1) Aloha Company reports the following information at December 31, 2014:
What is Aloha Companys net income?
A.$ 15,000
B.$ 45,000
C.$ 55,000
D.$ 65,000
2) Maryland Vacations has a $2,200 account receivable from the Miami Kiwanis. On
March 11, the Kiwanis makes a partial payment of $1,050 to Maryland. The journal
entry made on March 11 by Maryland to record this transaction includes:
A.A debit to the Cash account of $1,150
B.A debit to the Accounts Receivable account of $1,150
C.A credit to the Service Revenue account of $1,050
D.A credit to the Accounts Receivable account of $1,050
3) A building with an appraisal value of $167,000 is made available at an offer price of
$162,000. The purchaser acquires the property for $25,000 in cash, a 90-day note
payable for $75,000, and a mortgage amounting to $65,000. The cost basis recorded in
the buyer’s accounting records to recognize this purchase is
A.$167,000
B.$162,000
C.$165,000
D.$140,000
4) Federal income tax rules allow businesses to use different inventory costing methods
for tax reporting and financial reporting with one exception. Which of the following
situations is not allowed by federal income tax rules?
Inventory Method Inventory Method
for Tax Reporting for Financial Reporting
A.LIFO LIFO
B.LIFO FIFO
C.Weighted Average FIFO
D.FIFO LIFO
5) Harvest Catering is a local catering service. Conceptually, when should Harvest
recognize revenue from its catering service?
A.At the date the customer places the order
B.At the date the meals are served
C.At the date the invoice is mailed to the customer
D.At the date the customer’s payment is received
6) On December 1, 2014, Xeon Company bought land and an accompanying warehouse
from Yen Company for $800,000. The fair market values of the land and the building at
the time of purchase were $700,000 and $300,000, respectively. How much of the
purchase price should Xeon Company allocate to the land and how much should be
allocated to the building?
A.$457,143 and $342,857, respectively
B.$700,000 and $300,000, respectively
C.$560,000 and $240,000, respectively
D.$500,000 and $300,000, respectively
7) Blair Resorts purchased guest room furniture on January 1, 2013 for $120,000. The
furniture has an estimated useful life of ten years. What amount will appear on Blairs
income statement for depreciation expense for the year ending June 30, 2014?
A.$1,000
B.$6,000
C.$10,000
D.$12,000
8) Hemmer Company received a 12%, 6-month promissory note with a face amount of
$10,000 from Stutfeld Company, for the sale of merchandise on December 1, 2014.
A) Which party is the maker? _______________________
B) Which party is the payee? _____________________
C) Determine the maturity value of the note.
9) Hsuang Fitness Co. purchased a patent at the beginning of 2013 for $120,000.
Economic benefits were expected for only 12 years, but the patent’s legal life is 17
years. Also during 2013, the company incurred research and development costs of
$50,000.
A. Determine the following amounts:
B. Prepare the intangible assets section of the balance sheet at December 31, 2013.
10) With the effective interest method of amortization, the amortization of bond
premium results in a(n)
A.increase in stockholders equity
B.decrease of stockholders equity
C.increase in interest expense
D.decrease in interest expense
11) Hui Corporation
The data below is for Hui Corporation for 2014.
Refer to the data for Hui Corporation.
If the aging approach is used to estimate bad debts, what amount should be recorded as
bad debt expense for 2014?
A.$ 2,900
B.$11,500
C.$23,500
D.$26,900
12) Leary Corporations end-of-year balance sheet consisted of the following amounts:
What amount should Leary report on its balance sheet for total assets?
A.$175,000
B.$141,000
C.$195,000
D.$194,000
13) When using the indirect method, how is an increase in accounts receivable during
the year shown on the statement of cash flows?
A.Operating activity
B.Investing activity
C.Financing activity
D.Noncash investing and financing activity
14) Miramar Corporation reported the following in the stockholders’ equity section of
its balance sheet at December 31, 2012:
How many shares of stock are issued?
A.9,000
B.10,000
C.10,100
D.Not enough information to determine.
15) All of the following statements are true except:
A.The criteria to determine whether a lease contract should be considered a capital
lease are applied in a more rigid way under U.S. GAAP than IFRS
B.The criteria to determine whether a lease contract should be considered a capital lease
are applied in a more rigid way under IFRS than U.S. GAAP
C.The lease criteria under IFRS are to be used as guidelines rather than rules
D.IFRS requires more accounting judgment than U.S. GAAP in the determination of
whether a lease is classified as an operating lease or a capital lease
16) Which of the following is an example of liquidity analysis?
A.Bonds payable are divided by total liabilities and stockholders’ equity.
B.Net income is divided by total assets.
C.Net income is divided by the number of shares of stock outstanding
D.Current assets are divided by current liabilities.
17) When an inventory system updates the Inventory account at the time of each sale,
this is known as:
A.a periodic system
B.a contra-purchase system
C.a perpetual system
D.an accrual system
18) On January 2, 2012, Dock Master Construction, Inc. issued $500,000, 10-year
bonds for $574,540. The bonds pay interest on June 30 and December 31. The face rate
is 8% and the market rate is 6%. At the maturity date, besides an interest payment,
Dock Master would repay the bondholders
A.$574,540
B.$520,000
C.$500,000
D.only the last interest payment