1) the advantage of relating a company’s bad debt expense to its outstanding accounts
receivable is that this approach
a.gives a reasonably correct statement of receivables in the balance sheet
b.best relates bad debt expense to the period of sale
c.is the only generally accepted method for valuing accounts receivable
d.makes estimates of uncollectible accounts unnecessary
2) adjust assets and liabilities to their fair market value.
a.1
b.2
c.3
d.1 and 2
3) renfro corporation will invest $50,000 every december 31st for the next six years
(2012 2017). if renfro will earn 12% on the investment, what amount will be in the
investment fund on december 31, 2017?
a.$205,570
b.$230,240
c.$405,760
d.$454,450
4) if an individual put $4,000 in a savings account today, what amount of cash would be
available two years from today?
a.$4,000 0.826
b.$4,000 0.826 2
c.$4,000 0.826
d.$4,000 0.909 2
5) at december 31, 2012, emley company had 1,200,000 shares of common stock
outstanding. on september 1, 2013, an additional 400,000 shares of common stock were
issued. in addition, emley had $8,000,000 of 6% convertible bonds outstanding at
december 31, 2012, which are convertible into 800,000 shares of common stock. no
bonds were converted into common stock in 2013. the net income for the year ended
december 31, 2013, was $3,000,000. assuming the income tax rate was 30%, what
should be the diluted earnings per share for the year ended december 31, 2013, rounded
to the nearest penny?
a.$1.41
b.$2.25
c.$1.56
d.$1.63
6) ventura corporation purchased machinery on january 1, 2012 for $840,000. the
company used the sum-of-the-years-digits method and no salvage value to depreciate
the asset for the first two years of its estimated six-year life. in 2013, ventura changed
to the straight-line depreciation method for this asset. the following facts pertain:
ventura is subject to a 40% tax rate. the cumulative effect of this accounting change on
beginning retained earnings is
a.$180,000
b.$160,000
c.$96,000
d.$0
7) an item that should be classified as an extraordinary item is
a.write-off of goodwill
b.gains from transactions involving foreign currencies
c.losses from moving a plant to another city
d.gains from a company selling the only investment it has ever owned
8) the if-converted method of computing earnings per share data assumes conversion of
convertible securities as of the
a.beginning of the earliest period reported (or at time of issuance, if later)
b.beginning of the earliest period reported (regardless of time of issuance)
c.middle of the earliest period reported (regardless of time of issuance)
d.ending of the earliest period reported (regardless of time of issuance)
9) a liability for compensated absences such as vacations, for which it is expected that
employees will be paid, should
a.be accrued during the period when the compensated time is expected to be used by
employees
b.be accrued during the period following vesting
c.be accrued during the period when earned
d.not be accrued unless a written contractual obligation exists
10) the board of directors of ogle construction company is meeting to choose between
the completed-contract method and the percentage-of-completion method of accounting
for long-term contracts in the company’s financial statements. you have been engaged to
assist ogle’s controller in the preparation of a presentation to be given at the board
meeting. the controller provides you with the following information:
1>ogle commenced doing business on january 1, 2013.
2>construction activities for the year ended december 31, 2013, were as follows:
3>each contract is with a different customer.
4>any work remaining to be done on the contracts is expected to be completed in 2014.
instructions
(a)prepare a schedule by project, computing the amount of income (or loss) before
selling, general, and administrative expenses for the year ended december 31, 2013,
which would be reported under:
(1)the completed-contract method.
(2)the percentage-of-completion method (based on estimated costs).
(b)prepare the general journal entry(ies) to record revenue and gross profit on project b
(second project) for 2013, assuming that the percentage-of-completion method is used.
(c)indicate the balances that would appear in the balance sheet at december 31, 2013 for
the following accounts for project d (fourth project), assuming that the
percentage-of-completion method is used.
accounts receivable
billings on construction in process
construction in process
(d)how would the balances in the accounts discussed in part (c) change (if at all) for
project d (fourth project), if the completed-contract method is used?
11) robust inc. has the following information related to an item in its ending inventory.
product 66 has a cost of $3,250, a replacement cost of $3,100, a net realizable value of
$3,200, and a normal profit margin of $200. what is the final lower-of-cost-or-market
inventory value for product 66?
a.$3,200
b.$3,100
c.$3,250
d.$3,100
12) which of the following is a characteristic of the expense warranty approach, but not
the sales warranty approach?
a.estimated liability under warranties
b.warranty expense
c.unearned warranty revenue
d.warranty revenue
13) deposits held as compensating balances
a.usually do not earn interest
b.if legally restricted and held against short-term credit may be included as cash
c.if legally restricted and held against long-term credit may be included among current
assets
d. none of these