1) How would outstanding checks 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
2) Arizona Inc. reported the following information for 2013 and 2014.
If Arizona uses the indirect method to prepare the operating activities section of the
statement of cash flows, what amount will be reported as net cash inflow from
operating activities for 2014?
A.$64,000
B.$66,000
C.$68,000
D.$70,000
3) How would bank service charges 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
4) All of the following are reasons for a company to repurchase its previously issued
stock, except:
A.to support the market price of the stock
B.to resell to employees
C.to increase the shares outstanding
D.for bonuses to employees
5) Presented below are a list of source documents and a list of transactions. Using the
identification letters before each source document, indicate next to each transaction
which source document serves as evidence for the recording of the transaction.
Source Documents
A) Purchase invoice
B) Sales invoice
C) Cash register tape
D) Check
E) Time card
F) Monthly statement
G) Promissory note
H) Stock certificate
6) Use the following information that was obtained from the 2012 and 2011 financial
statements of Lake Company, River Corporation, and Ocean Company to answer the
questions that follow.
REQUIRED: Compare the three companies and answer the following:
7) [APPENDIX] Tropic Vending, a sole proprietorship, had the following balances and
transactions during 2013: beginning capital, $40,000; contribution of cash to the
business by the owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by
the owner, $5,000. What is the amount of the ending capital balance?
A.$40,000
B.$60,000
C.$75,000
D.$85,000
8) Here is a list of accounts and their balances that appear on the Thomas Companys
income statement and balance sheet.
REQUIRED:
Identify which of these are:
(a) Assets
(b) Liabilities
(c) Expenses
(d) Revenues
9) Which the following organizations is primarily responsible for establishing GAAP
today?
A.Financial Accounting Standards Board (FASB)
B.Securities and Exchange Commission (SEC)
C.Internal Revenue Service (IRS)
D.Federal Government
10) Which of the following would appear on a multiple-step income statement but not
on a single-step income statement?
A.Net income
B.Total expenses
C.Total revenues
D.Income before income taxes
11) Which of the following items should not appear in the long-term liability section of
the balance sheet?
A.Accrued income taxes
B.Deferred income taxes
C.Bonds payable
D.Pension obligations
12) Carrington & Co. rented office space to a tenant on January 31 and received a total
of $9,000 for the first three months of rent. The amount was recorded as Rent Collected
in Advance when received. Adjustments are recorded only at the end of every quarter.
What effect does the adjustment at March 31 have on Carringtons net income for the
quarter ending March 31?
A.Increase by $9,000
B.Decrease by $6,000
C.Decrease by $3,000
D.Increase by $6,000
13) Iowa Industries Inc.
Selected data from the financial statements of Iowa Industries Inc. for the years ended
December 31, 2014 and 2013, are presented below. Also, certain assumptions are
presented. Use these data and assumptions to answer the questions that follow.
Assumptions:
Review the data and assumptions for Iowa Industries Inc.
REQUIRED:
(A) What was the cost of the property, plant and equipment which was disposed of
during 2014?
(B) What was the amount of accumulated depreciation on the property, plant and
equipment disposed of during 2014?
(C) Assuming that the book value of the property, plant and equipment disposed of
during 2014 was $76.9, what were the cash proceeds from the disposal of property,
plant and equipment for 2014?
14) If a credit memo appears on a bank reconciliation, this could be an indication that:
A.there has been a decrease the company’s bank account
B.there has been a bank service charge
C.there has been a deposit of a customer’s NSF check
D.there has been a note receivable for the company that was collected by the bank.
15) When using the direct method, how is the collection of cash from customers shown
on the statement of cash flows?
A.Operating activity
B.Investing activity
C.Financing activity
D.Noncash investing and financing activity
16) A voucher is usually supported by
A.a supplier’s invoice
B.a purchase order
C.a receiving report
D.all of the above
17) How would you describe the current role of the IASB in setting accounting
standards?
18) Write a short paragraph explaining each of the following:
1> When bad debts are estimated, why is the balance in Allowance for Doubtful
Accounts considered when the percentage of accounts receivable approach is used but
not when the percentage of net credit sales approach is used?
2> When estimating bad debts on the basis of a percentage of accounts receivable, what
is the advantage of using an aging schedule?
19) Flores Department Store currently uses the periodic inventory system.
REQUIRED: Explain what the advantages would be to Flores if it uses the perpetual
inventory system. Assume that Flores can use a computer system which is linked to its
cash registers and that all products have bar codes that can be read by bar code readers
attached to the cash registers.
20) Select the term below most properly satisfies each statement.
21) _____________ is the type of accounting used by nonbusiness entities.
22) Raponi, Inc.
The following balance sheet items from Raponi, Inc. are listed for December 31, 2014:
Read the information about Raponi, Inc.
Required:
Compute Raponis current ratio. On the basis of your answer, does Raponi appear to be
liquid? What other information do you need to fully answer that question?