1) Callable bonds may be retired by the issuer before their specified due date.
2) If a company prepares a statement of stockholders’ equity, net income is added to
retained earnings on this statement.
3) When reconciling a bank account, the company must prepare an adjusting entry for
deposits in transit.
4) A trial balance can be distributed to stockholders in place of the balance sheet.
5) Double-declining-balance depreciation is most commonly used by businesses for
financial reporting purposes.
6) The general journal is often used to record repetitive transactions.
7) None of the Stockholders Equity accounts are affected by the split.
8) There is a universal chart of accounts that is applicable to all businesses.
9) Braggert, Inc. purchased a truck at the beginning of 2012 for $32,500. Braggert
decided to depreciate the truck over an 8-year period using the straight-line method, and
estimated its residual value to be $4,500. At the beginning of 2013, Braggert
determined that a 5-year life should have been used to depreciate the truck. The
estimated residual value was not affected by the revision in the asset’s life.
10) Kiwi Charters reported the following information at December 31, 2013:
Kiwis total contributed capital is
A.$ 650,000
B.$ 675,000
C.$1,500,000
D.$ 625,000
11) Which one of the following correctly represents one of the basic financial statement
models?
A.Assets – Liabilities = Net Income
B.Assets + Liabilities = Owners Equity
C.Revenues + Expenses = Net Income
D.Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings
12) Using the following information, what is the amount of cost of goods sold?
A.$26,900
B.$20,530
C.$28,130
D.$30,210
13) Read the information about Garrison Industries. The companys dividends for the
year
A.Reduce the amount of capital stock reported by the company
B.Are part of Garrison Industries’ operating costs
C.Are reported on the statement of retained earnings
D.Are an expense of Garrison Industries
14) Which of the following combinations appropriately reflects the type of accounts
represented by the Treasury Stock account and Additional Paid-in Capital–Treasury
Stock account?
Treasury Stock Additional Paid-Capital – Treasury Stock
A.contra stockholders equity stockholders equity
B.contra stockholders equity contra stockholders equity
C.stockholders equity stockholders equity
D.retained earnings retained earnings
15) Playlinda Surf Shop provided the following information from its 2012 financial
statements:
In addition, the stockholders’ equity section of the balance sheet showed:
The common stock had a year-end market price of $24.
16) Solvency and liquidity differ in a company’s ability
A.to show a profit.
B.to remain in business over a long or short period of time.
C.to collect cash from customers during the short- or long-term.
D.to increase gross profit percentages over long or short periods of time.
17) If a company overstates its ending inventory for the current year, what are the
effects on cost of goods sold and net income for the current year?
Effect on Effect on
Cost of Goods Sold Net Income
A.Understated Overstated
B.Overstated No effect
C.Understated Understated
D.Overstated Overstated
18) The Securities and Exchange Commission (SEC) is concerned with
A.All companies in the United States regardless of size
B.Companies that issue securities to the general public
C.Accounting reports issued by government entities
D.All domestic and international companies that issue accounting reports
19) Macon Corporation has been in the business of delivering small packages for local
companies within the city of Atlanta, Georgia, since 1960. The following information
concerning financial activities during 2014 is available at December 31, 2014:
A. Prepare an income statement for the year ended December 31, 2014
B. If you were a bank loan officer and Macon Corporation wanted to borrow $100,000
from your bank, would you lend the money? Explain.
C. Calculate retained earnings at December 31, 2014
20) All of the following statements are true except:
A.IFRS requires that estimates of residual value and the life of the asset be reviewed at
least annually and revised if necessary
B.The FASB standards do not have a specific rule that requires residual value and asset
life to be reviewed annually
C.IFRS does not have a specific rule that requires residual value and asset life to be
reviewed annually
D.The FASB generally requires operating assets to be recorded at acquisition cost, less
depreciation, and the assets values are not changed to reflect their fair market values or
selling prices
21) When bonds are sold for less than the face amount, this means that the
A.maturity value will be less than the face amount
B.maturity value will be greater than the face amount
C.bonds are sold at a premium
D.face rate of interest is less than the market rate of interest
22) Owners of corporations are called ____________________.
23) ___________________________ is a noncash expense related to plant assets.
24) What is the best way to assess solvency? Explain.
25) McDonald Corp. owns a building with an original cost of $2,000,000 and
accumulated depreciation at the balance sheet date of $300,000. Based on a recent
appraisal, the fair value of the building is $1,800,000.
REQUIRED:
1> At what amount will the building be reported on the year-end balance sheet if
McDonald follows U.S. GAAP?
2> Does McDonald have a choice in the amount to report for the building if instead it
follows IFRS? What are those choices?
26) 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:
27) Cost of goods sold is equal to beginning inventory plus the net cost of purchases
minus _________________________.
28) Contrast stock dividends and stock splits.
29) Would a banker be more interested in the liquidity or the profitability of a
company? Explain.
30) [APPENDIX] How do most changes in long-term liabilities on the balance sheet
appear on the cash flow statement?
31) Stock issued by the firm, but then repurchased and not retired is
________________________.