1) foster corporation had net income of $160,000 and paid dividends to common
stockholders of $40,000 in 2012. the weighted average number of shares outstanding in
2012 was 50,000 shares. foster corporation’s common stock is selling for $50 per share
on the new york stock exchange. foster corporation’s price-earnings ratio is
a.3.2 times
b.15.6 times
c.10 times
d.5 times
2) a promissory note
a.is not a formal credit instrument
b.may be used to settle an accounts receivable
c.has the party to whom the money is due as the maker
d.cannot be factored to another party
3) the receivable that is usually evidenced by a formal instrument of credit is a(n)
a.trade receivable
b.note receivable
c.accounts receivable
d.income tax receivable
4) when goods are returned that relate to a prior cash sale
a.the sales returns and allowances account should not be used
b.the cash account will be credited
c.sales returns and allowances will be credited
d.accounts receivable will be credited
5) bonkers bananas has the following inventory data:
a physical count of merchandise inventory on july 30 reveals that there are 30 units on
hand. using the lifo inventory method, the amount allocated to ending inventory for july
is
a.$660
b.$610
c.$600
d.$630
6) if total liabilities decreased by $25,000 and stockholders equity increased by $5,000
during a period of time, then total assets must change by what amount and direction
during that same period?
a.$20,000 decrease
b.$20,000 increase
c.$25,000 increase
d.$30,000 increase
7) nathan company earns 11% on an investment that pays back $440,000 at the end of
each of the next 5 years. nathan’s finance department has the following values related to
the time value of money to help in its planning process and compounded interest
decisions.
to the closest dollar, what is the amount nathan invested to earn the 11% rate of return?
a.$741,426
b.$1,626,196
c.$261,118
d.$119,051
8) a company just began business and made the following four inventory purchases in
june:
a physical count of merchandise inventory on june 30 reveals that there are 250 units on
hand. using the average cost method, the amount allocated to the ending inventory on
june 30 is
a.$1,418
b.$1,475
c.$1,425
d.$1,400
9) when an asset is sold, a gain occurs when the
a.sale price exceeds the book value of the asset sold
b.sale price exceeds the original cost of the asset sold
c.book value exceeds the sale price of the asset sold
d.sale price exceeds the depreciable cost of the asset sold
10) what organization issues u.s. accounting standards?
a.security exchange commission
b.international accounting standards committee
c.international auditing standards committee
d.financial accounting standards board
11) a company shows the following balances:
what is the gross profit rate?
a.69%
b.65%
c.35%
d.31%
12) which of the following would be considered an other comprehensive income item?
a.loss on disposal of discontinued operations
b.unrealized loss on available-for-sale securities
c.extraordinary gain due to expropriated plant facilities
d.net income
13) clark company developed the following reconciling information in preparing its
september bank reconciliation:
using the above information, determine the cash balance per books (before adjustments)
for the clark company.
a.$13,685
b.$21,700
c.$2,485
d.$21,000
14) a company has an ending accounts receivable balance of $900,000 and it estimates
that uncollectible accounts will be 2% of the receivable balance. if allowance for
doubtful accounts has a credit balance of $1,000 prior to adjustment, its balance after
adjustment will be a credit of
a.$19,000
b.$18,000
c.$17,980
d.$17,000
15) short-term investments are securities that are readily marketable and intended to be
converted into cash within the next
a.year
b.two years
c.year or operating cycle, whichever is shorter
d.year or operating cycle, whichever is longer
16) horizontal analysis is also known as
a.linear analysis
b.vertical analysis
c.trend analysis
d.common size analysis
17) the basic accounting entries for merchandising are
a.the same under gaap and under ifrs
b.required under gaap but not under ifrs
c.required under ifrs but not under gaap
d.required under ifrs with some differences as compared to gaap
18) information pertaining to stock investments in 2012 by comstock corporation
follows:
acquired 15% of the 200,000 shares of common stock of burton company at a total cost
of $9 per share on january 1, 2012. on july 1, burton company declared and paid a cash
dividend of $1 per share. on december 31, burton reported net income was $675,000 for
the year.
obtained significant influence over evenson company by buying 30% of evenson’s
120,000 outstanding shares of common stock at a total cost of $25 per share on january
1, 2012. on june 15, evenson company declared and paid a cash dividend of $2.50 per
share. on december 31, evenson’s reported net income was $330,000.
instructions
prepare all necessary journal entries for 2012 for comstock corporation.
19) which of the following show the proper effect of a stock split and a stock dividend?
20) equipment was acquired on january 1, 2009, at a cost of $190,000. the equipment
was originally estimated to have a salvage value of $10,000 and an estimated life of 10
years. depreciation has been recorded through december 31, 2011, using the
straight-line method. on january 1, 2012, the estimated salvage value was revised to
$16,000 and the useful life was revised to a total of 8 years.
instructions
determine the depreciation expense for 2012.
21) on november 1, 2012, kalen corporations stockholders equity section is as follows:
on november 1, kalen declares and distributes a 15% stock dividend when the market
value of the stock is $14 per share.
instructions
indicate the balances in the stockholders equity accounts after the stock dividend has
been distributed.
22) a method of amortizing bond discount or premium that allocates an equal amount
each period is the ________________ method.
23) robert harder, jr. was appointed the manager of westbrook properties, a recently
formed company that manages residential rental properties. maria valdez is the
accountant. she prepared a chart of accounts based on an analysis of the expenditures of
the company. one of the largest expense categories is travel and entertainment. mr.
harder believes that it is important to maintain a presence in the social life of the city. in
this, he sharply differs from his father, robert harder, sr. the elder mr. harder has set up
westbrook properties in order to test his son’s management skills before allowing him to
manage a more lucrative commercial property business. mr. harder, sr. provided the
capital for westbrook, and maintains close contact with the company. he allowed his
son, however, to hire his own employees.
mr. harder has asked ms. valdez to name the travel and entertainment account property
development. he hopes to deflect his father’s attention away from the amount he has
spent on travel and entertainment until he has proven that his methods work. when ms.
valdez resisted, he reminded her that he, not his father, hired her. he also reminded her
that she had been enthusiastic about his business plans when she was hired.
1)who are the stakeholders in this situation?
2)should ms. valdez agree to the change in the travel and entertainment account to
property development? explain.
24) expressing each item in a financial statement as a percent of a base amount is called
______________ analysis.