1) the following totals for the month of april were taken from the payroll register of
metz company.
the journal entry to record the monthly payroll on april 30 would include a
a.debit to salaries and wages expense for $20,000
b.credit to salaries and wages payable for $20,000
c.debit to salaries and wages payable for $20,000
d.debit to salaries and wages expense for $13,267
2) a $600,000 bond was retired at 98 when the carrying value of the bond was
$592,000. the entry to record the retirement would include a
a.gain on bond redemption of $8,000
b.loss on bond redemption of $4,000
c.loss on bond redemption of $8,000
d.gain on bond redemption of $4,000
3) racer corporations december 31, 2012 balance sheet showed the following:
racers total stockholders equity was
a.$55,140,000
b.$46,860,000
c.$54,510,000
d.$53,880,000
4) the depreciation method that applies a constant percentage to depreciable cost in
calculating depreciation is
a.straight-line
b.units-of-activity
c.sum-of-years-digits
d.none of these
5) on october 1, 2012, hess company places a new asset into service. the cost of the
asset is $60,000 with an estimated 5-year life and $15,000 salvage value at the end of
its useful life. what is the book value of the plant asset on the december 31, 2012,
balance sheet assuming that hess company uses the double-declining-balance method of
depreciation?
a.$39,000
b.$45,000
c.$54,000
d.$57,000
6) dobler company purchased factory equipment with an invoice price of $75,000. other
costs incurred were freight costs, $1,300; installation wiring and foundation, $2,200;
material and labor costs in testing equipment, $700; oil lubricants and supplies to be
used with equipment, $500; fire insurance policy covering equipment, $1,500. the
equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful
service life.
instructions
(a)compute the acquisition cost of the equipment. clearly identify each element of cost.
(b)if the straight-line method of depreciation was used, the annual rate applied to the
depreciable cost would be __________.
7) under which of the following cases may a percentage change be computed?
a.the trend of the amounts is decreasing but all amounts are positive
b.there is no amount in the base year
c.there is a negative amount in the base year and a negative amount in the subsequent
year
d.there is a negative amount in the base year and a positive amount in the subsequent
year
8) which of the following is not considered a measure of liquidity?
a.current ratio
b.working capital
c.debt to total assets ratio
d.each of the above are liquidity measures
9) over the term of the bonds, the balance in the discount on bonds payable account will
a.fluctuate up and down if the market is volatile
b.decrease
c.increase
d.be unaffected until the bonds mature
10) a common measure of long-term solvency is
a.the cash debt coverage ratio
b.the current ratio
c.the asset turnover ratio
d.inventory turnover
11) the following information is available for finley company:
the inventory turnover ratio for 2012 is
a.4.3 times
b.4.0 times
c.2.0 times
d.2.4 times
12) a bond with a face value of $200,000 and a quoted price of 97 has a selling price of
a.$194,500
b.$194,050
c.$194,004
d.$195,000
13) short-term creditors are usually most interested in assessing
a.solvency
b.liquidity
c.marketability
d.profitability
14) when the effective-interest method of amortization is used for a bond premium, the
amount of interest expense for an interest period is calculated multiplying the
a.face value of the bonds at the beginning of the period by the contractual interest rate
b.face value of the bonds at the beginning of the period by the effective interest rate
c.carrying value of the bonds at the beginning of the period by the contractual interest
rate
d.carrying value of the bonds at the beginning of the period by the effective interest rate
15) the following totals for the month of april were taken from the payroll register of
noll company.
the journal entry to record the monthly payroll on april 30 would include a
a.debit to salaries and wages expense for $48,000
b.credit to salaries and wages payable for $48,000
c.debit to salaries and wages payable for $48,000
d.debit to salaries and wages expense for $34,000
16) the following totals for the month of march were taken from the payroll register of
kern company.
the journal entry to record the monthly payroll on march 30 would include a
a.debit to salaries and wages payable for $23,238
b.credit to salaries and wages payable for $25,326
c.debit to salaries and wages expense for $36,000
d.debit to salaries and wages expense for $23,238
17) the revenue recognition principle and the expense recognition principle are helpful
guides used in determining net income or net loss for a period.
18) expenses paid and recorded in an asset account before they are used or consumed
are called _______________. revenue received and recorded as a liability before it is
earned is referred to as _________________.
19) a new sales representative, eddy wherli, has just received his copy of the month-end
financial reports. he is puzzled by the term “unearned revenue.” he left the following
e-mail message for you on the company’s bulletin board system:
what is this??? creative accounting, or what??? line item 12 on year-to-date financials
shows over $25gs in unearned revenue!!! come on, guys! either we earned it, or we
didn’t . . . right??! is this how you guys lower our commissions? reply to e.wherli@sbd
20) expense recognition is tied to revenue recognition.
21) the cash basis of accounting is not in accordance with ifrs.
22) morrow corporation purchased 1,000 shares of kent common stock at $70 per share
plus $3,000 brokerage fees as a short-term investment. the shares were subsequently
sold at $80 per share less $3,400 brokerage fees. the cost of the securities purchased and
gain or loss on the sale were
23) an overall measure of profitability is the ______________________ ratio.
24) under the cost method, dividends received from an investee company are credited to
the _______________ account, whereas under the equity method, dividends received
from an investee company are credited to the _______________ account.