1) jim yount, m.d., keeps his accounting records on the cash basis. during 2013, dr.
yount collected $300,000 from his patients. at december 31, 2012, dr. yount had
accounts receivable of $40,000. at december 31, 2013, dr. yount had accounts
receivable of $70,000 and unearned revenue of $10,000. on the accrual basis, how
much was dr. yount’s patient service revenue for 2013?
a.$260,000
b.$320,000
c.$330,000
d.$340,000
2) charging off the cost of a wastebasket with an estimated useful life of 10 years as an
expense of the period when purchased is an example of the application of the
a.consistency characteristic
b.expense recognition principle
c.materiality characteristic
d.historical cost principle
3) rodriguez corporation sells its product, a rare metal, in a controlled market with a
quoted price applicable to all quantities. the total cost of 5,000 pounds of the metal now
held in inventory is $210,000. the total selling price is $490,000, and estimated costs of
disposal are $5,000. at what amount should the inventory of 5,000 pounds be reported
in the balance sheet?
a.$205,000
b.$210,000
c.$485,000
d.$490,000
4) reich, inc. issued bonds with a maturity amount of $200,000 and a maturity ten years
from date of issue. if the bonds were issued at a premium, this indicates that
a.the effective yield or market rate of interest exceeded the stated (nominal) rate
b.the nominal rate of interest exceeded the market rate
c.the market and nominal rates coincided
d.no necessary relationship exists between the two rates
5) when a corporation pays a note payable and interest,
a.the account notes payable will be increased
b.the account interest expense will be decreased
c.they will debit notes payable and interest expense
d.they will debit cash
6) the income statement information would help in which of the following tasks?
a.evaluate the liquidity of a company
b.evaluate the solvency of a company
c.estimate future cash flows
d.estimate future financial flexibility
7) on january 1, 2012, the merchandise inventory of glaus, inc. was $1,000,000. during
2012 glaus purchased $2,000,000 of merchandise and recorded sales of $2,500,000. the
gross profit rate on these sales was 25%. what is the merchandise inventory of glaus at
december 31, 2012?
a.$500,000
b.$625,000
c.$1,125,000
d.$1,875,000
8) a cash over and short account
a.is not generally accepted
b.is debited when the petty cash fund proves out over
c.is debited when the petty cash fund proves out short
d.is a contra account to cash
9) which of the following is the proper way to report a gain contingency?
a.as an accrued amount
b.as deferred revenue
c.as an account receivable with additional disclosure explaining the nature of the
contingency
d.as a disclosure only
10) in a statement of cash flows, interest payments to lenders and other creditors should
be classified as cash outflows for
a.operating activities
b.borrowing activities
c.lending activities
d.financing activities
11) jane wants to set aside funds to take an around the world cruise in four years. jane
expects that she will need $10,000 for her dream vacation. if she is able to earn 8% per
annum on an investment, how much will she have to set aside today so that she will
have sufficient funds available?
a.$2,219
b.$13,604
c.$7,350
d.$6,806
12) foxx corp.’s comparative balance sheet at december 31, 2013 and 2012 reported
accumulated depreciation balances of $850,000 and $600,000, respectively. property
with a cost of $50,000 and a carrying amount of $38,000 was the only property sold in
2013. depreciation charged to operations in 2013 was
a.$238,000.
b.$250,000.
c.$262,000.
d.$212,000.
13) under the cash basis of accounting, revenues are recorded
a.when they are earned and realized
b.when they are earned and realizable
c.when they are earned
d.when they are realized
14) which one of the following types of losses is excluded from the determination of net
income in income statements?
a.material losses resulting from transactions in the company’s investments account
b.material losses resulting from unusual sales of assets not acquired for resale
c.material losses resulting from the write-off of intangibles
d.material losses resulting from correction of errors related to prior periods
15) kinder company purchased a depreciable asset for $280,000. the estimated salvage
value is $14,000, and the estimated useful life is 10,000 hours. kinder used the asset for
1,100 hours in the current year. the activity method will be used for depreciation. what
is the depreciation expense on this asset?
a.$26,600
b.$29,260
c.$30,800
d.$266,000
16) why do companies provide trade discounts?
a.to avoid frequent changes in catalogs
b.to induce prompt payment
c.to easily alter prices for different customers
d.both a. and c
17) when preparing a statement of cash flows, a decrease in accounts receivable during
a period would cause which one of the following adjustments in determining cash flow
from operating activities?
18) which of the following is an appropriate reconciling item to the balance per bank in
a
bank reconciliation?
a.bank service charge
b.deposit in transit
c.bank interest
d.chargeback for nsf check
19) in 2012, mordica co. issued 300,000 of its 500,000 authorized shares of $10 par
value common stock at $35 per share. in january, 2013, mordica repurchased 20,000
shares at $30 per share. assume these are the only stock transactions the company has
ever had.
instructions
(a)what are the two methods of accounting for treasury stock?
(b)prepare the journal entry to record the purchase of treasury stock by the cost method.
(c)7,000 shares of treasury stock are reissued at $33 per share. prepare the journal entry
to record the reissuance by the cost method.