1) Irrigation Corp. purchased supplies at a cost of $5,200 during 2014. At January 1,
2014, supplies on hand were $1,600. During the year, the company used $4,000 of
supplies. Irrigations accounting year ends on December 31.
2) Which of the following is not a characteristic of extraordinary items reported on the
income statement?
A.appear near the end of the income statement
B.reported separately from continuing operations
C.shown net of tax effects
D.is shown as a combined amount with discontinued operations
3) Lakeview Company reported the following amounts on its balance sheet at
December 1, 2012:
The following transactions occurred during December:
4) Tracy, Inc.
Tracy, Inc. adjusts its books each month but closes its books at the end of the year. The
trial balance at July 31 before adjustments is as follows:
Refer to the trial balance for Tracy, Inc.
Employees are owed $750 for services since the last payday in July, to be paid the first
week in August. The amount to be reported in the July income statement for salaries
expense is:
A.$750
B.$8,550
C.$7,050
D.$7,800
5) Which one of the following steps in the accounting cycle is optional rather than
required?
A.Business transactions are recorded
B.Adjustments are recorded
C.The accounts are closed
D.Work sheets are prepared
6) All of the following are advantages available to companies if a single set of
accounting standards were used except:
A.A single set of worldwide accounting standards would have no effect on accounting
fee costs
B.A single set of standards would make it much easier to decide whether to acquire a
foreign company
C.A single set of worldwide accounting standards would facilitate comparisons for
investment purposes
D.A single set of worldwide accounting standards would make it easier to access
foreign capital markets
7) There are some liabilities, such as income tax payable, for which the amounts must
be estimated. Failure to estimate these amounts and record them would be a violation of
the
A.matching principle
B.convention of conservation
C.practice of consistency
D.concept of historical cost
8) To determine whether a lottery winner would prefer to receive the money in a single
lump sum immediately or receive an equal amount over a period of years, you would
use which type of time value of money calculation?
A.The future value of a single amount
B.The present value of a single amount
C.The future value of an annuity
D.The present value of an annuity
9) A company forgot to record four adjustments during 2012. Which one of the
following omissions of adjustments will overstate assets?
A.Sales made during the last week of the period are not recorded
B.Interest on monies borrowed has not yet been recorded
C.Prepaid insurance is not reduced for the portion of the policy that has expired during
the period
D.Income taxes owed but not yet paid are ignored
10) Wolfe Inc.
Wolfe Inc. reports these account balances at January 1, 2014:
See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on
its note payable. In Wolfes trial balance prepared on January 31, 2014, the total of the
credit column is:
A.$297,000
B.$287,000
C.$286,000
D.$275,000
11) Which of the following transactions does not affect the total assets of Horizon
Sailing Corp.?
A.A bill is received for the telephone service used by Horizon Sailing during the past
month
B.Dividends are paid by Horizon Sailing
C.Customers are billed for sales made on credit by Horizon Sailing
D.A new computer is purchased on credit by Horizon Sailing
12) Under the ____________________ method, an increase in inventory is shown as an
adjustment to net income in the operating activities category of the cash flow statement.
13) Heather Valley Company has the following amounts in the Stockholders Equity
category of the balance sheet at December 31, 2014:
Preferred Stock, $100 par, 8%, noncumulative (liquidation value of $120 per share)
$100,000
Paid-In CapitalPreferred 60,000
Common Stock, $5 par 450,000
Paid-In CapitalCommon 50,000
Retained Earnings 225,000
Required:
Determine the book value per share of the Heather Valley Company stock.
14) Bonds issued by corporations or governmental bodies as a form of borrowing are
called ____________________.
15) According to the text, almost all current liabilities appear in the Operating Activities
category of the statement of cash flows, but there are exceptions. Explain the exceptions
and give an example.
16) ______________________________ is a liquidity measure that is calculated by
subtracting current assets from current liabilities.
17) Utah Corp.
Use the following selected data and additional information from the records of Utah
Corp. to answer the questions that follow.
Additional information:
Review the data for Utah Corp.
REQUIRED:
Prepare the operating activities section of statement of cash flows for Utah Corp. for
2014 if the direct method is used to determine net cash flow from operating activities.
18) When a bond is retired early and the redemption price is greater than the bond’s
carrying value, there will be a(n) ______________________ on redemption.
19) Use the current asset section of the balance sheets of the Breeze Company as of
June 30, 2012 and 2011 presented below to answer the questions that follow.
REQUIRED:
In the spaces provided below, complete a horizontal analysis of the current asset section
of Breeze Company’s balance sheet for 2012. Your answers for % Change should be
rounded to one decimal place, e.g., 10.3%. Provide a short evaluation of this analysis.
20) Quirin Corp. purchases office supplies once a month and prepares monthly financial
statements. The asset account Office Supplies on hand has a balance of $1,850 on
March 1. Purchases of supplies during March amount to $1,500. Supplies on hand at
March 31 amount to $1,020. Identify and analyze the effect of the adjustment on
Quirins books on March 31. What will be the effect on net income for March if this
adjustment is not made?
