Inventory does not include:
a. Materials used in the production of goods to be sold.
b. Assets intended to be sold in the normal course of business.
c. The cost of office equipment.
d. Assets currently in production for normal sales.
Logistics Company had the following items listed in its trial balance at 12/31/2016:
Included in the checking account balance is $50,000 of restricted cash that Bank of the
East requires as a compensating balance for the $300,000 note. What amount will
Logistics include in its year-end balance sheet as cash and cash equivalents?
a. $412,000.
b. $462,000.
c. $392,000.
d. $442,000.
All other things equal, what is the effect on earnings per share when a corporation
acquires shares of its own stock on the open market?
a. Decrease.
b. No effect if the shares are held as treasury shares.
c. Increase only if the shares are considered to be retired.
d. Increase.
Property dividends distributed are reported in connection with a statement of cash flows
as:
a. A financing activity.
b. An investing activity.
c. A noncash activity.
d. Not reported in the statement of cash flows.
Amortizing prior service cost for pension plans will:
a. Increase retained earnings and increase accumulated other comprehensive income.
b. Decrease retained earnings and decrease accumulated other comprehensive income.
c. Increase retained earnings and decrease accumulated other comprehensive income.
d. Decrease retained earnings and increase accumulated other comprehensive income.
Rowdy’s Restaurants Cash Flow (in millions)
Rowdy’s would report net cash inflows (outflows) from financing activities in the
amount of:
a. $ 1,100.
b. $(1,100).
c. $ 820.
d. $ 900.
Janson Corporation Co.’s trial balance included the following account balances at
December 31, 2016:
What amount should be included in the current liability section of Janson’s December
31, 2016, balance sheet? a. $ 63,000.
b. $ 41,000.
c. $ 61,000.
d. $101,000.
For the lessee to account for a lease as a capital lease, the lease must meet:
a. All four of the criteria specified by GAAP regarding accounting for leases.
b. Any one of the six criteria specified by GAAP regarding accounting for leases.
c. Any two of the criteria specified by GAAP regarding accounting for leases.
d. Any one of the four criteria specified by GAAP regarding accounting for leases.
On January 1, 2016, Dreamworld Co. began construction of a new warehouse. The
building was finished and ready for use on September 30, 2017. Expenditures on the
project were as follows:
Dreamworld had $5,000,000 in 12% bonds outstanding through both years.
The average accumulated expenditures for 2017 by the end of the construction period
was:
a. $1,950,000.
b. $1,554,000.
c. $1,254,000.
d. $ 975,000.
Porite Company recognizes revenue in the period in which it records an asset for the
related account receivable, rather than in the period in which the account receivable is
collected in cash. Porite”s practice is an example of:
a. Cash basis accounting.
b. Accrual accounting.
c. The matching principle.
d. Economic entity.
How many performance obligations exist in this contract?
On July 15, 2016, Ortiz & Co. signed a contract to provide EverFresh Bakery with an
ingredient-weighing system for a price of $90,000. The system included finely tuned
scales that fit into EverFresh’s automated assembly line, Ortiz’s proprietary software
modified to allow the weighing sytem to function in EverFresh’s automated system, and
a one-year contract to calibrate the equipment and software on an as-needed basis.
(Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz’s
systems.) If Ortiz was to provide these goods and services separately, it would charge
$60,000 for the scales, $10,000 for the software, and $30,000 for the calibration
contract. Ortiz delivered and installed the equipment and software on August 1, 2016,
and the calibration service commenced on that date. a. 0
b. 1
c. 2
d. 3
Which of the following would be added to net income when determining cash flows
from operating activities under the indirect method?
a. A gain on the sale of land.
b. An increase in prepaid expenses.
c. A decrease in accounts payable.
d. A decrease in accounts receivable.
The accounting for defined contribution pension plans is easy because each year:
a. The employer records pension expense equal to the amount paid out to retirees.
b. The employer records pension expense based on an amount provided by the actuary.
c. The employer records pension expense equal to the annual contribution.
d. The employer records pension expense based on the earnings of the plan assets.
Northwest Fur Co. started 2016 with $94,000 of merchandise inventory on hand.
During 2016, $400,000 in merchandise was purchased on account with credit terms of
1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point.
Northwest paid freight charges of $7,500. Merchandise with an invoice amount of
$5,000 was returned for credit. Cost of goods sold for the year was $380,000.
Northwest uses a perpetual inventory system. What is ending inventory assuming
Northwest uses the gross method to record purchases?
a. $112,490.
b. $112,550.
c. $116,500.
d. $120,300.
What is the treasury stock method of accounting for stock options, warrants, and
rights?
The following transactions occurred during the year for XYZ Corporation:
•During the year, trading securities were purchased for $250,000.
•
•During the year, securities available for sale were purchased for $80,000.
•
•During the year, trading securities that are carried on the balance sheet at their fair
value of $125,000 were sold for $125,000 cash.
•
•At the end of the year, the trading securities portfolio has an aggregate market
value of $142,000 and an aggregate cost of $150,000.
•
(e.) At the end of the year the securities available for sale portfolio has an aggregate
market
value of $95,000.
Required:
Indicate how each of these transactions would affect the statement of cash flows for
a corporation. Assume the statement of cash flows is prepared using the indirect
method. Each transaction is assumed to be independent of the other transactions.
Listed below are 4 terms followed by a list of phrases that describe or characterize each
of the terms. Match each phrase with the number for the most correct term.
The prescribed accounting treatment for stock dividends implicitly assumes that
shareholders are fooled by ‘œsmall’ stock dividends and benefit by the market value of
their additional shares. Explain this statement. Is it logical?
On December 31, 2015, Heffner Company had 100,000 shares of common stock
outstanding and 30,000 shares of 7%, $100 par, cumulative preferred stock outstanding.
On February 28, 2016, Heffner purchased 24,000 shares of common stock on the open
market as treasury stock paying $45 per share. Heffner sold 6,000 of the treasury shares
on September 30, 2016, for $47 per share. Net income for 2016 was $540,000. The
income tax rate is 40%. Also outstanding at December 31, 2015, were fully vested
incentive stock options giving key personnel the option to buy 50,000 common shares
at $40. The market price of the common shares averaged $50 during 2016. Five
thousand 6% bonds were issued at par on January 1, 2016. Each $1,000 bond is
convertible into 125 shares of common stock. None of the bonds had been converted by
December 31, 2016, and no stock options were exercised during the year.
Required:
Compute basic and diluted earnings per share (rounded to 2 decimal places) for Heffner
Company for 2016.
On May 1, Lectric Industries issued 9-month notes in the amount of $60 million.
Interest is payable at maturity. Required:
Determine the amount of interest expense that should be recorded in a year-end
adjusting entry under each of the following independent assumptions:
Listed below are five terms followed by a list of phrases that describe or characterize
each of the terms. Match each phrase with the number for the correct term.