1) the recording process becomes more efficient and informative if all transactions are
recorded in one account.
2) an investment is readily marketable if it is management’s intent to sell the
investment.
3) if a building is offered for sale at $100,000 and the buyer pays $95,000 cash for it,
the buyer would record the building at $100,000.
4) raw materials inventories are the goods that a manufacturing company has completed
and are ready to be sold to customers.
5) a petty cash fund is used to pay relatively large amounts.
6) the responsibility for keeping the records for an asset should be separate from the
physical custody of that asset.
7) the book value of a plant asset is always equal to its fair market value.
8) a company would be expected to generate small amounts of cash from operations
during the
a.introductory phase
b.growth phase
c.maturity phase
d.decline phase
9) assume the following sales data for a company:
if 2011 is the base year, what is the percentage increase in sales from 2011 to 2012?
a.45%
b.30%
c.130%
d.145%
10) kaufman corporation’s balance sheet at december 31, 2011, showed the following:
short-term investments, at fair value$46,500
kaufman corporation’s trading portfolio of stock investments consisted of the following
at december 31, 2011:
during 2012, the following transactions took place:
at year end on december 31, 2012, the fair values per share were:
instructions
(a)prepare the journal entries to record the 2012 stock transactions.
(b)on december 31, 2012, prepare any adjusting entry that might be necessary relative
to the trading portfolio.
(c)show how the stock investments will appear on kaufman corporation’s balance sheet
at december 31, 2012.
11) all of the following statements are true regarding the lifo reserve except:
a.companies using lifo are required to report the lifo reserve
b.the equation (lifo inventory lifo reserve = fifo inventory) adjusts the inventory balance
from lifo to fifo
c.the financial statement differences of using lifo normally increase the longer a
company uses lifo
d.current ratios and the inventory turnover ratio can be significantly affected if a
company has material lifo reserves
12) which financial statement is prepared first?
a.balance sheet
b.income statement
c.retained earnings statement
d.statement of cash flows
13) warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest
dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest
method of amortization is to be used. how much bond interest expense (to the nearest
dollar) should be reported on the income statement for the end of the first year?
a.$110,844
b.$110,554
c.$110,262
d.$96,000
14) an expense
a.decreases assets and liabilities.
b.decreases stockholders equity.
c.leaves stockholders equity unchanged.
d.is basically the same as a liability.
15) on july 1, 2012, linden company purchased the copyright to norman computer
tutorials for $160,000. it is estimated that the copyright will have a useful life of 5
years. the amount of amortization expense recognized for the year 2012 would be
a.$32,000
b.$15,000
c.$29,600
d.$16,000
16) match the statements below with the appropriate terms by entering the appropriate
letter code in the spaces provided.
terms:
a.prepaid expenses
b.unearned revenues
c.accrued revenues
d.accrued expenses
statements:
1>a revenue not yet earned; collected in advance.
2>an expense incurred; not yet paid or recorded.
3>a revenue earned; not yet collected or recorded.
4>an expense not yet incurred; paid in advance.
17) fisher co. purchased 50, 6% hannigan company bonds for $50,000 cash plus
brokerage fees of $500. interest is payable semiannually on july 1 and january 1. the
entry to record the july 1 semiannual interest payment would include a
a.debit to interest receivable for $1,500
b.credit to interest revenue for $1,500
c.credit to interest revenue for $1,515
d.credit to debt investments for $1,515
18) the periodicity assumption states that the economic life of a business can be divided
into
a.equal time periods
b.cyclical time periods
c.artificial time periods
d.perpetual time periods
19) quark inc. just began business and made the following four inventory purchases in
june:
a physical count of merchandise inventory on june 30 reveals that there are 250 units on
hand. using the fifo inventory method, the amount allocated to ending inventory for
june is
a.$1,385
b.$1,425
c.$1,455
d.$1,475
20) the figure for which of the following items is determined at a different time under
the perpetual inventory method than under the periodic method?
a.sales revenue
b.cost of goods sold
c.purchases
d.accounts receivable
21) harden corporation engaged in the following transaction. assume that the harden
corporation uses the indirect method to depict cash flows. indicate where, if at all,
income taxes paid would be classified on the statement of cash flows.
a.operating activities section
b.investing activities section
c.financing activities section
d.does not represent a cash flow
22) (a)bazil company purchased merchandise on account from office suppliers for
$56,000, with terms of 2/10, n/30. during the discount period, bazil returned some
merchandise and paid $53,900 as payment in full. bazil uses a perpetual inventory
system. prepare the journal entries that bazil company made to record the:
(1)purchase of merchandise.
(2)return of merchandise.
(3)payment on account.
(b)weaver company sold merchandise to moore company on account for $84,000 with
credit terms of ?/10, n/30. the cost of the merchandise sold was $63,000. during the
discount period, moore company returned $4,000 of merchandise and paid its account
in full (minus the discount) by remitting $79,200 in cash. both companies use a
perpetual inventory system. prepare the journal entries that weaver company made to
record the:
(1)sale of merchandise.
(2)return of merchandise.
(3)collection on account.
23) dole industries had the following inventory transactions occur during 2012:
the company sold 153 units at $126 each and has a tax rate of 30%. assuming that a
periodic inventory system is used, what is the companys gross profit using fifo?
(rounded to whole dollars)
a.$14,646
b.$14,190
c.$5,088
d.$4,632
24) a sales invoice is prepared when goods
a.are sold for cash
b.are sold on credit
c.sold on credit are returned
d.are sold on credit or for cash
25) jason hansen has invested $600,000 in a privately held family corporation. the
corporation does not do well and must declare bankruptcy. what amount does hansen
stand to lose?
a.up to his total investment of $600,000
b.zero
c.the $600,000 plus any personal assets the creditors demand
d.$400,000
26) which of the following is the most appropriate and modern definition of
accounting?
a.the information system that identifies, records, and communicates the economic
events of an organization to interested users
b.a means of collecting information
c.the interconnected network of subsystems necessary to operate a business
d.electronic collection, organization, and communication of vast amounts of
information.
27) the principal purpose of posting is to
a.help identify errors made in the journal.
b.accumulate the effects of journalized transactions in the individual accounts.
c.enter transactions directly into the ledger.
d.help determine if the financial statements are ready to be prepared.
28) the constraint of _______________ refers to items in financial statements that are
likely to influence the decision of a reasonably prudent investor or creditor.
29) daniel elston owns a garage and is contemplating purchasing a tire retreading
machine for $18,150. after estimating costs and revenues, daniel projects a net cash
flow from the retreading machine of $3,300 annually for 8 years. daniel hopes to earn a
return of 10 percent on such investments. what is the present value of the retreading
operation? should daniel purchase the retreading machine?
30) jenkins company dishonors a note at maturity. what are the options available to the
lender?
31) the following information is available for colaw corporation for the year ended
december 31, 2012.
instructions
prepare a statement of cash flows using the indirect method.
32) the post closing trial balance will have fewer accounts than the adjusted trial
balance.
33) discontinued operations refers to the disposal of a __________________ of a
business.
34) in accounting, ____________ results when different companies use the same
accounting principles.
35) the act of entering an amount on the left side of an account is called
_______________ the account, and making an entry on the right side is called
_________________ the account.
36) this information relates to connor co. for the year 2012.
instructions
after analyzing the data, prepare an income statement and a retained earnings statement
for the year ending december 31, 2012.
