1) the balance in retained earnings at december 31, 2012 was $720,000 and at december
31, 2013 was $582,000. net income for 2013 was $500,000. a stock dividend was
declared and distributed which increased common stock $250,000 and paid-in capital
$110,000. a cash dividend was declared and paid.
the stock dividend should be reported on the statement of cash flows (indirect method)
as
a.an outflow from financing activities of $250,000
b.an outflow from financing activities of $360,000
c.an outflow from investing activities of $360,000
d.stock dividends are not shown on a statement of cash flows
2) younger company has outstanding both common stock and nonparticipating,
non-cumulative preferred stock. the liquidation value of the preferred is equal to its par
value. the book value per share of the common stock is unaffected by
a.the declaration of a stock dividend on preferred payable in preferred stock when the
market price of the preferred is equal to its par value
b.the declaration of a stock dividend on common stock payable in common stock when
the market price of the common is equal to its par value
c.the payment of a previously declared cash dividend on the common stock
d.a 2-for-1 split of the common stock
3) the conversion of preferred stock into common requires that any excess of the par
value of the common shares issued over the carrying amount of the preferred being
converted should be
a.reflected currently in income, but not as an extraordinary item
b.reflected currently in income as an extraordinary item
c.treated as a prior period adjustment
d.treated as a direct reduction of retained earnings
4) which of the following is considered research and development costs?
a.planned search or critical investigation aimed at discovery of new knowledge
b.translation of research findings or other knowledge into a plan or design for a new
product or process
c.translation of research findings or other knowledge into a significant improvement of
an existing product
d.all of the above
5) moorman corporation reports the following information:
moorman should report retained earnings, 12/31/12, as adjusted at
a.$2,355,000
b.$3,375,000
c.$4,020,000
d.$4,665,000
6) carr corporation retires its $500,000 face value bonds at 105 on january 1, following
the payment of interest. the carrying value of the bonds at the redemption date is
$518,725. the entry to record the redemption will include a
a.credit of $18,725 to loss on bond redemption
b.debit of $18,725 to premium on bonds payable
c.credit of $6,275 to gain on bond redemption
d.debit of $25,000 to premium on bonds payable
7) risers inc. reported total assets of $3,200,000 and net income of $170,000 for the
current year. risers determined that inventory was understated by $46,000 at the
beginning of the year and $20,000 at the end of the year. what is the corrected amount
for total assets and net income for the year?
a.$3,220,000 and $190,000
b.$3,180,000 and $196,000
c.$3,220,000 and $144,000
d.$3,200,000 and $170,000
8) when computing the amount of interest cost to be capitalized, the concept of
“avoidable interest” refers to
a.the total interest cost actually incurred
b.a cost of capital charge for stockholders’ equity
c.that portion of total interest cost which would not have been incurred if expenditures
for asset construction had not been made
d.that portion of average accumulated expenditures on which no interest cost was
incurred
9) which of the following are not true concerning a conceptual framework in
account-ing?
a.it should be a basis for standard-setting
b.it should allow practical problems to be solved more quickly by reference to it
c.it should be based on fundamental truths that are derived from the laws of nature
d.all of the above (a-c) are true
10) which of the following organizations has been responsible for setting u.s.
accounting standards?
a.accounting principles board
b.committee on accounting procedure
c.financial accounting standards board
d.all of the above
11) at december 31, 2012 the following balances existed on the books of rentro
corporation:
if the bonds are retired on january 1, 2013, at 102, what will rentro report as a loss on
redemption?
a.$250,000
b.$337,500
c.$400,000
d.$460,000
12) which of the following sets of conditions would give rise to the accrual of a
contingency under current generally accepted accounting principles?
a.amount of loss is reasonably estimable and event occurs infrequently
b.amount of loss is reasonably estimable and occurrence of event is probable
c.event is unusual in nature and occurrence of event is probable
d.event is unusual in nature and event occurs infrequently
13) plant assets may properly include
a.deposits on machinery not yet received
b.idle equipment awaiting sale
c.land held for possible use as a future plant site
d.none of these