1) la more company had the following transactions during 2011.
what is la mores 2011 net income using cash basis accounting?
a.$5,375
b.$875
c.$5,125
d.$625
2) equipment costing $140,000 was destroyed when it caught on fire. at the date of the
fire, the accumulated depreciation on the equipment was $56,000. an insurance check
for $160,000 was received based on the replacement cost of the equipment. the entry to
record the insurance proceeds and the disposition of the equipment will include a
a.gain on disposal of $20,000
b.credit to the equipment account of $84,000
c.credit to the accumulated depreciation account for $56,000
d.gain on disposal of $76,000
3) which of the following would not be classified as a long-term liability?
a.current maturities of long-term debt
b.bonds payable
c.mortgage payable
d.lease liabilities
4) norton company has just purchased equipment that requires annual payments of
$30,000 to be paid at the end of each of the next 4 years. the appropriate discount rate is
15%. what is the present value of the payments?
a.$85,649
b.$120,000
c.$47,205
d.$108,143
5) which of the following is not a liability?
a.unearned service revenue
b.accounts payable
c.accounts receivable
d.interest payable
6) the financial statements of the phelps manufacturing company reports net sales of
$400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year
and end of year, respectively. what is the receivables turnover ratio for phelps?
a.6.7 times
b.10 times
c.5 times
d.8 times
7) la vida corporation issued 18,000 shares of no-par value ordinary shares for 29.50
per share. which of the following statements is true?
a.share premiumordinary account will increase by 207,000
b.the cash account will increase by 18,000
c.retained earnings account will increase by 513,000
d.share capitalordinary account will increase by 531,000
8) if morris corporation has a negative $131 million free cash flow, which of the
following statements is most likely true?
a.morris’ capital expenditures plus its cash dividends are less than its cash provided by
operations
b.this free cash flow indicates that morris is in good shape to repay its long-term
obligations when they come due
c.this free cash flow indicates that morris presents good cash generating ability to retire
stock
d.morris’ cash provided by operations is less than its cash dividends plus capital
expenditures
9) under the equity method, the stock investments account is increased when the
a.investee company reports net income
b.investee company pays a dividend
c.investee company reports a loss
d.stock investment is sold at a gain
10) accounts receivable arising from sales to customers amounted to $80,000 and
$70,000 at the beginning and end of the year, respectively. income reported on the
income statement for the year was $220,000. exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
a.$220,000
b.$210,000
c.$230,000
d.$300,000
11) on march 1, 2012, geoffrey company acquired real estate, on which it planned to
construct a small office building, by paying $90,000 in cash. an old warehouse on the
property was demolished at a cost of $8,200; the salvaged materials were sold for
$2,200. additional expenditures before construction began included $1,500 attorney’s
fee for work concerning the land purchase, $5,500 real estate broker’s fee, $9,100
architect’s fee, and $16,000 to put in driveways and a parking lot.
instructions
(a)determine the amount to be reported as the cost of the land.
(b)for each cost not used in part (a), indicate the account to be debited.