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1) bella requires $120,000 in four years to purchase a new home. what amount must be
invested today in an investment that earns 6% interest, compounded annually?
a.$95,051
b.$98,724
c.$145,337
d.$151,497
2) in computations of weighted average of shares outstanding, when a stock dividend or
stock split occurs, the additional shares are
a.weighted by the number of days outstanding
b.weighted by the number of months outstanding
c.considered outstanding at the beginning of the year
d.considered outstanding at the beginning of the earliest year reported
3) gains" on sales of treasury stock (using the cost method) should be credited to
a.paid-in capital from treasury stock
b.capital stock
c.retained earnings
d.other income
4) in accounting for a long-term construction-type contract using the
percentage-of-completion method, the gross profit recognized during the first year
would be the estimated total gross profit from the contract, multiplied by the percentage
of the costs incurred during the year to the
a.total costs incurred to date
b.total estimated cost
c.unbilled portion of the contract price
d.total contract price
5) the following information pertains to parsons co.:
instructions
compute (assume no changes in balances during the past year):
(a)total amount of stockholders equity in the balance sheet
(b)earnings per share of common stock
(c)book value per share of common stock
(d)payout ratio of common stock
(e)return on common stock equity
6) financial information does not demonstrate consistency when
a.firms in the same industry use different accounting methods to account for the same
type of transaction
b.a company changes its estimate of the salvage value of a fixed asset
c.a company fails to adjust its financial statements for changes in the value of the
measuring unit
d.none of these
7) which of the following is true about intraperiod tax allocation?
a.it arises because certain revenue and expense items appear in the income statement
either before or after they are included in the tax return
b.it is required for extraordinary items and cumulative effect of accounting changes but
not for prior period adjustments
c.its purpose is to allocate income tax expense evenly over a number of accounting
periods
d.its purpose is to relate the income tax expense to the items which affect the amount of
tax
8) dunn, inc. uses the accrual method of accounting for financial reporting purposes and
appropriately uses the installment method of accounting for income tax purposes.
installment income of $1,500,000 will be collected in the following years when the
enacted tax rates are:
the installment income is dunn's only temporary difference. what amount should be
included in the deferred income tax liability in dunn's december 31, 2012 balance
sheet?
a.$375,000
b.$427,500
c.$472,500
d.$525,000
9) the following information was taken from the 2013 financial statements of jenny
gardner corporation:
if the direct method is used in the 2013 statement of cash flows, what amount should
jenny gardner report as cash payments to suppliers?
a.$405,000
b.$435,000
c.$465,000
d.$495,000
10) why was it believed that accounting standards that were issued by the financial
accounting standards board would carry more weight?
a.smaller membership
b.fasb board members are well-paid
c.fasb board members must be cpas
d.due process
11) on december 31, 2012, gonzalez company granted some of its executives options to
purchase 120,000 shares of the companys $10 par common stock at an option price of
$50 per share. the black-scholes option pricing model determines total compensation
expense to be $900,000. the options become exercisable on january 1, 2013, and
represent compensation for executives services over a three-year period beginning
january 1, 2013. at december 31, 2013 none of the executives had exercised their
options. what is the impact on gonzalezs net income for the year ended december 31,
2013 as a result of this transaction under the fair value method?
a.$300,000 increase
b.$900,000 decrease
c.$300,000 decrease
d.$0
12) genesis company has seven loans receivable. the loans vary in size and have been
extended to companies with different credit ratings. given a downturn in the economy, it
is expected that at least two of these loans will be impaired. which of the following
statements best describes the accounting for these loans under igaap?
a.igaap implies that the loans should be reported as an aggregated portfolio
b.igaap uses an incurred loss model rather than an expected loss model, so no
impairment on each of the two loans is recognized until an identifiable event occurs and
is measurable
c.under igaap, when impairment is permitted, the balance on each of the impaired loans
becomes the new basis for the loan
d.igaap uses an expected loss model, so the entire diverse portfolio should be written
down based on the anticipated impairment
13) which of these is generally an example of an extraordinary item?
a.loss incurred because of a strike by employees
b.write-off of deferred marketing costs believed to have no future benefit
c.gain resulting from the devaluation of the u.s. dollar
d.gain resulting from the state exercising its right of eminent domain on a piece of land
used as a parking lot
14) maintaining a set of accounting records is
a.optional
b.required by the internal revenue service
c.required by the foreign corrupt practices act
d.required by the internal revenue service and the foreign corrupt practices act
15) igaap requires an impairment loss for a loan receivable be recognized when
a.its carrying amount is less than its recoverable amount
b.its recoverable amount is less than its carrying amount
c.its present value of expected future cash flows is greater than its carrying amount
d.its principal amount is less than its interest amount
16) a journal entry to record the sale of inventory on account will include a
a.debit to inventory
b.debit to accounts receivable
c.debit to sales
d.credit to cost of goods sold
