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 accomplish the accounting process
c.the accounting process represents the steps taken to accomplish the accounting cycle
d.merely semantic, because both concepts refer to the same thing
2) the omission of the adjusting entry to record depreciation expense will result in an:
a.overstatement of assets and an overstatement of owners’ equity
b.understatement of assets and an understatement of owner’s equity
c.overstatement of assets and an overstatement of liabilities
d.overstatement of liabilities and an understatement of owners’ equity
3) detailed guidance regarding the accounting and reporting for the indirect effects of
changes in accounting principle is available under
a.both u.s. gaap and ifrs
b.neither u.s. gaap nor ifrs
c.u.s. gaap only
d.ifrs only
4) lane co. has a machine that cost $300,000. it is to be leased for 20 years with rent
received at the beginning of each year. lane wants a return of 10%. calculate the amount
of the annual rent.
a.$32,034
b.$35,864
c.$44,592
d.$35,238
5) the cash account shows a balance of $90,000 before reconciliation. the bank
statement does not include a deposit of $4,600 made on the last day of the month. the
bank statement shows a collection by the bank of $1,880 and a customer’s check for
$640 was returned because it was nsf. a customer’s check for $900 was recorded on the
books as $1,080, and a check written for $158 was recorded as $194. the correct
balance in the cash account was
a.$91,024
b.$91,096
c.$91,456
d.$95,696
6) tram industries, a company who uses ifrs reporting standards, is installing a new
plant. the company has incurred the following costs
which of these costs can tram capitalize in accordance with ifrs?
a.1, 2, 3, & 4
b.2 & 4
c.2, 3, & 4
d.1, 2, & 4
7) which of the following errors will cause an imbalance in the trial balance?
a.omission of a transaction in the journal
b.posting an entire journal entry twice to the ledger
c.posting a credit of $720 to accounts payable as a credit of $720 to accounts receivable
d.listing the balance of an account with a debit balance in the credit column of the trial
balance
8) the following information is taken from french corporation’s financial statements:
instructions
prepare a statement of cash flows for french corporation for the year 2013. (use the
indirect method.)
9) on january 2, 2012, perez co. issued at par $10,000 of 8% bonds convertible in total
into 1,000 shares of perez’s common stock. no bonds were converted during 2012.
throughout 2012, perez had 1,000 shares of common stock outstanding. perez’s 2012 net
income was $4,000, and its income tax rate is 30%. no potentially dilutive securities
other than the convertible bonds were outstanding during 2012. perez’s diluted earnings
per share for 2012 would be (rounded to the nearest penny)
a.$2.00
b.$2.28
c.$2.40
d.$4.56
10) of the following items, the only one which should not be classified as a current
liability is
a.current maturities of long-term debt
b.sales taxes payable
c.short-term obligations expected to be refinanced
d.unearned revenues
11) what is a primary objective of financial reporting as indicated in the conceptual
framework?
a.provide information that is helpful to present and potential investors, creditors, and
other users in assessing the amounts, timing, and uncertainty of future cash flows
b.provide information that is helpful to present investors, creditors, and other users in
assessing the amounts, timing, and uncertainty of future cash flows
c.provide information that is helpful to potential investors, creditors, and other users in
assessing the amounts, timing, and uncertainty of future cash flows
d.none of the above
12) during 2012 carne corporation transferred inventory to nolan corporation and
agreed to repurchase the merchandise early in 2013. nolan then used the inventory as
collateral to borrow from norwalk bank, remitting the proceeds to carne. in 2013 when
carne repurchased the inventory, nolan used the proceeds to repay its bank loan.
on whose books should the cost of the inventory appear at the december 31, 2012
balance sheet date?
a.carne corporation
b.nolan corporation
c.norwalk bank
d.nolan corporation, with carne making appropriate note disclosure of the transaction
13) when comparing u.s. gaap with igaap, which of the following is true regarding the
reporting of securitizations?
a.both u.s. gaap and igaap show these as off-balance-sheet treatments
b.only igaap requires full or partial balance sheet recognition of securitizations
c.only u.s. gaap requires full or partial balance sheet recognition of securitizations
d.both u.s. gaap and igaap requires full or partial balance sheet recognition of
securitizations
14) which of the following earnings per share figures must be disclosed on the face of
the income statement?
a.eps for income before taxes
b.the effect on eps from unusual items
c.eps for gross profit
d.eps for income from continuing operations
15) marsh corporation purchased a machine on july 1, 2010, for $1,250,000. the
machine was estimated to have a useful life of 10 years with an estimated salvage value
of $70,000. during 2013, it became apparent that the machine would become
uneconomical after december 31, 2017, and that the machine would have no scrap
value. accumulated depreciation on this machine as of december 31, 2012, was
$295,000. what should be the charge for depreciation in 2013 under generally accepted
accounting principles?
a.$177,000
b.$191,000
c.$205,000
d.$238,750