1) depreciation is normally computed on the basis of the nearest
a.full month and to the nearest cent
b.full month and to the nearest dollar
c.day and to the nearest cent
d.day and to the nearest dollar
2) one of the more popular input measures used to determine the progress toward
completion in the percentage-of-completion method is
a.revenue-percentage basis
b.cost-percentage basis
c.progress completion basis
d.cost-to-cost basis
3)
prepare journal entries to record the following transactions related to long-term bonds
of quirk co.
(a)on april 1, 2011, quirk issued $1,000,000, 9% bonds for $1,075,736 including
accrued interest. interest is payable annually on january 1, and the bonds mature on
january 1, 2021.
(b)on july 1, 2013 quirk retired $300,000 of the bonds at 102 plus accrued interest.
quirk uses straight-line amortization.
4) which of the following terms is associated with recording a contingent liability?
a.possible
b.likely
c.remote
d.probable
5) inventories at current cost.
a.1
b.2
c.3
d.1 and 2
6) during 2012, a textbook written by mercer co. personnel was sold to roark
publishing, inc., for royalties of 10% on sales. royalties are receivable semiannually on
march 31, for sales in july through december of the prior year, and on september 30, for
sales in january through june of the same year.
royalty income of $162,000 was accrued at 12/31/12 for the period july-december 2012.
royalty income of $180,000 was received on 3/31/13, and $234,000 on 9/30/13.
mercer learned from roark that sales subject to royalty were estimated at $2,430,000 for
the last half of 2013.
in its income statement for 2013, mercer should report royalty income at
a.$414,000
b.$432,000
c.$477,000
d.$495,000
7) a company gives each of its 50 employees (assume they were all employed
continuously through 2012 and 2013) 12 days of vacation a year if they are employed at
the end of the year. the vacation accumulates and may be taken starting january 1 of the
next year. the employees work 8 hours per day. in 2012, they made $21 per hour and in
2013 they made $24 per hour. during 2013, they took an average of 9 days of vacation
each. the companys policy is to record the liability existing at the end of each year at
the wage rate for that year. what amount of vacation liability would be reflected on the
2012 and 2013 balance sheets, respectively?
a.$100,800; $140,400
b.$115,200; $144,000
c.$100,800; $144,000
d.$115,200; $140,400
8) maxim company leased an office under a five-year contract, which has been
accounted for as an operating lease. faced with the downturn in the economy, the viable
company decided to sub-lease the office. however, they have had no luck with this
effort and the landlord will not allow the lease to be cancelled. the payments are $6,000
per year and there are four years left on the lease. the company’s most recent interest
rate for financing from a bank is 6%. the risk-free rate on government bonds is 4%.
what is the provision for the lease under ifrs?
a.$21,780
b.$22,572
c.$24,000
d.$20,791
9) inventory may be recorded at net realizable value if
a.there is a controlled market with a quoted price
b.there are no significant costs of disposal
c.the inventory consists of precious metals or agricultural products
d.all of these
10) accrued salaries payable of $51,000 were not recorded at december 31, 2012. office
supplies on hand of $34,000 at december 31, 2013 were erroneously treated as expense
instead of supplies inventory. neither of these errors was discovered nor corrected. the
effect of these two errors would cause
a.2013 net income to be understated $85,000 and december 31, 2013 retained earnings
to be understated $34,000
b.2012 net income and december 31, 2012 retained earnings to be understated $51,000
each
c.2012 net income to be overstated $17,000 and 2013 net income to be understated
$34,000
d.2013 net income and december 31, 2013 retained earnings to be understated $34,000
each
11) leonard corporation reports the following information:
correction of overstatement of depreciation expense
in prior years, net of tax$ 215,000
dividends declared160,000
net income500,000
retained earnings, 1/1/12, as reported2,000,000
leonard should report retained earnings, 1/1/12, as adjusted at
a.$1,785,000
b.$2,000,000
c.$2,215,000
d.$2,555,000
12) when the effective-interest method is used to amortize bond premium or discount,
the periodic amortization will
a.increase if the bonds were issued at a discount
b.decrease if the bonds were issued at a premium
c.increase if the bonds were issued at a premium
d.increase if the bonds were issued at either a discount or a premium
13) gross billings for merchandise sold by lang company to its customers last year
amounted to $12,720,000; sales returns and allowances were $370,000, sales discounts
were $175,000, and freight-out was $140,000. net sales last year for lang company were
a.$12,720,000
b.$12,350,000
c.$12,175,000
d.$12,035,000