Archives: Quiz

1) plank co. uses the retail inventory method. the following information is available for the current year. assuming that the lifo inventory method is used, that the beginning inventory is the base inventory when the index was 100, and that […]

1) warranty4u provides extended service contracts on electronic equipment sold through major retailers. the standard contract is for three years. during the current year, warranty4u provided 42,000 such warranty contracts at an average price of $81 each. related to these […]

1) at the end of the fiscal year, apha airlines has an outstanding non-cancellable purchase commitment for the purchase of 1 million gallons of jet fuel at a price of $4.10 per gallon for delivery during the coming summer. the […]

1) in accounting for investments in debt securities that are classified as trading securities, a.a discount is reported separately b.a premium is reported separately c.any discount or premium is not amortized d.none of these 2) at december 31, 2012, the […]

1) timmons company traded machinery with a book value of $240,000 and a fair value of $400,000. it received in exchange from lewis company a machine with a fair value of $360,000 and cash of $40,000. lewiss machine has a […]

1) salvage values must be zero. a.1 is correct b.2 is correct c.1 and 2 are correct d.all are correct 2) under ifrs, sampson company, who has a non-current asset which has been classified as held-for-sale, should a.test the asset’s […]

1) the financial accounting standards board a.has issued a series of pronouncements entitled statements on auditing standards b.was the forerunner of the current accounting principles board c.is the arm of the securities and exchange commission responsible for setting financial accounting […]

1) part a.judd company has a beginning inventory in year one of $500,000 and an ending inventory of $605,000. the price level has increased from 100 at the beginning of the year to 110 at the end of year one. […]

1) miles company, a wholesaler, budgeted the following sales for the indicated months: all merchandise is marked up to sell at its invoice cost plus 20%. merchandise inventories at the beginning of each month are at 30% of that month’s […]

1) which of the following is a fundamental characteristic of useful accounting information? a.comparability b.relevance c.neutrality d.materiality 2) what is the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory? a.prevents understatement of the inventory value b.allows for […]

1) an accountant wishes to find the present value of an annuity of $1 payable at the beginning of each period at 10% for eight periods. the accountant has only one present value table which shows the present value of […]

1) a decrease in net assets arising from peripheral or incidental transactions is called a(n) a.capital expenditure b.cost c.loss d.expense 2) the conversion of bonds is most commonly recorded by the a.incremental method b.proportional method c.market value method d.book value […]

1) what is prudence or conservatism? a.understating assets and net income b.when in doubt, recognizing the option that is least likely to overstate assets and income c.recognizing the option that is least likely to overstate assets and income d.recognizing revenue […]

1) wilkinson corporation factored, with recourse, $400,000 of accounts receivable with huskie financing. the finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. wilkinson estimates the recourse obligation at $9,600. what amount […]

1) haag corp.’s 2013 income statement showed pretax accounting income of $1,250,000. to compute the federal income tax liability, the following 2013 data are provided: what amount of current federal income tax liability should be included in hagg’s december 31, […]

1) given below are the future value factors for 1 at 8% for one to five periods. each of the items 65 to 68 is based on 8% interest compounded annually. what amount will be in a bank account three […]

1) jamison company purchased the assets of booker company at an auction for $2,800,000. an independent appraisal of the fair value of the assets is listed below: assuming that specific identification costs are impracticable and that jamison allocates the purchase […]

1) which of the following statements is incorrect regarding the classification of accounts and notes receivable? a.segregation of the different types of receivables is required if they are material b.disclose any loss contingencies that exist on the receivables c.any discount […]

1) hudson, inc. is a calendar-year corporation. its financial statements for the years 2013 and 2012 contained errors as follows: assume that no correcting entries were made at december 31, 2012, or december 31, 2013 and that no additional errors […]

1) hummel co. purchased a put option on olney common shares on july 7, 2012, for $100. the put option is for 200 shares, and the strike price is $30. the option expires on january 31, 2013. the following data […]

1) the times interest earned ratio is computed by dividing a.net income by interest expense b.income before taxes by interest expense c.income before income taxes and interest expense by interest expense d.net income and interest expense by interest expense 2) […]

1) gorman construction co. began operations in 2013. construction activity for 2013 is shown below. gorman uses the completed-contract method. which of the following should be shown on the balance sheet at december 31, 2013 related to contract 3? a.inventory, […]

1) which of the following is an example of managing earnings up? a.decreasing estimated salvage value of equipment b.writing off obsolete inventory c.underestimating warranty claims d.accruing a contingent liability for an ongoing lawsuit 2) on october 1, 2012 bartley corporation […]

1) ifrs and u.s. gaap a.are diametrically opposed in their accounting for impairments of assets held for disposal b.are similar in the accounting for impairments of assets held for disposal c.are moving toward common ground in their accounting for impairments […]

1) a company buys an oil rig for $2,000,000 on january 1, 2012. the life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $400,000 (present value at […]

1) which of the following situations may give rise to unearned revenue? a.providing trade credit to customers b.selling inventory c.selling magazine subscriptions d.providing manufacturer warranties 2) a ‘secret reserve” will be created if a.inadequate depreciation is charged to income b.a […]

1) which basic element of financial statements arises from peripheral or incidental transactions? a.assets b.liabilities c.gains d.expenses 2) which of these is not included in an employer’s payroll tax expense? a.f.i.c.a. (social security) taxes b.federal unemployment taxes c.state unemployment taxes […]

1) users of financial reports include all of the following except a.creditors b.government agencies c.unions d.all of these are users 2) on january 1, 2004, mill corporation purchased for $304,000, equipment having a useful life of ten years and an […]

1) an item that should be classified as an extraordinary item is a.write-off of goodwill b.gains from transactions involving foreign currencies c.losses from moving a plant to another city d.gains from a company selling the only investment it has ever […]

1) which of the following is an advantage for u.s. companies with international operations to use lifo for u.s. purposes, as opposed to using fifo for foreign subsidiaries? a.lifo creates paper profits b.lifo generally approximates the physical flow of items […]

1) the asset turnover ratio is computed by dividing a.net income by ending total assets b.net income by average total assets c.net sales by ending total assets d.net sales by average total assets 2) which of the following is a […]

1) armstrong inc. is a calendar-year corporation. its financial statements for the years ended 12/31/12 and 12/31/13 contained the following errors: assume that the 2012 errors were not corrected and that no errors occurred in 2011. by what amount will […]

1) the difference between the accounting process and the accounting cycle is a.the accounting process results in the preparation of financial statements, whereas the accounting cycle is concerned with recording business transactions b.the accounting cycle represents the steps taken to […]

1) which of the following is never classified as an extraordinary item? a.losses from a major casualty b.losses from an expropriation of assets c.gain on a sale of the only security investment a company has ever owned d.losses from exchange […]

1) the pervasive criterion by which accounting information can be judged is that of a.decision usefulness b.freedom from bias c.timeliness d.comparability 2) the average days to sell inventory is computed by dividing a.365 days by the inventory turnover ratio b.the […]

1) theoretically, the costs of issuing bonds could be a.expensed when incurred b.reported as a reduction of the bond liability c.debited to a deferred charge account and amortized over the life of the bonds d.any of these 2) on september […]

1) which of the following legal fees should be capitalized? 2) green co. received merchandise on consignment. as of january 31, green included the goods in inventory, but did not record the transaction. the effect of this on its financial […]

1) glaus corp. signed a three-month, zero-interest-bearing note on november 1, 2012 for the purchase of $250,000 of inventory. the face value of the note was $253,675. assuming glaus used a discount on note payable account to initially record the […]

1) the percentage-of-completion method must be used when certain conditions exist. which of the following is not one of those necessary conditions? a.estimates of progress toward completion, revenues, and costs are reasonably dependable b.the contractor can be expected to perform […]

1) composite or group depreciation is a depreciation system whereby a.the years of useful life of the various assets in the group are added together and the total divided by the number of items b.the cost of individual units within […]

1) information about different companies and about different periods of the same company can be prepared and presented in a similar manner. comparability and consistency are related to which of these objectives? comparability consistency a. companies companies b. companies periods […]

1) note disclosures for long-term debt generally include all of the following except a.assets pledged as security b.call provisions and conversion privileges c.restrictions imposed by the creditor d.names of specific creditors 2) the assumption that a company will not be […]

1) harper company commonly issues long-term notes payable to its various lenders. harper has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). harper has elected to […]

1) on january 2, 2013, tylor co. issued a 4-year, $750,000 note at 6% fixed interest, interest payable semiannually. tylor now wants to change the note to a variable rate note. as a result, on january 2, 2013, tylor co. […]

1) the worksheet for sharko co. consisted of five pairs of debit and credit columns. the dollar amount of one item appeared in both the credit column of the income statement section and the debit column of the balance sheet […]

1) mott co. includes one coupon in each bag of dog food it sells. in return for eight coupons, customers receive a leash. the leashes cost mott $3 each. mott estimates that 40 percent of the coupons will be redeemed. […]

1) the most significant current source of generally accepted accounting principles is the a.aicpa b.sec c.apb d.fasb 2) elton industries, a company who uses ifrs reporting standards, has assets and liabilities of a disposal group classified as held-for-sale shown on […]

1) on january 1, 2008, goll corp. issued 4,000 of its 10%, $1,000 bonds for $4,160,000. these bonds were to mature on january 1, 2016 but were callable at 101 any time after december 31, 2011. interest was payable semiannually […]

1) bell inc. took a physical inventory at the end of the year and determined that $780,000 of goods were on hand. in addition, bell, inc. determined that $60,000 of goods that were in transit that were shipped f.o.b. shipping […]

1) which of the following is a change in accounting principle? a.a change in the estimated service life of machinery b.a change from fifo to lifo c.a change from straight-line to double-declining-balance d.a change from fifo to lifo and a […]