1) bell inc. took a physical inventory at the end of the year and determined that
$780,000 of goods were on hand. in addition, bell, inc. determined that $60,000 of
goods that were in transit that were shipped f.o.b. shipping point were actually received
two days after the inventory count and that the company had $90,000 of goods out on
consignment. what amount should bell report as inventory at the end of the year?
a.$780,000
b.$840,000
c.$870,000
d.$930,000
2) jane wants to set aside funds to take an around the world cruise in four years.
assuming that jane has $8,000 to invest today in an account expected to earn 6% per
annum, how much will she have to spend on her vacation?
a.$6,336
b.$10,100
c.$34,997
d.$10,706
3) the financial accounting standards board (fasb) was proposed by the
a.american institute of certified public accountants
b.accounting principles board
c.study group on the objectives of financial statements
d.special study group on establishment of accounting principles (wheat committee)
4) debt securities that are accounted for at amortized cost, not fair value, are
a.held-to-maturity debt securities
b.trading debt securities
c.available-for-sale debt securities
d.never-sell debt securities
5) charlie corp. is purchasing new equipment with a cash cost of $200,000 for the
assembly line. the manufacturer has offered to accept $45,920 payments at the end of
each of the next six years. what is the interest rate that charlie corp. will be paying?
a.8%
b.9%
c.10%
d.11%
6) the major elements of the income statement are
a.revenue, cost of goods sold, selling expenses, and general expense
b.operating section, nonoperating section, discontinued operations, extraordinary items,
and cumulative effect
c.revenues, expenses, gains, and losses
d.all of these
7) on december 31, 2010, nolte co. is in financial difficulty and cannot pay a note due
that day. it is a $1,200,000 note with $120,000 accrued interest payable to piper, inc.
piper agrees to accept from nolte equipment that has a fair value of $580,000, an
original cost of $960,000, and accumulated depreciation of $460,000. piper also
forgives the accrued interest, extends the maturity date to december 31, 2013, reduces
the face amount of the note to $500,000, and reduces the interest rate to 6%, with
interest payable at the end of each year.
nolte should recognize a gain or loss on the transfer of the equipment of
a.$0
b.$80,000 gain
c.$120,000 gain
d.$380,000 loss
8) in 2012, esther corporation reported net income of $600,000. it declared and paid
preferred stock dividends of $150,000 and common stock dividends of $60,000. during
2012, esther had a weighted average of 200,000 common shares outstanding. compute
esther’s 2012 earnings per share.
a.$1.95
b.$2.25
c.$3.00
d.$3.75
9) the approach most companies use to provide information related to the components
of other comprehensive income is a
a.second separate income statement
b.combined income statement of comprehensive income
c.separate column in the statement of changes in stockholders equity
d.footnote disclosure
10) olsen company paid or collected during 2012 the following items:
the following balances have been excerpted from olsen’s balance sheets:
the insurance expense on the income statement for 2012 was
a.$15,400
b.$20,200
c.$21,400
d.$26,200
11) which of the following is never classified as an extraordinary item?
a.losses from a major casualty
b.losses from an expropriation of assets
c.gain on a sale of the only security investment a company has ever owned
d.losses from exchange or translation of foreign currencies
12) on december 31, 2012, pacer co. adopted the dollar-value lifo retail inventory
method. inventory data for 2013 are as follows:
under the lifo retail method, pacer’s inventory at december 31, 2013, should be
a.$542,400
b.$577,500
c.$586,500
d$600,150
13) day company purchased a patent on january 1, 2012 for $600,000. the patent had a
remaining useful life of 10 years at that date. in january of 2013, day successfully
defends the patent at a cost of $270,000, extending the patents life to 12/31/24. what
amount of amortization expense would kerr record in 2013?
a.$60,000
b.$67,500
c.$72,500
d.$90,000
14) ellison company’s balance sheet shows:
instructions
record the following transactions by the cost method.
(a)bought 6,000 shares of its common stock at $29 a share.
(b)sold 3,000 treasury shares at $30 a share.
(c)sold 1,500 shares of treasury stock at $26 a share.
15) sutherland company purchased machinery for $640,000 on january 1, 2009.
straight-line depreciation has been recorded based on a $40,000 salvage value and a
5-year useful life. the machinery was sold on may 1, 2013 at a gain of $12,000. how
much cash did sutherland receive from the sale of the machinery?
a.$92,000
b.$108,000
c.$132,000
d.$172,000
16) under the cost-recovery method of revenue recognition,
a.income is recognized on a proportionate basis as the cash is received on the sale of the
product
b.income is recognized when the cash received from the sale of the product is greater
than the cost of the product
c.income is recognized immediately
d.none of these
17) which of the following items should not be included in the cash caption on the
balance sheet?
a.coins and currency in the cash register
b.checks from other parties presently in the cash register
c.amounts on deposit in checking account at the bank
d.postage stamps on hand
18) a reversing entry should never be made for an adjusting entry that
a.accrues unrecorded revenue
b.adjusts expired costs from an asset account to an expense account
c.accrues unrecorded expenses
d.adjusts unexpired costs from an expense account to an asset account
19) hunt co. at the end of 2012, its first year of operations, prepared a reconciliation
between pretax financial income and taxable income as follows:
estimated warranty expense of $800,000 will be deductible in 2013, $300,000 in 2014,
and $100,000 in 2015. the use of the depreciable assets will result in taxable amounts of
$500,000 in each of the next three years.
instructions
(a)prepare a table of future taxable and deductible amounts.
(b)prepare the journal entry to record income tax expense, deferred income taxes, and
income taxes payable for 2012, assuming an income tax rate of 40% for all years.
20) which of the following is false with regard to ifrs and the statement of cash flows?
a.the iasb is strongly in favor of requiring use of the direct method for operating
activities
b.in certain circumstances under ifrs, bank overdrafts are considered part of cash and
cash equivalents
c.ifrs requires that noncash investing and financing activities be excluded from the
statement of cash flows
d.all of the above statements are false with regard to ifrs and the statement of cash flows