1) those most responsible for the major policy decisions of a corporation are the
a.stockholders
b.board of directors
c.management
d.employees
2) compton inc. made a $500 ordinary repair to a piece of equipment. compton’s
accountant debited this amount to the asset account, equipment and credited cash. was
this the correct entry and if not, why not?
a.yes, this was the correct entry
b.no, the correct entry would be a debit to repairs expense and a credit to cash
c.no, the correct entry would be a debit to cash and a credit to repairs expense
d.no, the correct entry would be a debit to service revenue and a credit to cash
3) very often, failure to record a liability means failure to record a(n)
a.revenue
b.asset conversion
c.footnote
d.expense
4) gomez company is considering purchasing equipment. the equipment will produce
the following cash flows: year 1, $50,000; year 2, $90,000; year 3, $120,000. below is
some of the time value of money information that gomez has compiled that might help
them in their planning and compounded interest decisions.
gomez requires a minimum rate of return of 11%. to the closest dollar, what is the
maximum price gomez should pay for the equipment?
a.$635,364
b.$205,834
c.$330,506
d.$492,418
5) sales revenues are usually considered earned when
a.cash is received from credit sales
b.an order is received
c.goods have been transferred from the seller to the buyer
d.adjusting entries are made
6) which of the following items appears on the income statement before income before
irregular items?
a.other comprehensive income
b.extraordinary items
c.income tax expense
d.discontinued operations
7) allowing only the treasurer to sign checks is an example of
a.documentation procedures
b.separation of duties
c.other controls
d.establishment of responsibility
8) equipment costing $20,000 machine is purchased by paying $5,000 cash and signing
a note payable for the remainder. the journal entry should include a
a.credit to notes payable.
b.debit to cash.
c.credit to notes receivable.
d.credit to equipment.
9) an income statement would not include
a.other revenue and gains
b.extraordinary items
c.discontinued operations
d.dividends paid
10) notification by the bank that a deposited customer check was returned nsf requires
that the company make the following adjusting entry:
a.accounts receivable
cash
b.cash
accounts receivable
c.miscellaneous expense
accounts receivable
d.no adjusting entry is necessary.
11) wolford company borrowed $750,000 from u.s. bank on january 1, 2011 in order to
expand its mining capabilities. the five-year note required annual payments of $195,327
and carried an annual interest rate of 9.5%. what is the amount of expense wolford must
recognize on its 2012 income statement?
a.$71,250
b.$59,463
c.$52,694
d.$46,555
12) from the standpoint of the issuing company, a disadvantage of using bonds as a
means of long-term financing is that
a.bond interest is deductible for tax purposes
b.interest must be paid on a periodic basis regardless of earnings
c.income to stockholders may increase as a result of trading on the equity
d.the bondholders do not have voting rights
13) under ifrs, some companies present which section of the cash flow statement as a
single line item?
a. operating activities
b. investing activities
c. financing activities
d. noncash investing and financing activities
14)
prepare the journal entries to record these transactions in (a) blacks records and (b)
hayes records. assume use of the perpetual inventory system for both companies.
15) equipment costing $20,000 is purchased by paying $5,000 cash and signing a note
payable for the remainder. the journal entry should include a
a.debit to notes payable.
b.credit to cash.
c.credit to notes receivable.
d.credit to equipment.
16) sauder corporation has the following trading portfolio of stock investments as of
december 31, 201
on january 22, 2012, sauder corporation sold security c for $30,000.
instructions
(a)prepare the adjusting entry for sauder corporation on december 31, 2011 to report the
portfolio at fair value.
(b)indicate the balance sheet and income statement presentation of the fair value data
for the sauder corporation at december 31, 2011.
(c)prepare the journal entry for the 2012 sale.
17) which of the following is not properly classified as property, plant, and equipment?
a.building used as a factory
b.land used in ordinary business operations
c.a truck held for resale by an automobile dealership
d.land improvement, such as parking lots and fences
18) which statement is correct?
a.as long as a company consistently uses the cash basis of accounting, generally
accepted accounting principles allow its use
b.the use of the cash basis of accounting violates both the revenue recognition and
expense recognition principles
c.the cash basis of accounting is objective because no one can be certain of the amount
of revenue until the cash is received
d.as long as management is ethical, there are no problems with using the cash basis of
accounting
19) these are selected account balances on december 31, 2012.
what is the total amount of property, plant, and equipment that will appear on the
balance sheet?
a.$1,300,000
b.$1,100,000
c.$1,600,000
d.$950,000