1) A ten-year lease obligation appears on the balance sheet of Generic Products
Company. How would it most likely be classified on the balance sheet?
A.Current asset
B.Long-term liability
C.Long-term asset
D.Contra-liability
2) Quan uses a periodic inventory system. At the end of April, Quan had 20 units on
hand.
If Quan, Inc. uses the weighted average cost inventory method, how much is cost of
goods sold for April?
A.$230
B.$232
C.$240
D.$250
3) Which of the following is an account in stockholders’ equity?
A.Dividends Payable
B.Loss on Sale of Equipment
C.Retained Earnings
D.Net income
4) Parachute Country Club
Use the selected accounts for Parachute Country Club presented below to answer the
following question(s).
Read the information about Parachute Country Club.
Which of the following describes the transaction which occurred on August 7?
A.Sold club memberships on credit
B.Cash sales of daily fees
C.Collected an advance deposit in cash
D.Received cash payments of accounts receivable
5) Battery Corp. purchased equipment with a cost of $70,000 at the beginning of 2013.
The equipment has an estimated life of 25 years or 25,000 units of product. The
estimated residual value is $7,500. During 2013, 1,100 units of product were produced
with this machinery. Determine the following:
A. Amount of total accumulated depreciation at December 31, 2013, using
units-of-production depreciation
B. Book value at the end of 2013 using straight-line depreciation
C. Why would the company choose units-of-production depreciation instead of
straight-line?
6) Discount on Bonds Payable is a balance sheet item for Generic Products Company.
How would it most likely be classified on the balance sheet?
A.Current liability
B.Long-term liability
C.Current asset
D.Contra-liability
7) Blanton Company bought equipment on January 1, 2012 with a cost of $160,000, an
estimated residual value of $40,000, and an estimated life of 15 years was depreciated
by the straight-line method for 4 years. Due to obsolescence, it was determined at the
beginning of 2014 that the useful life should be shortened by 3 years and the residual
value changed to zero. What is the accumulated depreciation at the end of 2015?
A.$42,667
B.$32,000
C.$40,000
D.$8,000
8) The primary purpose of the statement of cash flows is to provide information about
A.the financial position of the company
B.the profitability of the company
C.the investing and financing activities of the company
D.the cash inflows and outflows of the company
9) Which of the following is reported as a financing activity?
A.Payment of cash dividends
B.Declaration of cash dividends
C.Stock dividend
D.Stock split
10) On July 1, 2014, Falcon Company received a $20,000 promissory note from Jordyn
Company. The annual interest rate is 5%. Principal and interest are paid in cash at the
maturity date of June 30, 2015.
If Falcons fiscal year ends September 30, 2014, an adjusting entry is needed to:
A.Increase interest revenue by $1,000
B.Increase notes receivable by $250
C.Increase interest receivable by $250
D.Increase notes receivable by $1,000
11) A(n) _______________ is a form sent by the seller to the buyer as evidence of a
sale.
12) Music Companys only asset as of January 1, 2014, was a copyright. During 2014,
only the following three transactions occurred:
Royalties earned from copyright use, $510,000 in cash
Cash paid for advertising and salaries, $62,500
Amortization, $50,000
Required
1> What amount of income will Music report in 2014?
2> What is the amount of cash on hand at December 31, 2014?
3> Explain how the cash balance increased from zero at the beginning of the year to its
year-end balance. Why does the increase in cash not equal the income?
13) What is meant by generally accepted accounting principles?
14) What makes the analysis of a service company different from the analysis of a
merchandising company?
15) Identify two methods of accelerating cash from sales.
16) Baucus, Inc.
Baucus, Inc. reported the following information for 2014 and 2013:
Refer to the information for Baucus, Inc.
How much is net sales for 2014? What other components that Baucus did not report
could be included in this computation?
17) The basis of accounting that fails to take into consideration amounts earned that are
not collected and expenses incurred but are not paid is the
_________________________.