1) The amount of working capital is more meaningful to users than the current ratio
because it provides information on the composition of the current accounts.
2) Plant assets, current assets, property, plant and equipment, and fixed assets are all
tangible assets.
3) A building with a cost of $163,000 and accumulated depreciation of $32,000 was
sold for a $11,000 gain. When using the indirect method, the cash generated from this
investing activity was $131,000.
4) A work sheet is an alternative to T accounts to help in the preparation of a statement
of
cash flows.
5) Under certain conditions, an investment in common stock can be considered a cash
equivalent.
6) In general, FASB standards concerning property, plant, and equipment are similar to
the international accounting standards, with two important differences.
7) The profit margin ratio reflects the amount of income for each dollar of sales.
8) A trial balance that balances provides proof that all transactions were correctly
journalized and posted to the ledger.
9) The accounting for leases is an excellent example of the differences in how U.S. and
IFRS accounting standards are applied.
10) A construction company that builds skyscrapers is likely to have an operating cycle
longer than one year.
11) The process of recording an item in the financial statements is called measurement.
12) When a lease is classified as an operating lease, the lease liability should be
presented on the balance sheet of the lessee.
13) Which organization would have the ultimate responsibility of deciding if the
advantages outweigh the disadvantages in the adoption of IFRS accounting standards in
the U.S.?
A.FASB
B.SEC
C.IASB
D.
14) Presented below are selected data from the financial statements of Carnival Corp.
for 2012 and 2011.
The dividend yield ratio for 2012 is
A.1.9%
B.2.1%
C.36.3%
D.38.1%
15) Given below is information for Xu Corporation and Yang Computers, Inc. at the
end of 2012.
16) The data presented below is for Tallon, Inc. for 2014
What amount will Tallon show on its year-end balance sheet for the net realizable value
of its accounts receivable?
A.$295,000
B.$267,000
C.$250,000
D.$ 28,000
17) Monticello Company reported the following information in its annual report for
2012.
What is the cash flow adequacy ratio for 2012 for Monticello Company?
A.0.38
B.1.50
C.1.88
D.7.50
18) How would interest earned on a checking account be dealt with in a bank
reconciliation?
A.added to companys book balance
B.deducted from companys book balance
C.added to bank statement balance
D.deducted from bank statement balance
19) Which of the following generally indicates a positive change?
A.Earnings per share decreases
B.The debt service coverage decreases
C.The acid-test ratio decreases
D.The number of days sales in inventory decreases
20) Which one of the following items would be added to the balance per books in a
bank reconciliation?
A.Outstanding checks
B.Deposit in transit
C.Service charges
D.Interest on customer note
21) On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and
signed a 12%, six-month note payable, all due at maturity. The interest on this loan is
stated separately. At December 31, 2014, the adjustment for this note includes a(n):
A.Increase to Interest Expense for $3,200
B.Increase to Notes Payable for $1,600
C.Decrease to Cash for $4,800
D.Increase to Interest Payable for $1,600
22) Which of the following ratios is the best measure in analyzing a company’s ability
to pay interest on long-term debt and to repay the long-term debt over several years
A.Debt-to-equity ratio
B.Times interest earned ratio
C.Debt service coverage ratio
D.Acid-test ratio
23) Because of changing market conditions, Friendly Corporation made the decision to
redeem $300,000 of its bonds prior to maturity. The bonds had been issued at a discount
and the balance in the discount account at the time of redemption was $15,000. The
corporation’s bond certificates indicated that the bonds could be retired early at 103.
Friendlys retirement of the bonds would result in a(n)
A.loss of $24,000
B.gain of $6,000
C.decrease in owners equity of $9,000
D.increase in assets of $15,000
24) Manson World reported the following:
Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and
outstanding
What is the effect of a 2-for-1 stock split if the market value of the common stock is
$20 per share when the stock split is declared?
A.Retained earnings in the amount of $400,000 is transferred to the contributed capital
accounts
B.Cash decreases $400,000
C.Additional Paid-in Capital increases $400,000
D.A stock split has no effect on total stockholders’ equity
25) A customer returned damaged goods for credit. Which of the seller’s accounts
decreases?
A.Purchase Returns
B.Accounts Receivable
C.Sales Returns
D.Sales Revenue
26) The solution to this problem requires time value of money calculations. Reference
to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
The total amount of interest compounded quarterly on a $1,500 note payable for 1 year
at 12% is
A.$180.00
B.$187.50
C.$189.00
D.$ 45.00
27) Harkin Company purchased a building on a tract of land and allocated the entire
cost of the purchase to building. Normally it depreciates buildings over 20 years using
the straight-line method with zero residual value and does not depreciate land. Because
of its accounting treatment of the purchase, Harkins income before taxes for the next 20
years will be
A.overstated
B.understated
C.unaffected
D.in conformance with GAAP
28) The solution to this problem requires time value of money calculations. Reference
to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
Approximately how many years will it take for a sum invested at 8% with annual
compounding to quadruple?
A.9 years
B.17 years
C.18 years
D.81 years
29) During the month, services performed for customers on account amounted to
$4,500 and collections from customers in payment of their accounts totaled $3,000. At
the end of the month, the Accounts Receivable account had a balance of $3,500. What
was the Accounts Receivable balance at the beginning of the month? (Show your work
using a T account.)
30) For a capital lease, the lessee must record both an asset and a liability. The amount
of the asset is subsequently reduced by the process of __________________________.
31) Baucus, Inc.
Baucus, Inc. reported the following information for 2014 and 2013:
Refer to the information for Baucus, Inc.
How much is cost of goods sold for 2014?
32) Liabilities and stockholders equity are ____________________ by debits.
33) ______________________ is the process of transferring an amount from the bond
discount or premium to interest expense each time period to adjust interest expense.
34) Tyson Trucking won a settlement in a lawsuit and was offered four different
payment alternatives by the defendant’s insurance company. The interest rate is 6%.
Ignoring tax considerations, which of the following four alternatives has the highest
present value? Support your answer with the appropriate calculations.
35) Develop an ethical dilemma scenario that an accountant may face and give
examples of key elements (listed below) that should be considered when analyzing the
decision:
1> Those who may benefit or be harmed
2> What potential benefits or harm could result from the situation
3> The rights or claims violated
4> The specific interests in conflict
5> The responsibilities and obligations
36) Using the indirect method, an increase in accounts payable would be shown as a(n)
_____________ in the ___________ Activities section of the statement of cash flows.
37) Joseph is the president of Sunshine Enterprises. Sunshine Enterprises began
business on January 1, 2014. The companys controller is out of the country on business.
Joseph needs a copy of the companys balance sheet for a meeting tomorrow and asks
his assistant to obtain
the required information from the companys records. She presents Joseph with the
following
balance sheet. He asks you to review it for accuracy.
Required
1>Prepare a corrected balance sheet.
2> Draft a memo explaining the major differences between the balance sheet Josephs
assistant prepared and the one you prepared.