1) Grout, Inc. offers terms of 2/10, n/30 to credit customers. Tile Mart Corp. purchased
100 tile cutters with a list price of $20 each on March 5, 2014, on account.
Tile Mart Corp. paid the invoice on March 31, 2014. How much sales discount will
Grout recognize?
A.$ -0-
B.$ 40
C.$ 200
D.$ 236
2) Happy Corporation leased a building from Sensor Company. The 10-year lease is
recorded as a capital lease. The annual payments are $10,000 and the recorded cost of
the asset is $67,100. The straight-line method is used to calculate depreciation. Which
of the following statements is true?
A.Depreciation expense of $6,710 will be recorded each year
B.Depreciation expense of $10,000 will be recorded each year
C.No depreciation expense will be recorded by Happy Corporation
D.No interest expense will be recorded by Happy Corporation
3) Parachute Country Club
Use the selected accounts for Parachute Country Club presented below to answer the
following question(s).
Read the information for Parachute Country Club.
On which date did the country club make a credit sale of club memberships?
A.August 2
B.August 3
C.August 5
D.August 7
4) What is the impact on the cash flow statement from an increase in notes receivable,
assuming the indirect method is used?
A.A decrease in the cash flow from operating activities
B.An increase in the cash flow from operating activities
C.An increase in the cash flow from financing activities
D.An increase in the cash flow from investing activities
5) Which of the following best describes a companys financing activities?
A.Financing activities focus on the sale of products and services
B.Financing activities include selling products
C.Financing activities enable a company to acquire assets needed to run a business
D.Financing activities are represented by the revenues and expenses on the income
statement
6) Blanket Airlines acquires a new aircraft. It has an estimated life of 15 years and
should be used for 15,000 hours of flight. What is the most appropriate method of
depreciation to properly match revenues and expenses?
A.Double-declining-balance
B.Revenue expenditure method
C.Straight-line
D.Units-of-production
7) Norys Corp. received an 8-month, 9% note for $100,000 from its agent on October 1,
2014. The note is due on May 30, 2015. If Norys accounting period ends on December
31, 2014, how much interest revenue should Norys recognize during 2014 and 2015?
2014 2015
A.$ 3,750 $ 2,250
B.$ 2,250 $ 3,750
C.$ 9,000 $ -0-
D.$ 3,375 $ 5,625
8) Which method assigns the cost of the most recent items purchased to ending
inventory?
A.Specific identification
B.Weighted average cost
C.FIFO
D.LIFO
9) Hensley Painting Company painted four houses in June at $500 each. At the end of
June, three homeowners had paid Hensley cash for the jobs. Under the accrual basis,
what amounts will be reported on the income statement and the statement of cash flows
for June?
Income Statement Statement of Cash Flows
A.$ 2,000 $ 2,000
B.$ 2,000 $ 1,500
C.$ 1,500 $ 1,500
D.$ 500 $ 500
10) Land is not depreciated because it
A.appreciates in value
B.does not have an established depreciable life
C.has a useful life that is limited to the period of time a company is in business
D.will provide future benefits for a company for an unlimited period of time
11) Which of these is not an acceptable inventory costing method under IFRS?
A.FIFO
B.LIFO
C.Specific Identification
D.Average cost
12) The comparative balance sheets of Farmore Corp. for 2014 and 2013 indicate that
short-term trade notes receivable increased from $5,000 in 2013 to $75,000 in 2014.
How will this change be reported on Farmores statement of cash flows (Farmore uses
the indirect method)?
A.It will be included in the amount of cash and cash equivalents at the end of 2014
B.It will be reported as a deduction from net income in the operating activities section
C.It will be reported as a cash outflow in the investing activities section
D.It will be added to net income in the operating activities section
13) Which of the following statements does not present financial information based on
the accrual basis of accounting?
A.Balance Sheet
B.Income Statement
C.Statement of Retained Earnings
D.Statement of Cash Flows
14) Which statement is trueconcerning operating assets?
A.Operating assets have no physical properties
B.A companys operating assets are important to its short-term liquidity
C.Operating assets are used over two or more periods to generate revenues
D.All operating assets are reported on the balance sheet
15) The accounting life of intangible assets is determined by
A.their legal lives
B.their useful lives
C.their legal lives or useful lives, whichever is shorter
D.the tax life mandated by the IRS
16) Identify each of the following items as operating (O), investing (I), or financing (F)
activities on the statement of cash flows(assuming the indirect method). If an item is not
on the statement, please mark it as none of these (N). If the item is an inflow, please
indicate by a (+). If the item is an outflow, please indicate by a (-)
____ (a) Paid an account payable for inventory purchased in the previous accounting
period.
____ (b) Amortization of debt issuance costs
____ (c) Paid a dividend to stockholders.
____ (d) Paid the interest on a note payable to National Street Bank.
____ (e) Paid the principal amount due on the note payable to National Street Bank.
____ (f) Transferred cash from a checking account into a money market fund.
____ (g) Purchased equipment for cash.
17) Rent expense in Volusia Company’s 2014 income statement is $420,000. If Prepaid
Rent was $70,000 at December 31, 2013, and is $95,000 at December 31, 2014, the
cash paid for rent during 2014 is:
A.$480,000
B.$445,000
C.$395,000
D.$420,000
18) On the reporting of liabilities where a range of values exists as a possible outcome,
IFRS requires which of the following points to be recorded as a provision, if the
outcome is probable?
A.Low end of the range
B.High end of the range
C.Midpoint of the range
D.IFRS presents no specific guidance as to this point
19) A statement of cash flows reports property, plant, and equipment transactions.
A. What are the effects of acquisitions of plant assets on the statement of cash flows?
B. In which section of the statement of cash flows are cash flows from sales of plant
assets reported?
C. How is depreciation reported on the statement of cash flows? Why?
20) Endeavor Company issued 20-year bonds with a coupon rate of 6% when the
market rate of interest was 9%. This means that the bonds were issued
A.at a premium
B.at a discount
C.at the face value
D.with an additional 3 years of interest
21) An alternate term for a timing difference is a _________________________.
22) Explain the relationship between the valuation of inventory and income
measurement as it relates to the balance sheet and the income statement.
23) The number of shares issued less the number of shares held as treasury stock are
______________________________.
24) Taryn Corporation
The accountant for Taryn Corporation prepared the following list of account balances
from the companys records for the year ended December 31, 2014:
Read the information for Taryn Corporation. Prepare a balance sheet for Taryn
Corporation in good form.
25) Explain the two ways that a dividend rate on preferred stock may be stated by
giving examples.