1) types of franchising arrangements include all of the following except
a.service sponsor-retailer
b.wholesaler-service sponsor
c.manufacturer-wholesaler
d.wholesaler-retailer
2) if kiner uses the completed-contract method, the gross profit to be recognized in
2013 is
a.$2,040,000
b.$4,200,000
c.$2,100,000
d.$8,400,000
3) preparing the statement of cash flows involves all of the following except
determining the
a.cash provided by operations
b.cash provided by or used in investing and financing activities
c.change in cash during the period
d.cash collections from customers during the period
4) which of the following are benefits of providing financial information?
a.potential litigation
b.auditing
c.disclosure to competition
d.improved allocation of resources
5) in matters of doubt and great uncertainty, accounting issues should be resolved by
choosing the alternative that has the least favorable effect on net income, assets, and
owners’ equity. this guidance comes from
a.the cost constraint
b.the industry practices constraint
c.prudence or conservatism
d.the full disclosure principle
6) vopat, inc., is a retail store operating in a state with a 5% retail sales tax. the state law
provides that the retail sales tax collected during the month must be remitted to the state
during the following month. if the amount collected is remitted to the state on or before
the twentieth of the following month, the retailer may keep 3% of the sales tax
collected. on april 10, 2012, vopat remitted $135,800 tax to the state tax division for
march 2012 retail sales. what was vopat ‘s march 2012 retail sales subject to sales tax?
a.$2,716,000
b.$2,660,000
c.$2,800,000
d.$2,741,667
7) at the beginning of 2012; elephant, inc. had a deferred tax asset of $8,000 and a
deferred tax liability of $12,000. pre-tax accounting income for 2012 was $600,000 and
the enacted tax rate is 40%. the following items are included in elephants pre-tax
income:
what is elephant, inc.s taxable income for 2012?
a.$600,000
b.$504,000
c.$696,000
d.$904,000
8) garcia corporation received cash of $24,000 on august 1, 2012 for one year’s rent in
advance and recorded the transaction with a credit to rent revenue. the december 31,
2012 adjusting entry is
a.debit rent revenue and credit unearned rent revenue, $10,000
b.debit rent revenue and credit unearned rent revenue, $14,000
c.debit unearned rent revenue and credit rent revenue, $10,000
d.debit cash and credit unearned rent revenue, $14,000
9) on january 1, 2012, ellison co. issued eight-year bonds with a face value of
$2,000,000 and a stated interest rate of 6%, payable semiannually on june 30 and
december 31. the bonds were sold to yield 8%. table values are:
the present value of the principal is
a.$1,068,000
b.$1,080,000
c.$1,246,000
d.$1,254,000
10) gross corporation adopted the dollar-value lifo method of inventory valuation on
december 31, 2011. its inventory at that date was $440,000 and the relevant price index
was 100. information regarding inventory for subsequent years is as follows:
what is the cost of the ending inventory at december 31, 2013 under dollar-value lifo?
a.$464,000
b.$462,800
c.$465,680
d.$480,000
11) chang corporation issued $6,000,000 of 9%, ten-year convertible bonds on july 1,
2012 at 96.1 plus accrued interest. the bonds were dated april 1, 2010 with interest
payable april 1 and october 1. bond discount is amortized semiannually on a
straight-line basis. on april 1, 2013, $1,200,000 of these bonds were converted into 500
shares of $20 par value common stock. accrued interest was paid in cash at the time of
conversion.
if “interest payable” were credited when the bonds were issued, what should be the
amount of the debit to “interest expense” on october 1, 2012?
a.$129,000
b.$135,200
c.$141,000
d.$270,000
12) an organization that has not published accounting standards is the
a.american institute of certified public accountants
b.securities and exchange commission
c.financial accounting standards board
d.all of these have published accounting standards
13) checkers uses the periodic inventory system. for the current month, the beginning
inventory consisted of 2,400 units that cost $12 each. during the month, the company
made two purchases: 1,000 units at $13 each and 4,000 units at $13.50 each. checkers
also sold 4,300 units during the month. using the average cost method, what is the
amount of cost of goods sold for the month?
a.$55,685
b.$57,900
c.$53,950
d.$55,900
14) instrument corp. has the following investments which were held throughout
20122013:
what amount of gain or loss would instrument corp. report in its income statement for
the year ended december 31, 2013 related to its investments?
a.$30,000 gain
b.$30,000 loss
c.$210,000 gain
d.$120,000 gain
15) equestrain roads sold $80,000 of goods and accepted the customer’s $80,000 10%
1-year note payable in exchange. assuming 10% approximates the market rate of return,
how much interest would be recorded for the year ending december 31 if the sale was
made on june 30?
a.$0
b.$2,000
c.$4,000
d.$8,000
16) the rate of return on common stock equity is calculated by dividing
a.net income less preferred dividends by average common stockholders equity
b.net income by average common stockholders equity
c.net income less preferred dividends by ending common stockholders equity
d.net income by ending common stockholders equity
17) alonzo co. acquires 3 patents from shaq corp. for a total of $300,000. the patents
were carried on shaqs books as follows: patent aa: $5,000; patent bb: $2,000; and patent
cc: $3,000. when alonzo acquired the patents their fair values were: patent aa: $20,000;
patent bb: $240,000; and patent cc: $60,000. at what amount should alonzo record
patent bb?
a.$100,000
b.$200,000
c. $2,000
d.$225,000
18) neutrality is an ingredient of which fundamental quality of information?
a.faithful representation
b.comparability
c.relevance
d.understandability
19) ortiz co. had the following account balances:
sales revenue$ 180,000
cost of goods sold90,000
salaries and wages expense15,000
depreciation expense30,000
dividend revenue6,000
utilities expense12,000
rent revenue30,000
interest expense18,000
sales returns and allow.16,500
advertising expense19,500
what would ortiz report as total expenses in a single-step income statement?
a.$190,500
b.$201,000
c.$184,500
d.$ 94,500