1) daily, inc. appropriately used the installment method of accounting to recognize
income in its financial statement. some pertinent data relating to this method of
accounting include:
what amount to be realized gross profit should be reported on dailys income statement
for 2013?
a.$99,000
b.$114,000
c.$132,000
d.$162,000
2) all of the following statements regarding accounting for derivatives are correct
except that
a.they should be recognized in the financial statements as assets and liabilities.
b.they should be reported at fair value
c.gains and losses resulting from speculation should be deferred
d.gains and losses resulting from hedge transactions are reported in different
ways,depending upon the type of hedge
3) tracy co. owns 4,000 of the 10,000 outstanding shares of penn corp. common stock.
during 2013, penn earns $360,000 and pays cash dividends of $120,000.
if the beginning balance in the investment account was $720,000, the balance at
december 31, 2013 should be
a.$720,000
b.$816,000
c.$864,000
d.$960,000
4) on january 1, 2012, solis co. issued its 10% bonds in the face amount of $4,000,000,
which mature on january 1, 2022. the bonds were issued for $4,540,000 to yield 8%,
resulting in bond premium of $540,000. solis uses the effective-interest method of
amortizing bond premium. interest is payable annually on december 31. at december
31, 2012, solis’s adjusted unamortized bond premium should be
a.$540,000
b.$503,200
c.$486,000
d.$406,000
5) 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.
if $4,000 is put in a savings account today, what amount will be available six years
from now?
a.$4,000 1.080 6
b.$4,000 1.080 1.469
c.$4,000 1.166 3
d.$4,000 1.260 2
6) revenue is recognized by the consignor when the
a.goods are shipped to the consignee
b.consignee receives the goods
c.consignor receives an advance from the consignee
d.consignor receives an account sales from the consignee
7) when applying the treasury stock method for diluted earnings per share, the market
price of the common stock used for the repurchase is the
a.price at the end of the year
b.average market price
c.price at the beginning of the year
d.none of these
8) horner company buys a delivery van with a list price of $45,000. the dealer grants a
15% reduction in list price and an additional 2% cash discount on the net price if
payment is made in 30 days. sales taxes amount to $600 and the company paid an extra
$450 to have a special device installed. what should be the recorded cost of the van?
a.$37,485
b.$38,468
c.$38,535
d.$38,085
9) which of the following costs are capitalized for self-constructed assets?
a.materials and labor only
b.labor and overhead only
c.materials and overhead only
d.materials, labor, and overhead
10) gomez, inc. began work in 2012 on contract #3814, which provided for a contract
price of $9,600,000. other details follow:
assume that gomez uses the completed-contract method of accounting. the portion of
the total gross profit to be recognized as income in 2013 is
a.$1,200,000
b.$1,800,000
c.$3,100,000
d.$9,600,000
11) moorman corporation reports the following information:
moorman should report retained earnings, 1/1/12, as adjusted at
a.$2,355,000
b.$3,000,000
c.$3,645,000
d.$4,665,000
12) on december 31, 2012, green company finished consultation services and accepted
in exchange a promissory note with a face value of $600,000, a due date of december
31, 2015, and a stated rate of 5%, with interest receivable at the end of each year. the
fair value of the services is not readily determinable and the note is not readily
marketable. under the circumstances, the note is considered to have an appropriate
imputed rate of interest of 10%.
the following interest factors are provided:
instructions
(a)determine the present value of the note.
(b)prepare a schedule of note discount amortization for green company under the
effective interest method. (round to whole dollars.)
13) which of the following is the recommended approach to handling interest incurred
in financing the construction of property, plant and equipment?
a.capitalize only the actual interest costs incurred during construction
b.charge construction with all costs of funds employed, whether identifiable or not
c.capitalize no interest during construction
d.capitalize interest costs equal to the prime interest rate times the estimated cost of the
asset being constructed
14) if plant assets of a manufacturing company are sold at a gain of $1,640,000 less
related taxes of $500,000, and the gain is not considered unusual or infrequent, the
income statement for the period would disclose these effects as
a.a gain of $1,640,000 and an increase in income tax expense of $500,000
b.operating income net of applicable taxes, $1,140,000
c.a prior period adjustment net of applicable taxes, $1,140,000
d.an extraordinary item net of applicable taxes, $1,140,000
15) if bonds are issued initially at a premium and the effective-interest method of
amortization is used, interest expense in the earlier years will be
a.greater than if the straight-line method were used
b.greater than the amount of the interest payments
cthe same as if the straight-line method were used
d.less than if the straight-line method were used
16) the statement of cash flows provides answers to all of the following questions
except
a.where did the cash come from during the period?
b.what was the cash used for during the period?
c.what is the impact of inflation on the cash balance at the end of the year?
d.what was the change in the cash balance during the period?
17) which of the following is not a generally practiced method of presenting the income
statement?
a.including prior period adjustments in determining net income
b.the single-step income statement
c.the consolidated statement of income
d.including gains and losses from discontinued operations of a component of a business
in determining net income
18) which of the following statements is true?
a.the higher the discount rate, the higher the present value
b.the process of accumulating interest on interest is referred to as discounting
c.if money is worth 10% compounded annually, $1,100 due one year from today is
equivalent to $1,000 today
d.if a single sum is due on december 31, 2012, the present value of that sum decreases
as the date draws closer to december 31, 2012
19) in 2013, fargo corporation began construction work under a three-year contract. the
contract price is $3,600,000. fargo uses the percentage-of-completion method for
financial accounting purposes. the income to be recognized each year is based on the
proportion of costs incurred to total estimated costs for completing the contract. the
financial statement presentations relating to this contract at december 31, 2013, follow:
how much cash was collected in 2013 on this contract?
a.$150,000
b.$210,000
c.$30,000
d.$360,000
20) during self-construction of an asset by richardson company, the following were
among the costs incurred:
what amount of overhead should be included in the cost of the self-constructed asset?
a.$ -0-
b.$ 60,000
c.$ 75,000
d.$135,000