1) note disclosures for long-term debt generally include all of the following except
a.assets pledged as security
b.call provisions and conversion privileges
c.restrictions imposed by the creditor
d.names of specific creditors
2) the assumption that a company will not be sold or liquidated in the near future is
known as the
a.economic entity assumption
b.monetary unit assumption
c.periodicity assumption
d.none of these
3) which of the following is an ingredient of faithful representation?
a.predictive value
b.materiality
c.neutrality
d.confirmatory value
4) cooper construction company had a contract starting april 2013, to construct a
$12,000,000 building that is expected to be completed in september 2015, at an
estimated cost of $11,000,000. at the end of 2013, the costs to date were $5,060,000 and
the estimated total costs to complete had not changed. the progress billings during 2013
were $2,400,000 and the cash collected during 2013 was 1,600,000.
for the year ended december 31, 2013, cooper would recognize gross profit on the
building of:
a.$421,667
b.$460,000
c.$540,000
d.$0
5) harlan mining co. has recently decided to go public and has hired you as an
independent cpa. one statement that the enterprise is anxious to have prepared is a
statement of cash flows. financial statements of harlan mining co. for 2013 and 2012
are provided below.
the following additional data were provided:
1>dividends for the year 2013 were $144,000.
2>during the year, equipment was sold for $180,000. this equipment cost $264,000
originally and had a book value of $216,000 at the time of sale. the loss on sale was
incorrectly charged to cost of sales.
3>all depreciation expense is in the selling expense category.
questions 58 through 62 relate to a statement of cash flows (direct method) for the year
ended december 31, 2013, for harlan mining company.
the net cash provided by operating activities is
a.$306,000
b.$216,000
c.$180,000
d.$150,000
6) norling corporation reports the following information:
norling should report earnings per share of
a.$2.25
b.$2.70
c.$3.30
d.$3.75
7) swift company purchased a machine on january 1, 2010, for $500,000. at the date of
acquisition, the machine had an estimated useful life of six years with no salvage. the
machine is being depreciated on a straight-line basis. on january 1, 2013, swift
determined, as a result of additional information, that the machine had an estimated
useful life of eight years from the date of acquisition with no salvage. an accounting
change was made in 2013 to reflect this additional information.
assume that the direct effects of this change are limited to the effect on depreciation and
the related tax provision, and that the income tax rate was 30% in 2010, 2011, 2012,
and 2013. what should be reported in swift’s income statement for the year ended
december 31, 2013, as the cumulative effect on prior years of changing the estimated
useful life of the machine?
a.$0
b.$33,000
c.$50,000
d.$175,000
8) in 2012, linz corporation reported an extraordinary loss of $1,000,000, net of tax. it
declared and paid preferred stock dividends of $100,000 and common stock dividends
of $300,000. during 2012, linz had a weighted average of 400,000 common shares
outstanding. compute the effect of the extraordinary loss, net of tax, on earnings per
share.
a.$1.50
b.$1.75
c.$2.25
d.$2.50
9) the net cash provided by operating activities in sosa company’s statement of cash
flows for 2013 was $135,000. for 2013, depreciation on plant assets was $45,000,
amortization of patent was $8,000, and cash dividends paid on common stock was
$54,000. based only on the information given above, sosas net income for 2013 was
a.$135,000
b.$82,000
c.$8,000
d.$136,000
10) gibson company paid $6,000 on june 1, 2012 for a two-year insurance policy and
recorded the entire amount as insurance expense. the december 31, 2012 adjusting entry
is
a.debit insurance expense and credit prepaid insurance, $1,750
b.debit insurance expense and credit prepaid insurance, $4,250
c.debit prepaid insurance and credit insurance expense, $1,750
d.debit prepaid insurance and credit insurance expense, $4,250
11) financial statements for kiner company are given below:
kiner company
balance sheet
january 1, 2013
kiner company
balance sheet
january 1, 2013
total assets on the balance sheet at december 31, 2013 are $2,216,000. accumulated
deprecia-tion on the equipment sold was $112,000.
the accounts payable at december 31, 2013 were
a.$88,000
b.$216,000
c.$64,000
d.$296,000