is the same as net income
c.sustainable income is income that is unusual in nature and infrequent in occurrence
d.sustainable income is the most likely level of income to be obtained in the future
10) on july 7, 2014, shireman enterprises received cash $1,400 for services rendered.
the entry to record this transaction will include
a.a debit to service revenue of $1,400.
b.a credit to accounts receivable of $1,400.
c.a debit to cash of $1,400.
d.a credit to accounts payable of $1,400.
11) newell company purchased a machine with a list price of $64,000. they were given
a 10% discount by the manufacturer. they paid $400 for shipping and sales tax of
$3,000. newell estimates that the machine will have a useful life of 10 years and a
residual value of $20,000. if newell uses straight-line depreciation, annual depreciation
will be
a.$4,100
b.$4,072
c.$6,100
d.$3,760
12) mitchell corporation has current assets of $1,200,000 million and current liabilities
of $750,000. if they pay $250,000 of their accounts payable what will their new current
ratio be?
a.1.9:1
b.2.4:1
c.1.27:1
d.1.33:1
13) nice corporation issues 20,000 shares of $100 par value preferred stock for cash at
$110 per share. the entry to record the transaction will consist of a debit to cash for
$2,200,000 and a credit or credits to
a.preferred stock for $2,200,000
b.preferred stock for $2,000,000 and paid-in capital in excess of par valuepreferred
stock for $200,000
c.preferred stock for $2,000,000 and retained earnings for $200,000
d.paid-in capital from preferred stock for $2,200,000
14) grant company has decided to change the estimate of the useful life of an asset that
has been in service for 2 years. which of the following statements describes the proper
way to revise a useful life estimate?
a.revisions in useful life are permitted if approved by the irs
b.retroactive changes must be made to correct previously recorded depreciation
c.only future years will be affected by the revision
d.both current and future years will be affected by the revision
15) when a horizontal analysis is performed and a zero or negative amount is reported
in the base year, then
a.no percentage change can be computed
b.the percent change will be negative
c.the accountant has made a mistake
d.the percentage change will be 100% of greater
16) on january 1, 2012, duvall industries acquired a 15% interest in florida corporation
through the purchase of 12,000 shares of florida corporation common stock for
$320,000. during 2012, florida corp. paid $80,000 in dividends and reported a net loss
of $120,000. duvall is able to exert significant influence on florida. however, duvall
mistakenly records these transactions using the cost method rather than the equity
method of accounting. which of the following would show the correct presentation for
duvall’s investment using the equity method?
17) the lower of cost or market basis of valuing inventories is an example of
a.comparability
b.the cost principle
c.conservatism
d.consistency