1) Munoz Corp.’s books showed pretax financial income of $2,700,000 for the year
ended December 31, 2015 . In the computation of federal income taxes, the following
data were considered:
Gain on an involuntary conversion$1,170,000
(Munoz has elected to replace the property within the statutory
period using total proceeds.)
Depreciation deducted for tax purposes in excess of depreciation
deducted for book purposes180,000
Federal estimated tax payments, 2015225,000
Enacted federal tax rate, 201530%
What amount should Munoz report as its current federal income tax liability on its
December 31, 2015 balance sheet?
a.$180,000
b.$234,000
c.$405,000
d.$459,000
2) Tram Industries, a company who uses IFRS reporting standards, is installing a new
plant. The company has incurred the following costs
1>Operating losses before commercial production$ 200,000
2>Cost of the plant1,500,000
3>Initial delivery and handling charges300,000
4>Cost of site preparation175,000
Which of these costs can Tram capitalize in accordance with IFRS?
a.1, 2, 3, & 4
b.2 & 4
c.2, 3, & 4
d.1, 2, & 4
3) Alternative methods exist for the measurement of the pension obligation (liability).
Which measure requires the use of future salaries in its computation?
a.Vested benefit obligation
b.Accumulated benefit obligation
c.Projected benefit obligation
d.Restructured benefit obligation
4) Which of the following helps in determining whether a business thrives?
a.Markets
b.Free enterprise
c.Competition
d.All of these answer choices are correct
5) A dividend which is a return to stockholders of a portion of their original investments
is a
a.liquidating dividend
b.property dividend
c.liability dividend
d.participating dividend
6) Which of the following subsequent events (post-balance-sheet events) would require
adjustment of the accounts before issuance of the financial statements?
a.Loss of plant as a result of fire
b.Changes in the quoted market prices of securities held as an investment
c.Loss on an uncollectible account receivable resulting from a customers major flood
loss
d.Loss on a lawsuit, the outcome of which was deemed uncertain at year end
7) Madsen Company reported the following information for 2014:
Sales revenue$1,530,000
Cost of goods sold1,050,000
Operating expenses165,000
Unrealized holding gain on available-for-sale securities90,000
Cash dividends received on the securities6,000
For 2014, Madsen would report other comprehensive income of
a.$321,000
b.$315,000
c.$96,000
d.$90,000
8) Why are inventories included in the computation of net income?
a.To determine cost of goods sold
b.To determine sales revenue
c.To determine merchandise returns
d.Inventories are not included in the computation of net income
9) Present Value ofFuture Value of
Ordinary AnnuityOrdinary Annuity
7 periods5.20648.92280
8 periods5.746610.63663
9 periods6.246912.48756
(8% interest)
What amount should be recorded as the cost of a machine purchased December 31,
2014, which is to be financed by making 8 annual payments of $9,000 each beginning
December 31, 2015? The applicable interest rate is 8%.
a.$63,000
b.$56,222
c.$95,730
d.$51,719
10) Which of the following is not a selling expense?
a.Advertising expense
b.Office salaries expense
c.Freight-out
d.Store supplies consumed
11) What is the relationship between the future value of one and the present value of
one?
a.The present value of one equals the future value of one plus one
b.The present value of one equals one plus future value factor for n-1 periods
c.The present value of one equals one divided by the future value of one
d.The present value of one equals one plus the future value factor for n+1 value