1) which of the following is not an accounting assumption?
a.integrity
b.going concern
c.periodicity
d.economic entity
2) all of the following statements about the useful life factor associated with
depreciation are true except
a.useful life is also called service life
b.useful life is an estimate of productive life
c.past experience with similar assets is helpful in establishing useful life
d.useful life is also called expected trade-in value
3) hermann corporation had net income of $200,000 and paid dividends to common
stockholders of $50,000 in 2012. the weighted average number of shares outstanding in
2012 was 50,000 shares. hermann corporation’s common stock is selling for $50 per
share on the new york stock exchange. hermann corporation’s payout ratio for 2012 is
a.$5 per share
b.20%
c.25%
d.10%
4) extraordinary items are reported on the income statement immediately
a.below income from continuing operations
b.after comprehensive income
c.below income before taxes
d.after discontinued operations
5) tina’s boutique has total receipts for the month of $16,170 including sales taxes. if the
sales tax rate is 5%, what are tina’s sales for the month?
a.$15,362
b.$15,400
c.$16,170
d.it cannot be determined
6) use the following data to determine the total dollar amount of assets to be classified
as property, plant, and equipment.
a.$640,000
b.$340,000
c.$490,000
d.$380,000
7) what percentage of companies worldwide have experienced fraud in the last two
years?
a.1%
b.10%
c.50%
d.100%
8) which of the following provides the best rationale regarding analysts’ views about
the information value of the gross profit rate versus the gross profit amount?
a.the gross profit amount is more informative than the gross profit rate because it is a
dollar amount rather than a ratio
b.the gross profit amount is less informative than the gross profit rate because the latter
presents a meaningful relationship between gross profit and net sales
c.the gross profit amount is more informative than the gross profit rate because the
gross profit rate is only used to describe a few industries while the gross profit amount
is universally used
d.the gross profit amount is more informative than the gross profit rate because high
volume operations are able to calculate the gross profit rate but not the gross profit
amount
9) at december 31, 2012 mohling companys inventory records indicated a balance of
$652,000. upon further investigation it was determined that this amount included the
following:
what is mohlings correct ending inventory balance at december 31, 2012?
a.$540,000
b.$646,000
c.$460,000
d.$534,000
10) accounting information is relevant to business decisions because it
a.has been verified by external audit
b.is prepared on an annual basis
c.confirms prior expectations
d.is neutral in its representations
11) which of the following activities is excluded from the statement of cash flows under
ifrs?
a. financing activities
b. investing activities
c. noncash investing and financing activities
d. operating activities
12) receivables are
a.one of the most liquid assets and thus are always considered current assets
b.claims that are expected to be collected in cash
c.shown on the income statement at cash realizable value
d.always the result of revenue recognition
13) the reconciliation of the cash register tape with the cash in the register is an
example of
a.other controls
b.independent internal verification
c.establishment of responsibility
d.segregation of duties
14) the following information is provided for nguyen company and northwest
corporation.
if nguyen and northwest are in the same industry and the industry average for return on
assets is equal to 30%, which of the following statements is true?
a.nguyen is more profitable than the average company in its industry
b.northwest is more profitable than nguyen
c.both nguyen and northwest are more profitable than the average company in their
industry
d.nguyen is more profitable than northwest
15) hogan company has $500,000 of bonds outstanding. the unamortized premium is
$7,200. if the company redeemed the bonds at 101, what would be the gain or loss on
the redemption?
a.$2,200 gain
b.$2,200 loss
c.$5,000 gain
d.$5,000 loss
16) (a)a company purchased a patent on january 1, 2012, for $2,000,000. the patent’s
legal life is 20 years but the company estimates that the patent’s useful life will only be
5 years from the date of acquisition. on june 30, 2012, the company paid legal costs of
$162,000 in successfully defending the patent in an infringement suit. prepare the
journal entry to amortize the patent at year end on december 31, 2012.
(b)milner company purchased a franchise from the tasty food company for $450,000 on
january 1, 2012. the franchise is for an indefinite time period and gives milner company
the exclusive rights to sell tasty wings in a particular territory. prepare the journal entry
to record the acquisition of the franchise and any necessary adjusting entry at year end
on december 31, 2012.
(c)huerter company incurred research and development costs of $500,000 in 2012 in
developing a new product. prepare the necessary journal entries during 2012 to record
these events and any adjustments at year end on december 31, 2012.
17) a corporation records a dividend-related liability
a.on the record date
b.on the payment date
c.when dividends are in arrears
d.on the declaration date
18) which of the following would not be classified as a short-term investment?
a.short-term commercial paper
b.idle cash in a bank checking account
c.marketable equity securities
d.marketable debt securities
19) all of the following statements are true regarding cash flow presentations except
a.the balance sheet provides only limited information about a company’s cash flows
b.the balance sheet provides information about how property, plant, and equipment
were financed
c.the income statement does not show how much cash was generated by operating
activities
d.if cash from operations is compared to net income, information about the quality of
reported net income is revealed