1) Electric Company borrowed on a one-year, 10%, $150,000 note on May 1, 2014 with
interest and principal to be paid at maturity. How much interest should Electric
Company report on its income statement for the year ending December 31, 2015?
A.$ 10,000
B.$ 15,000
C.$ 30,000
D.$ 5,000
2) Deal Mart
The 2014 income statement of Deal Mart shows operating revenues of $130,800,
selling expenses of $37,100, general and administrative expenses of $34,900, interest
expense of $900, and income tax expense of $11,430. Deal Marts stockholders equity
was $280,000 at the beginning of the year and $320,000 at the end of the year. The
company has 20,000 shares of stock outstanding at December 31, 2014.
Read the information about Deal Mart. What is Deal Marts net income?
A.$80,000
B.$92,190
C.$130,800
D.$46,470
3) Computech Industries
Below is financial data for Computech Industries current year.
Refer to the data for Computech Industries.
Based on this information, what is Computechs number of days sales in receivables
(assuming a 360 day year)?
A.32.4 days
B.36.0 days
C.28.8 days
D.25.2 days
4) If a company constructs an asset over a period of time and borrows money, the
amount of interest incurred during construction on the borrowed money is
A.capitalized as part of the cost of the plant asset
B.amortized over the construction period
C.reported as interest expense on the income statement
D.reported as depletion on the income statement
5) Which of the following statements best describes one effect of recognizing expenses
incurred by a business entity?
A.Assets will increase
B.Liabilities will decrease
C.Stockholders equity will increase
D.Stockholders equity will decrease
6) All of the following statements are true except:
A.U.S. standards do not require a classified balance sheet
B.IFRS require companies to present classified balance sheets
C.Under IFRS, an unclassified balance sheet based on the order of liquidity is
acceptable only when it provides more reliable information than a classified one
D.U.S. standards require a classified balance sheet with liabilities in order by size or by
order of liquidity
7) Segregation and rotation of duties is most effective in
A.Increasing cost of goods sold
B.Assisting management in overriding controls
C.Preventing collusion
D.Misappropriating company assets
8) Grover, Inc.
Grover, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual
value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation. The
crane was purchased on January 1, 2013 and was used 2,700 hours in 2013 and 2,600
hours in 2014.
Refer to the information for Grover, Inc.
Based on this information, what method of depreciation will produce the maximum
depreciation expense in 2013?
A.Straight-line
B.Double-declining-balance
C.Units-of-production
D.All methods produce the same expense in 2013.
9) Cost of goods sold represents
A.Expired costs during a period and is reported on the income statement
B.Unexpired costs and is reported on the balance sheet as an asset
C.The cost of goods that will be purchased during the next operating cycle and is
reported on the balance sheet as an asset
D.Expired costs and is reported on the balance sheet as an expense
10) Blenham, Inc. sells merchandise on credit. If a customer pays its balance due within
the discount period, what is the effect of the payment on Blenhams accounting
equation?
A.Assets and stockholders equity decrease
B.Assets and stockholders equity increase
C.Assets decrease and liabilities increase
D.Stockholders equity decreases and liabilities increase
11) A list of all accounts and their balances which is used to prove the equality of debits
and credits as of a specific date is a(an)
A.Account
B.General Journal
C.Trial Balance
D.Chart of Accounts
12) Which of the following represents the board of directors subset that acts as a direct
contact between stockholders and the independent accounting firm?
A.Audit committee
B.Internal audit staff
C.External auditors
D.Stockholders representative
13) What is the effect on the accounting equation when a company recognizes rent as
earned that had previously been received in advance from customers?
A.Expenses increase
B.Revenues decrease
C.Liabilities increase
D.Net income increases
14) Which financial statement reports the sources and uses of an entity’s cash
resources?
A.Income statement
B.Statement of retained earnings
C.Balance sheet
D.Statement of cash flows
15) Rose, Inc. purchased equipment at the beginning of 2013 for $180,000. Rose
decided to depreciate the equipment over a 5-year period using the
double-declining-balance method. Rose estimated the equipment’s residual value at
$30,000. Which of the following statements is correct concerning Roses financial
statements at December 31, 2013?
A.The book value of the equipment is $108,000
B.The book value of the equipment is $72,000
C.The total accumulated depreciation is $90,000
D.Depreciation expense for 2013 is $60,000