Archives: Quiz

1) Franco Company uses IFRS and owns property, plant and equipment with a historical cost of 5,000,000 euros. At December 31, 2013, the company reported a valuation reserve of 8,565,000 euros. At December 31, 2014, the property, plant and equipment […]

1) Which of the following is a current liability? a.Preferred dividends in arrears b.A dividend payable in the form of additional shares of stock c.A cash dividend payable to preferred stockholders d.All of these answers are correct 2) Which of […]

1) Depletion expense a.is usually part of cost of goods sold b.includes tangible equipment costs in the depletion base c.excludes intangible development costs from the depletion base d.excludes restoration costs from the depletion base 2) The sales price for a […]

1) On January 1, 2014, Garrett Company purchased a machine costing $250,000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $50,000 salvage value at the end of its economic life. Assuming the […]

1) The interest rate written in the terms of the bond indenture is known as the a.coupon rate b.nominal rate c.stated rate d.coupon rate, nominal rate, or stated rate 2) On January 1, 2015, Yancey, Inc. signs a 10-year noncancelable […]

1) Hubbard, Inc. received the following information from its pension plan trustee concerning the operation of the company’s defined-benefit pension plan for the year ended December 31, 2015 . 1/1/1512/31/15 Projected benefit obligation$11,400,000$11,760,000 Pension assets (at fair value) 6,000,0006,900,000 Accumulated […]

1) What is the effect of freight-in on the cost-to-retail ratio when using the conventional retail method? a.Increases the cost-to-retail ratio b.No effect on the cost-to-retail ratio c.Depends on the amount of the net markups d.Decreases the cost-to-retail ratio 2) […]

1) Brown Corporation earns $480,000 and pays cash dividends of $160,000 during 2014 . Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown. What amount should Dexter show in the investment account at December 31, 2014 if the […]

1) Which of the following statements is false? a.The factor for the future value of an annuity due is found by multiplying the ordinary annuity table value by one plus the interest rate b.The factor for the present value of […]

1) The following information relates to the pension plan for the employees of Turner Co.: 1/1/14 12/31/14 12/31/15 Accum. benefit obligation$6,160,000$6,440,000$8,400,000 Projected benefit obligation6,510,0006,972,0009,338,000 Fair value of plan assets5,950,0007,280,0008,036,000 AOCI – net (gain) or loss-0-(1,008,000)(1,120,000) Settlement rate (for year)11%11% Expected […]

1) Which of the following statements is not true of fair value option? a.Receivables are recorded at fair value in the financial statements b.Unrealized holding gains and losses from fair value adjustments are reported as a component of comprehensive income […]

1) ill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Crane Company uses (a) the fair value method and (b) the equity method for accounting […]

1) Cost estimates at the end of the second year indicate that a loss will result on completion of the entire contract. Which of the following statements is correct? a.Under the completed-contract method, the loss is not recognized until the […]

1) At December 31, 2014 and 2015, Plank Corp. had outstanding 4,000 shares of $100 par value 8% cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 2014, dividends in arrears on the preferred […]

1) Use the code letters listed below (a l) to indicate, for each balance sheet item ( 1 13 ) listed below the usual valuation reported on the balance sheet. 1>Common stock8>Long-term bonds payable 2>Prepaid insurance9>Land (in use) 3>Natural resources10>Land […]

1) On January 1, 2014, Trent Company granted Dick Williams, an employee, an option to buy 400 shares of Trent Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value […]

1) Stinson Corporation owned 30,000 shares of Matile Corporation. These shares were purchased in 2011 for $270,000. On November 15, 2015, Stinson declared a property dividend of one share of Matile for every ten shares of Stinson held by a […]

1) Muggs Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Muggs $3 each. Muggs estimates that 45 percent of the coupons will be redeemed. […]

1) An expenditure made in connection with a machine being used by an enterprise should be a.expensed immediately if it merely extends the useful life but does not improve the quality b.expensed immediately if it merely improves the quality but […]

1) Lewis Company traded machinery with a book value of $760,000 and a fair value of $720,000. It received in exchange from Timmons Company a machine with a fair value of $800,000. Lewis also paid cash of $80,000 in the […]

1) Which of the following is not a difference between the accounting treatment for depreciation and cost depletion? a.Depletion applies to natural resources while depreciation applies to plant and equipment b.Depletion refers to the physical exhaustion or consumption of the […]

1) A ten-year bond was issued in 2013 at a discount with a call provision to retire the bonds. When the bond issuer exercised the call provision on an interest date in 2015, the carrying amount of the bond was […]

1) The following data are provided: December 31 2015 2014 Cash$ 750,000$ 500,000 Accounts receivable (net)800,000600,000 Inventories1,300,0001,100,000 Plant assets (net)3,500,0003,250,000 Accounts payable550,000400,000 Income taxes payable100,00050,000 Bonds payable700,000700,000 10% Preferred stock, $50 par1,000,0001,000,000 Common stock, $10 par1,200,000900,000 Paid-in capital in excess […]

1) Mitchell Corporation prepared the following reconciliation for its first year of operations: Pretax financial income for 2015$ 900,000 Tax exempt interest(75,000) Originating temporary difference (175,000) Taxable income$650,000 The temporary difference will reverse evenly over the next two years at […]

1) Mays, Inc. had net income for 2014 of $1,060,000 and earnings per share on common stock of $5. Included in the net income was $150,000 of bond interest expense related to its long-term debt. The income tax rate for […]

1) A corporation was organized in January 2014 with authorized capital of $10 par value common stock. On February 1, 2014, shares were issued at par for cash. On March 1, 2014, the corporation’s attorney accepted 7,000 shares of common […]

1) If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is a.net realizable value b.original cost c.market value d.net […]

1) Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of […]

1) When the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, revenues are considered a.earned b.realized c.recognized d.All of these answers are correct 2) Midland Company follows U.S. GAAP for […]

1) Torrey Co. manufactures equipment that is sold or leased. On December 31, 2015, Torrey leased equipment to Dalton for a five-year period ending December 31, 2020, at which date ownership of the leased asset will be transferred to Dalton. […]

1) Which of the following is a reason for recasting prior financial statements based on IFRS? a.To increase the market value of a companys shares b.To report a high income for attracting investors c.To report a low taxable income reducing […]

1) Which of the following methods of determining bad debt expense does not properly match expense and revenue? a.Charging bad debts with a percentage of sales under the allowance method b.Charging bad debts with an amount derived from a percentage […]

1) Geary Co. assigned $800,000 of accounts receivable to Kwik Finance Co. as security for a loan of $670,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the […]

1) According to the FASB, redeemable preferred stock should be a.included with common stock b.included as a liability c.excluded from the stockholders equity heading d.included as a contra item in stockholders’ equity 2) Harris Co. takes a full year’s depreciation […]

1) The basic accounting concept that refers to the tendency of accountants to resolve uncertainty in favor of understating assets and revenues and overstating liabilities and expenses is known as a.prudence or conservatism b.the materiality concept c.the substance over form […]

1) Link Co. purchased machinery that cost $1,800,000 on January 4, 2013 . The entire cost was recorded as an expense. The machinery has a nine-year life and a $120,000 residual value. The error was discovered on December 20, 2015 […]

1) Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on […]

1) On October 1, 2014 Macklin Corporation issued 5%, 10-year bonds with a face value of $4,000,000 at 104 . Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-line basis. Bond […]

1) A prepaid expense can best be described as an amount a.paid and currently matched with revenues b.paid and not currently matched with revenues c.not paid and currently matched with revenues d.not paid and not currently matched with revenues 2) […]

1) Which of the following relates to both relevance and faithful representation? a.Cost constraint b.Predictive value c.Verifiability d.Neutrality 2) A trial balance a.proves that debits and credits are equal in the ledger b.supplies a listing of open accounts and their […]

1) Where must earnings per share be disclosed in the financial statements to satisfy generally accepted accounting principles? a.On the face of the statement of retained earnings (or, statement of stockholders’ equity) b.In the footnotes to the financial statements c.On […]

1) On May 1, 2015, TV Inc. consigned 80 TVs to Ed’s TV. The TVs cost $450. Freight on the shipment paid by Eds TV was $1,000. On July 10, TV Inc. received an account sales and $21,500 from Ed’s […]

1) Jerome Co. has the following deferred tax liabilities at December 31, 2014: What amount would Jerome Co. report as a noncurrent deferred tax liability under IFRS and under U.S. GAAP? IFRSU.S. GAAP a.$0$450,000 b.$540,000$350,000 c.$350,000$350,000 d.$540,000$540,000 2) Rogers Co. […]

1) Moorman Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax$ 860,000 Dividends declared640,000 Net income2,000,000 Retained earnings, 1/1/14, as reported4,000,000 Moorman should report retained earnings, 12/31/14, as adjusted at a.$3,140,000 b.$4,500,000 […]

1) In a period of rising prices, the inventory method which tends to give the highest reported inventory is a.FIFO b.moving average c.LIFO d.weighted-average 2) Company A issuing its annual financial reports within one month of the end of the […]

1) The primary IFRS related to property, plant and equipment is found in a.IAS 1 and IAS 34 b.IAS 11 and IAS 17 c.IAS 16 and IAS 23 d.IAS 27 and IAS 39 2) In order to properly record a […]

1) Renfro Corporation will invest $70,000 every December 31st for the next six years (2014 2019). If Renfro will earn 12% on the investment, what amount will be in the investment fund on December 31, 2019? a.$287,798 b.$322,336 c.$568,063 d.$636,230 […]

1) On January 1, 2008, Forrest Company purchased equipment at a cost of $130,000. The equipment was estimated to have a salvage value of $4,000 and it is being depreciated over eight years under the sum-of-the-years’-digits method. What should be […]

1) What would be an advantage of having all countries adopt and follow the same accounting standards? a.Agreement b.Comparability c.Lower preparation costs d.Comparability and lower preparation costs 2) Which of the following is not one of the basic questions that […]

1) When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities? Indirect MethodDirect Method a.IncreaseDecrease b.DecreaseIncrease c.IncreaseIncrease d.DecreaseDecrease 2) Spencer Corporation […]