1) Dimension Inc. had net income for 2014 of $24,000. It declared and paid a $13,000
cash dividend in 2014. If the companys retained earnings for the end of the year was
$39,600, what was the companys retained earnings balance at the beginning of 2014?
A.$28,600
B.$50,600
C.$76,600
D.$2,600
2) The Stockholders’ Equity section of Snack, Inc.’s balance sheet on January 1, 2012,
appeared as follows:
On March 1, 2012, Snack reacquired 4,000 shares of common stock at $50 per share.
All common shares were originally sold for $42 each. How much should be reported in
the treasury stock account on the March 31, 2012 balance sheet?
A.$ 128,000
B.$ 168,000
C.$200,000
D.$32,000
3) Presented below is the operating activities section of the statement of cash flows for
Golden Consulting for 2012:
Which method of preparing the operating activities section has Golden Consulting
used?
A.The direct method
B.The indirect method
C.Either method
D.Cannot be determined without further information
4) Wens Export Co.
Wens Export Co. purchased a new delivery truck at the beginning of 2013. The truck
has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of
$7,000. A full year’s depreciation expense is to be recorded in 2013. The truck was
driven 20,000 miles during 2013 and 24,000 miles during 2014. The number of
expected miles over five years is 100,000.
Refer to information for Wens Export Co.
What is the amount by which double-declining-balance depreciation exceeds
straight-line depreciation over the 5-year life of the truck?
A.$ -0-
B.$ 7,000
C.$37,000
D.$ 6,000
5) If a company overstates its ending inventory balance for 2012 by $10,000, and
understates its ending inventory balance for 2011 by $5,000 what are the effects on its
net income for 2012 and 2011?
Effect on 2012 Net Income Effect on 2011 Net Income
A.Overstated by $15,000 Understated by $10,000
B.Understated by $5,000 Overstated by $10,000
C.Overstated by $15,000 Understated by $5,000
D.Overstated by $10,000 Understated by$5,000
6) The department in an organization that is responsible for preparing the invoice
approval form to document all of the information about a particular purchase is:
A.the human resources department
B.the purchasing department
C.the receiving department
D.the accounting department
7) 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. Determine the following amounts for
Taryn Corporation:
A) Total revenues for 2014.
B) Total expenses for 2014.
C) What is the purpose of the income statement?
D) Is Taryn Corp. profitable? Explain your answer.
E) Is this the first year of operations for Taryn Corp.? Explain your answer.
8) Amortization of bond premium results in a(n)
A.decrease of the carrying value of bonds
B.decrease of stockholders equity
C.increase in interest expense
D.decrease in the cash account
9) Yen Co. reported the following information at the end of 2013 and 2014:
An analysis of Yens records indicated that there were no cash flow effects resulting
from the changes in the two accounts presented above. How should Yen report the
changes in these accounts on a statement of cash flows?
A.Yen should report $65,000 for the acquisition of land as an investing activity and
$65,000 for the issuance of stock as a financing activity
B.Yen should report $65,000 as a noncash investing and financing activity for the
acquisition of land by issuing common stock
C.Yen should report the issuance of common stock to acquire land in the financing
activity section with a net cash flow effect of zero
D.Yen should report the acquisition of land by issuing common stock in the investing
activity section with a net cash flow effect of zero
10) Skyline, Inc.
The balance sheet of Skyline Inc. includes the following items:
Read the information about Skyline, Inc. What is Skylines current ratio?
A.0.8 to 1
B.1.6 to 1
C.1.2 to 1
D.2.5 to 1
11) Why do businesses invest in short-term investments?
A.They are trying to gain control over the activities of other companies
B.They are investing excess cash to meet future business operation or investment needs
C.They are lending money to companies that cannot obtain bank loans
D.More than one of the above is correct
12) The total amount of simple interest calculated annually on a $6,000 note payable for
3 years at 11% is
A.$1,980
B.$2,205
C.$6,600
D.$7,980
13) Which of the following represents one of the purposes of the notes to financial
statements?
A.To provide a place for management to justify questionable items in the statements
B.To provide comparative ratios for the company’s financial data
C.To provide the CPA’s opinion of the fairness of the financial statements
D.To satisfy the need for full disclosure of all the facts relevant to a company’s results
and financial position
14) Which of the following entries causes a decrease in assets and in net income?
A.The entry to record the payment of utilities with cash
B.The entry to record the payment of rent for three months in advance
C.The entry to record accrued wages payable
D.The entry to record revenue earned but not yet received
15) During 2013, the accounts receivable balance of Dawson Corp. increased. Which of
the following statements is true?
A.This indicates that Dawson sold more than it collected in cash during the period
B.This increase is added to net income in the operating activities section of a statement
of cash flows prepared under the indirect method
C.This increase is added to sales recognized on the income statement to determine the
cash collections from customers during the period
D.This increase is considered only when the operating activities section of a statement
of cash flows is prepared under the indirect method
16) When a company using LIFO experiences a partial or complete liquidation of its
older, lower-priced inventory, its gross margin will be ____________________ (higher,
lower, or unchanged) for the period.
17) The issuance of common stock increases both ____________________ and
stockholders equity.
18) The interest earned on the principal amount only is referred to as
______________________________.
19) Property, plant and equipment is classified as ____________________ assets on the
balance sheet.
20) Mobile Designs, Inc.
Use the selected data from the comparative financial statements for Mobile Designs,
Inc. to answer the questions that follow.
Mobile Designs, Inc.
Balance Sheet Accounts
(all accounts have normal balances)
(in millions)
Refer to the account information for Mobile Designs, Inc.
REQUIRED:
Compute the total current liabilities for the years 2013 and 2012. Calculate the
percentage change in the total current liabilities.
21) Under the _______________________________, the net cash flow from operating
activities is computed by adjusting net income to remove the effect of all deferrals of
past operating cash receipts and payments, and all accruals of future operating cash
receipts or payments.
22) The names of the four financial statements are
________________________________, ________________________________,
________________________________, and ________________________________