1) which of the following would be unethical?
a.recording accrued salaries and wages expense
b.recording accrued interest revenue
c.recording backdated revenue
d.recording prepaid expense adjustments
2) a computer company has $2,000,000 in research and development costs. before
accounting for these costs, the net income of the company is $2,400,000. what is the
amount of net income or loss before taxes after these research and development costs
are accounted for?
a.$400,000 loss
b.$2,000,000 net income
c.$400,000 net income
d.cannot be determined from the information provided
3) which account below is not a subdivision of stockholders equity?
a.dividends
b.revenues
c.expenses
d.liabilities
4) the following information is available for bradshaw corporation and newell
corporation:
based on this information, which of the following is suggested by the earnings per share
calculations (rounded to two decimals) and the information given?
a.there is lower performance in 2011 than in 2012 for newell corporation
b.there is higher performance in 2011 than in 2012 for newell corporation
c.there are fewer earnings available to newell’s common stockholders in 2012 than in
2011
d.there is a decrease in preferred shares of stock in 2012 as compared with 2011
5) unearned rental revenue is
a.a contra account to rental revenue
b.a revenue account
c.reported as a current liability
d.debited when rent is received in advance
6) james company had checks outstanding totaling $16,200 on its june bank
reconciliation. in july, james company issued checks totaling $116,700. the july bank
statement shows that $78,900 in checks cleared the bank in july. a check from one of
james company’s customers in the amount of $900 was also returned marked “nsf.” the
amount of outstanding checks on james company’s july bank reconciliation should be
a.$37,800
b.$54,000
c.$53,100
d.$21,600
7) the expense recognition principle matches:
a.customers with businesses
b.expenses with revenues
c.assets with liabilities
d.creditors with businesses
8) the purchase of an asset on credit
a.increases assets and stockholders equity.
b.increases assets and liabilities.
c.decreases assets and increases liabilities.
d.leaves total assets unchanged.
9) declaring a cash dividend will
a.increase retained earnings
b.decrease retained earnings
c.increase common stock
d.decrease common stock
10) the going concern assumption underlies the
a.cost principle
b.monetary unit assumption
c.periodicity assumption
d.full disclosure principle
11) when a year-end adjustment is made to reduce the trading securities portfolio to
market, what effect, if any, will the adjustment have on the balance sheet and the
income statement?
12) which of the following correctly identifies normal balances of accounts?
13) if the unit cost of inventory has continuously increased, the ______________,
first-out inventory valuation method will result in a higher valued ending inventory than
if the ______________, first-out method had been used.
14) accounts receivable is a permanent account.
15) for each of the ratios listed below, indicate by the appropriate code letter, whether it
is a liquidity ratio, a profitability ratio, or a solvency ratio.
code:
l=liquidity ratio
p=profitability ratio
s=solvency ratio
1>price-earnings ratio
2>free cash flow
3>debt to total assets ratio
4>earnings per share
5>current ratio
16) maria gomez is discussing the advantages of the effective-interest method of bond
amortization with her accounting staff. what do you think maria is saying?
17) for each item below, indicate whether a debit or credit applies.
18) the following accounts appear in the ledger of bradley, inc., after the books are
closed at
instructions
prepare the stockholders equity section at december 31, 2012, assuming that part of
retained earnings is restricted for plant expansion in the amount of $200,000.
19) mark remington, the president and ceo of earth systems, inc., a waste management
firm, was recently hospitalized, suffering from exhaustion and a heart ailment.
immediately prior to his hospitalization, earth systems had experienced a sharp decline
in its stock price, and trading activity became almost nonexistent. the primary reason
for this was concern expressed in the media over a new untested waste management
system implemented by the company.
mr. remington had been unwilling to submit the procedure to testing before
implementation, but he reluctantly agreed to limited tests after the system was
operational. no problems have been identified by the tests to date.
the other members of management called a meeting to determine what they should do.
terry jackson, the marketing manager, suggested that the company purchase a large
number of shares of treasury stock. in that way, investors might notice that activity had
picked up, and might decide to buy some more shares. this plan would use up most of
the companys available cash, so that there will be no money available for a cash
dividend. earth systems has paid cash dividends every quarter for over ten years.