1) if the assets owned by a business total $100,000 and liabilities total $65,000,
stockholders equity totals $25,000.
2) additions and improvements to a plant asset that increase the asset’s operating
efficiency, productive capacity, or expected useful life are generally expensed in the
period incurred.
3) trade receivables can be an account receivable or a note receivable.
4) source documents can provide evidence that a transaction has occurred.
5) a corporation that issues bonds at a discount will recognize interest expense at a rate
which is greater than the market rate of interest.
6) external users of accounting information are managers who plan, organize, and run a
business.
7) discounting may be done on an annual basis or over shorter periods of time such as
semiannually.
8) information in the notes to the financial statements has to be quantifiable (numeric).
9) for external reporting, a company must prepare either an income statement or a
statement of cash flows, but not both.
10) an advantage of using the periodic inventory system is that it requires less record
keeping than the perpetual inventory system.
11) an account consists of two parts: (1) a left or debit side and (2) a right or credit side.
12) in order to prevent a transaction from being recorded more than once, a company
should maintain only one book of original entry.
13) operating activities involve putting the resources of the business into action to
generate a profit.
14) bad debt expense and interest revenue are reported in the income statement under
other revenues and expenses.
15) the difference between the balance of a plant asset account and the related
accumulated depreciation account is termed:
a.market value
b.contra asset
c.book value
d.liability
16) on january 1, ripken corporation had 60,000 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 common stock for $60,000
b.debit to common stock dividends distributable for $78,000
c.credit to paid-in capital in excess of par value for $18,000
d.debit to stock dividends for $18,000
17) ifrs, compared to gaap, tends to be more
a.detailed
b.rules-based
c.principles-based
d.full of disclosures requirements
18) which of the following is not a basic principle of cash management?
a.increase collection of receivables
b.keep inventory levels high
c.delay payment of liabilities
d.invest idle cash
19) use the following data to determine the total dollar amount of assets to be classified
as investments.
a.$0
b.$300,000
c.$150,000
d.$360,000
20) hulse corporation retires its $800,000 face value bonds at 105 on january 1,
following the payment of annual interest. the carrying value of the bonds at the
redemption date is $829,960. the entry to record the redemption will include a
a.credit of $29,960 to loss on bond redemption
b.debit of $29,960 to premium on bonds payable
c.credit of $10,040 to gain on bond redemption
d.debit of $40,000 to premium on bonds payable
21) based on the following data, what is the amount of current assets?
a.$192,000
b.$350,000
c.$212,000
d.$210,000
22) dividends in arrears on cumulative preferred stock
a.never have to be paid, even if common dividends are paid
b.must be paid before common stockholders can receive a dividend
c.should be recorded as a current liability until they are paid
d.enable the preferred stockholders to share equally in corporate earnings with the
common stockholders
23) the use of ifrs results in more transactions affecting
a.net income but not other comprehensive income
b.other comprehensive income, but not net income
c.net income and other comprehensive income
d.neither net income nor other comprehensive income
24) selected data taken from the 2012 financial statements of trading card company
tipton company, inc. are as follows (in millions).
instructions
compute these ratios at february 20, 2012:
(a)current cash debt coverage ratio
(b)cash debt coverage ratio
(c)free cash flow
provide a brief interpretation of your results.
25) all of the following statements regarding convertible bonds are true except
a.if the market price of common stock increases substantially, bondholders with
convertible bonds benefit
b.convertible bonds can be converted into common stock at the option of the issuing
company
c.bondholders with convertible bonds receive interest on the bonds until conversion
d.convertible bonds sell at a higher price and pay a low rate of interest than those
without the conversion option
26)
the summaries of data from the balance sheet, income statement, and retained earnings
statement for two corporations, bates corporation and wilson enterprises, are presented
below for 2012.
instructions
determine the missing amounts. assume all changes in stockholders’ equity are due to
changes in retained earnings.
27) a debit balance in retained earnings is identified as a ________________.
28) after all closing entries are journalized and posted, a _________________ trial
balance is prepared from the ledger.
29) the accrued interest for a three month note payable of $10,000 dated december 1,
2011 at an interest rate of 6% is $150 on december 31, 2011.
30) bonds may be redeemed (retired) before maturity by the issuing corporation.
explain why a company would decide to retire bonds before maturity and the necessary
steps to record the redemption.
31) when closing entries are prepared, each income statement account is closed directly
to retained earnings.
32) when credit sales are made, _________________ expense is considered a normal
and necessary risk of doing business on a credit basis.
33) a statement of cash flows summarizes the operating, ____________, and
___________ activities of an entity.