1) crawford company started the year with $30,000 in its common stock account and a
credit balance in retained earnings of $22,000. during the year, the company earned net
income of $24,000 and declared and paid $10,000 of dividends. in addition, the
company sold additional common stock amounting to $14,000. as a result, the amount
of its retained earnings at the end of the year would be
a.$80,000.
b.$36,000.
c.$66,000.
d.$50,000.
2) the per share amount normally assigned by the board of directors to a small stock
dividend is
a.the market value of the stock on the date of declaration
b.the average price paid by stockholders on outstanding shares
c.the par or stated value of the stock
d.zero
3)
4) with respect to the income statement
a.contra revenue accounts do not appear on the income statement
b.sales discounts increase the amount of sales
c.contra revenue accounts increase the amount of operating expenses
d.sales discounts are included in the calculation of gross profit
5) are advanced receipts from customers treated as revenue at the time of receipt? why
or why not?
a.yes, they are treated as revenue at the time of receipt because the company has access
to the cash.
b.no, the amount of revenue cannot be adequately determined until the company
completes the work.
c.yes, the intent of the company is to perform the work and the customer is confident
that the services will be completed.
d.no, revenue cannot be recognized until the work is performed.
6) the management discussion and analysis (md&a) section of the annual report covers
all of the following aspects except:
a.the ability of the company to pay near-term obligations
b.the certification criteria of the company’s auditors
c.the company’s ability to fund operations and expansion
d.the results of the company operations
7) the policy at adler corporation is to expense all office supplies at the time of
purchase. on the last day of the accounting period, there are $1,400 of unused office
supplies on hand and the balance of supplies expense is $3,500. what should the
accountant do?
a.debit supplies and credit supplies expense for $1,400
b.nothing, company policy says to expense supplies when purchased
c.convince management to change its policy to avoid problems in the future
d.debit supplies expense for $2,100 and credit supplies for $2,100
8) in vertical analysis
a.a base amount is required
b.a base amount is optional
c.the same base is used across all financial statements analyzed
d.the results of the horizontal analysis are necessary inputs for performing the analysis
9) a $100 petty cash fund has cash of $18 and receipts of $86. the journal entry to
replenish the account would include a
a.debit to cash for $86
b.credit to petty cash for $86
c.credit to cash over and short for $4
d.credit to cash for $86
10) net sales are $3,000,000, beginning total assets are $1,400,000, and the asset
turnover is 2.5 times. what is the ending total asset balance?
a.$1,200,000
b.$1,000,000
c.$1,400,000
d.$1,600,000
11) a common application of the conservatism constraint is the use of the
1>straight-line depreciation method for plant assets.
2>lower of cost or market method for inventories.
3>fifo method for inventory valuation.
a.1
b.2
c.3
d.1 and 2
12) the cash account balance reported on the statement of financial position is needed to
prepare
a.the income statement
b.the share capital statement
c.the retained earnings statement
d.the statement of cash flows
13) to determine the net cash provided (used) by operating activities, it is necessary to
analyze
a.the current year’s income statement
b.a comparative balance sheet
c.additional information
d.all of the above
14) which is not a strategic reason to invest?
a.there has been a change in the economic climate
b.to establish a presence in a related industry
c.to exercise some influence over a customer or supplier
d.to enter a new industry without starting from scratch
15) which of the following is not a category used for valuing and reporting
investments?
a.securities held for investing purposes
b.trading securities
c.held-to-maturity securities
d.available-for-sale securities
16) on january 1, hamblin corporation had 80,000 shares of $10 par value common
stock outstanding. on march 17 the company declared a 10% stock dividend to
stockholders of record on march 20. market value of the stock was $13 on march 17.
the stock was distributed on march 30. the entry to record the transaction of march 30
would include a
a.credit to cash for $80,000
b.debit to common stock dividends distributable for $80,000
c.credit to paid-in capital in excess of par value for $24,000
d.debit to stock dividends for $24,000
17) boyce company purchased office supplies costing $5,000 and debited office
supplies for the full amount. at the end of the accounting period, a physical count of
office supplies revealed $1,400 still on hand. the appropriate adjusting journal entry to
be made at the end of the period would be:
a.debit office supplies expense, $3,600; credit office supplies, $3,600
b.debit office supplies, $1,400; credit office supplies expense, $1,400
c.debit office supplies expense, $1,400; credit office supplies, $1,400
d.debit office supplies, $3,600; credit office supplies expense, $3,600
18) joe is a warehouse custodian and also maintains the accounting record of the
inventory held at the warehouse. an assessment of this situation indicates
a.documentation procedures are violated
b.independent internal verification is violated
c.segregation of duties is violated
d.establishment of responsibility is violated
19) a tabular analysis of the transactions made during august 2014 by baxter company
during its first month of operations is shown below. each increase and decrease in
stockholders’ equity is explained.
instructions
(a)determine how much stockholders’ equity increased for the month.
(b)compute the net income for the month.
20) which of the following statements reflects the transferability of ownership rights in
a corporation?
a.if a stockholder decides to transfer ownership, he must transfer all of his shares
b.a stockholder may dispose of part or all of his shares
c.a stockholder must obtain permission of the board of directors before selling shares
d.a stockholder must obtain permission from at least three other stockholders before
selling shares
21) the income statement of runge inc. for the year ended december 31, 2012, reported
the following condensed information:
runge’s balance sheet contained the following comparative data at december 31:
runge has no depreciable assets. accounts payable pertains to operating expenses.
instructions
prepare the operating activities section of the statement of cash flows using the direct
method.
22) which of the following is the correct matching concerning an investor’s influence on
the operations and financial affairs of an investee?
23) a 75-day note receivable dated july 5 would mature on ______________.
24) double-entry accounting services begin operations on july it allows its clients 90
days to pay for services received. on the other hand, the companys suppliers require
payment for their goods and services within 30 days. double-entry prepaid its office rent
for 12 months on july at the end of the year, december 31, the company had yet to pay
its last months utility bill.
instructions:
explain how cash and accrual basis accounting would handle each of the events
described above. use the column heading s shown below.
eventcash basisaccrual basis
25) manuel company had cash sales of $65,100 (including taxes) for the month of june.
sales are subject to 8.5% sales tax. prepare the entry to record the sale.
26) don’s pharmacy has collected $600 in sales taxes during march. if sales taxes must
be remitted to the state government monthly, what entry will don’s pharmacy make to
show the march remittance?
