Archives: Quiz

1) In 2014, Esther Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2014, Esther had a weighted average of 250,000 common shares outstanding. Compute Esther’s 2014 […]

1) Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $172,076, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The […]

1) Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are) Recoverability TestFair Value Test a.YesYes […]

1) A depreciable asset has an estimated 15% salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods? Straight-lineProductive Output a.YesNo b.YesYes […]

1) Characteristics of generally accepted accounting principles include all of the following except a.authoritative accounting that the rule-making body has established as a principle of reporting b.standards are considered useful by the profession c.each principle is approved by the SEC […]

1) At the beginning of 2015, Flaherty Company had retained earnings of $350,000. During the year Flaherty reported net income of $100,000, sold treasury stock at a gain of $36,000, declared a cash dividend of $60,000, and declared and issued […]

1) At December 31, 2014 Rice Company had 300,000 shares of common stock and 10,000 shares of 8%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2014 or 2015 […]

1) Continuing franchise fees should be recorded by the franchisor a.as revenue when earned and receivable from the franchisee b.as revenue when received c.in accordance with the accounting procedures specified in the franchise agreement d.as revenue only after the balance […]

1) “In-substance defeasance” is a term used to refer to an arrangement whereby a.a company gets another company to cover its payments due on long-term debt b.a governmental unit issues debt instruments to corporations c.a company provides for the future […]

1) Adjustments are often prepared a.after the balance sheet date, but dated as of the balance sheet date b.after the balance sheet date, and dated after the balance sheet date c.before the balance sheet date, and dated before the balance […]

1) Which of the following should be reported for capital stock? a.The shares authorized b.The shares issued c.The shares outstanding d.All of these answer choices are correct 2) What condition is not necessary in order to use the retail method […]

1) Yoder, Incorporated, has 3,600,000 shares of common stock outstanding on December 31, 2014 . An additional 800,000 shares of common stock were issued on April 1, 2015, and 400,000 more on July 1, 2015 . On October 1, 2015, […]

1) In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be a.the terms of payment in the contract b.the degree to which a reliable estimate of the costs to complete […]

1) In which account are postage stamps classified? a.Cash b.Office supplies c.Receivables d.Inventory 2) Marsh Co. had 2,400,000 shares of common stock outstanding on January 1 and December 31, 2015 . In connection with the acquisition of a subsidiary company […]

1) Perez Company’s net accounts receivable were $800,000 at December 31, 2014 and $880,000 at December 31, 2015 . Net cash sales for 2015 were $520,000. The accounts receivable turnover for 2015 was 8.0. What were Perez’s total net sales […]

1) On January 1, 2014, Ogleby Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Ogleby to make annual payments of $90,000 at the beginning of each year for five years with title passing […]

1) For the year ended December 31, 2014, Transformers Inc. reported the following: Net income$180,000 Preferred dividends declared30,000 Common dividend declared6,000 Unrealized holding loss, net of tax3,000 Retained earnings240,000 Common stock120,000 Accumulated Other Comprehensive Income, Beginning Balance15,000 What would Transformers […]

1) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2014 . Historically, 10% of customers mail in the rebate form. During 2014, 3,000,000 packages of light bulbs are sold, and 160,000 […]

1) Which of the following is true of accounting for changes in estimates? a.A company recognizes a change in estimate by making a retrospective adjustment to the financial statements b.A company accounts for changes in estimates only in the period […]

1) Risers Inc. reported total assets of $1,800,000 and net income of $240,000 for the current year. Risers determined that inventory was overstated by $18,000 at the beginning of the year (this was not corrected). What is the corrected amount […]

1) Purchased goodwill represents a.excess of price paid over fair value of net assets obtained in a combination b.excess of price paid over the book value of the net assets obtained in a combination c.the difference in the aggregate amount […]

1) Which of the following statements is true about postretirement health care benefits? a.They are generally funded b.The benefits are well-defined and level in dollar amount c.The beneficiary is the retiree, spouse, and other dependents d.The benefit is payable monthly […]

1) The following information is available for Naab Company for 2014: Freight-in$ 30,000 Purchase returns75,000 Selling expenses230,000 Ending inventory260,000 The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale? […]

1) Fogelberg Company purchased equipment for $25,000. Sales tax on the purchase was $1,500. Other costs incurred were freight charges of $400, repairs of $700 for damage during installation, and installation costs of $450. What is the cost of the […]

1) Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the a.economic entity assumption b.relevance characteristic c.comparability characteristic d.neutrality characteristic 2) Beeman Company exchanged machinery with an appraised value of $3,510,000, a recorded cost of […]

1) Under IFRS, interest revenue earned on specific borrowings for qualifying assets a.reduces the cost of the qualifying asset b.reduces interest expense reported on the income statement c.increases equity in the period earned d.increases the cost of the qualifying asset […]

1) Dividends representing a return of capital to stockholders are not uncommon among companies which a.use accelerated depreciation methods b.use straight-line depreciation methods c.recognize both functional and physical factors in depreciation d.none of these answers are correct 2) Which of […]

1) Fill in the appropriate blanks for each of the independent situations below. Company A Company B Company C Sales revenue(a) $_______$343,400$540,000 Beginning inventory52,600(d) _______90,000 Net purchases195,300255,600(g) _______ Ending inventory52,200108,00063,000 Cost of goods sold(b) _______(e) _______427,000 Gross profit75,300118,000(h) _______ Operating […]

1) Munoz Corp.’s books showed pretax financial income of $2,700,000 for the year ended December 31, 2015 . In the computation of federal income taxes, the following data were considered: Gain on an involuntary conversion$1,170,000 (Munoz has elected to replace […]

1) The use of a Purchase Discounts Lost account implies that the recorded cost of a purchased inventory item is its a.invoice price b.invoice price plus the purchase discount lost c.invoice price less the purchase discount taken d.invoice price less […]

1) The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2014, its first year of operations. The enacted income tax rate is 30% for all years. Pretax […]

1) Farmer Company issues $25,000,000 of 10-year, 9% bonds on March 1, 2014 at 97 plus accrued interest. The bonds are dated January 1, 2014, and pay interest on June 30 and December 31 . What is the total cash […]

1) An electronics store is running a promotion where for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. The coupons expire in one year. The store normally recognized […]

1) Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows: Year endedInventory atPrice December 31End-of-year PricesIndex 2013 $390,0001.00 2014756,0001.05 2015810,0001.10 What is the 2013 inventory balance using dollar-value […]

1) Didde Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2014 included the following expense and loss accounts: Accounting and legal fees$210,000 Advertising290,000 Freight-out120,000 Interest105,000 Loss on […]

1) A company gives each of its 50 employees ( assume they were all employed continuously through 2014 and 2015 ) 12 days of vacation a year if they are employed at the end of the year. The vacation accumulates […]

1) Instrument Corporation has the following investments which were held throughout 2014-2015: Fair Value Cost 12/31/1412/31/15 Trading$600,000$800,000$760,000 Available-for-sale 600,000 640,000 720,000 What amount of gain or loss would Instrument Corporation report in its income statement for the year ended December […]

1) Which of the following criteria must be met before an event or item should be recorded for accounting purposes? a.The event or item can be measured objectively in financial terms b.The event or item is relevant and reliable c.The […]

1) The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows: Goebel Company Balance Sheet December 31, 2014 Assets$1,200,000 Liabilities$ 150,000 Capital stock600,000 Retained earnings 450,000 Total equities$1,200,000 Dobbs Company Balance Sheet […]

1) If, at the end of a period, a company erroneously excluded some goods from its ending inventory and also erroneously did not record the purchase of these goods in its accounting records, these errors would cause a.the ending inventory […]

1) Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows: 20152014 Ending inventory$6,000 overstated$16,000 overstated Depreciation expense$4,000 understated$12,000 overstated Assume that no correcting entries were made at December 31, 2014 […]

1) What is a purpose of having a conceptual framework? a.To enable the profession to more quickly solve emerging practical problems b.To provide a foundation from which to build more useful standards c.Neither a nor b d.To enable the profession […]

1) Rowen, Inc. had pre-tax accounting income of $1,800,000 and a tax rate of 40% in 2015, its first year of operations. During 2015 the company had the following transactions: At the end of 2015, which of the following deferred […]

1) A machine cost $600,000, has annual depreciation of $100,000, and has accumulated depreciation of $450,000 on December 31, 2014 . On April 1, 2015, when the machine has a fair value of $137,500, it is exchanged for a machine […]

1) Below is a list of items. Classify each into one of the following balance sheet categories: a.Cashc.Short-term Investments b.Receivablesd.Other 1>Compensating balances held in long-term borrowing arrangements 2>Savings account 3>Trust fund 4>Checking account 5>Postage stamps 6>Treasury bills maturing in six […]

1) Platteville Corporation has the following account balances at 12/31/15: Amortization expense$ 20,000 Goodwill280,000 Patent, net of $60,000 amortization140,000 What amount should Platteville report for intangible assets on the 12/31/12 balance sheet? a.$140,000 b.$200,000 c.$420,000 d.$440,000 2) The following information […]

1) A journal entry to record a receipt of rent in advance will include a a.debit to Rent Revenue b.credit to Rent Revenue c.credit to Cash d.credit to Unearned Revenue 2) For each of the items listed below, indicate how […]

1) Which of the following is a condition for accruing a liability for the cost of compensation for future absences? a.The obligation relates to the rights that vest or accumulate b.Payment of the compensation is probable c.The obligation is attributable […]

1) Craig borrowed $350,000 on October 1, 2014 and is required to pay $360,000 on March 1, 2015 . What amount is the note payable recorded at on October 1, 2014 and how much interest is recognized from October 1 […]

1) In the time diagram below, which concept is being depicted? a.Present value of an ordinary annuity b.Present value of an annuity due c.Future value of an ordinary annuity d.Future value of an annuity due 2) To compute interest expense […]