Week 5, Quiz1. Cost of goods
\nsold is determined only at the end of the accounting period in
\nA). neither a
\nperpetual nor a periodic inventory system.
\nB). a perpetual
\ninventory system.
\nC).
\na periodic inventory system.
\nD). both a
\nperpetual and a periodic inventory system<\/p>\n
2. A sales invoice
\nis a source document that
\nA). provides
\nevidence of incurred operating expenses.
\nB).
\nprovides evidence of credit sales.
\nC). serves only as
\na customer receipt.
\nD). provides
\nsupport for goods purchased for resale.<\/p>\n
3. Financial
\ninformation is presented below:
\nOperating Expenses
\n $ 45,000<\/p>\n
Sales Returns and
\nAllowances 9,000
\nSales Discounts 6,000
\nSales Revenue 160,000
\nCost of Goods Sold
\n 87,000
\nThe gross profit
\nrate would be
\nA).503.
\nB).363.
\nC).400.<\/p>\n
D).456.<\/p>\n
4. The Sales
\nReturns and Allowances account is classified as a(n)
\nA).
\ncontra revenue account.
\nB). contra asset
\naccount.
\nC). expense
\naccount.
\nD). asset account.<\/p>\n
5. On October 4,
\n2013, JT Corporation had credit sales transactions of $3,200 from merchandise
\nhaving cost $1,900. The entries to record the day’s credit transactions include
\na
\nA). credit of
\n$1,900 to Cost of Goods Sold.
\nB).
\ncredit of $3,200 to Sales Revenue.
\nC). debit of
\n$1,900 to Inventory.
\nD). debit of
\n$3,200 to Inventory.<\/p>\n
6. Comprehensive
\nincome under IFRS
\nA). excludes
\nunrealized gains and losses included in net income, in contrast to GAAP.
\nB).
\nincludes unrealized gains and losses included in net income, similar to GAAP.
\nC). excludes
\nunrealized gains and losses included in net income, similar to GAAP.
\nD). includes
\nunrealized gains and losses included in net income, in contrast to GAAP<\/p>\n
7. If a company
\nhas net sales of $700,000 and cost of goods sold of $490,000, the gross profit
\npercentage is
\nA).
\n30%.
\nB). 70%.
\nC). 100%.
\nD). 15%.<\/p>\n
8. The consistent
\napplication of an inventory costing method is essential for
\nA). accuracy.
\nB). efficiency.
\nC).
\ncomparability.
\nD). conservatism.<\/p>\n
9. The inventory
\nturnover ratio is computed by dividing cost of goods sold by
\nA). beginning
\ninventory.
\nB). ending
\ninventory.
\nC).
\naverage inventory.
\nD). 365 days.<\/p>\n
10. Switzer, Inc.
\nhas 5 computers which have been part of the inventory for over two years. Each
\ncomputer cost $600 and originally retailed for $900. At the statement date,
\neach computer has a current replacement cost of $400. How much loss should
\nSwitzer, Inc., record for the year?
\nA). $2,000.
\nB). $2,500.
\nC).
\n$1,000.
\nD). $1,500.<\/p>\n
11. Which one of
\nthe following inventory methods is often impractical to use?
\nA). LIFO
\nB). FIFO
\nC).
\nSpecific identification
\nD). Average cost<\/p>\n
12. Overstating
\nending inventory will overstate all of the following except
\nA). net income.
\nB). owner’s
\nequity.
\nC). assets.
\nD).
\ncost of goods sold.<\/p>\n
13. Under IFRS,
\ncompanies can choose which inventory system?
\nLIFO FIFO
\nYes No
\nYes Yes
\nNo
\n Yes
\nNo No<\/p>\n
14. The lower-of-cost-or-market (LCM) basis may
\nbe used with all of the following methods except
\nA). FIFO.
\nB). LIFO.
\nC).
\nThe LCM basis may be used with all of these.
\nD). average cost.<\/p>\n
15. Inventory
\nitems on an assembly line in various stages of production are classified as
\nA). Raw materials.<\/p>\n
B). Merchandise
\ninventory.
\nC). Finished
\ngoods.
\nD).
\nWork in process.<\/p>\n
Week 7, Quiz1. A company has
\nthe following assets:
\nBuildings and
\nEquipment, less accumulated depreciation of $2,000,000 $ 7,600,000
\nCopyrights 960,000<\/p>\n
Patents 4,000,000
\nTimberlands, less
\naccumulated depletion of $2,800,000 4,800,000
\nThe total amount
\nreported under Property, Plant, and Equipment would be
\nA). $16,400,000.
\nB). $13,360,000.
\nC).
\n$12,400,000.
\nD). $17,360,000.<\/p>\n
2. Expenditures that
\nmaintain the operating efficiency and expected productive life of a plant asset
\nare generally
\nA).
\nexpensed when incurred.
\nB). not recorded
\nuntil they become material in amount.
\nC). capitalized as
\na part of the cost of the asset.
\nD). debited to the
\nAccumulated Depreciation account<\/p>\n
3. A gain or loss
\non disposal of a plant asset is determined by comparing the
\nA). original cost
\nof the asset with the proceeds received from its sale.
\nB). book value of
\nthe asset with the asset’s original cost.
\nC).
\nbook value of the asset with the proceeds received from its sale.
\nD). replacement
\ncost of the asset with the asset’s original cost.<\/p>\n
4. Salem Company
\nhired Kirk Construction to construct an office building for \u00c2\u00a38,000,000 on land
\ncosting \u00c2\u00a32,000,000, which Salem Company owned. The building was complete and
\nready to be used on January 1, 2013 and it has a useful life of 40 years. The
\nprice of the building included land improvements costing \u00c2\u00a3600,000 and personal
\nproperty costing \u00c2\u00a3750,000. The useful lives of the land improvements and the
\npersonal property are 10 years and 5 years, respectively. Salem Company uses
\ncomponent depreciation, and the company uses straight-line depreciation for
\nother similar assets. What is the net amount reported for the building on Salem
\nCompany’s December 31, 2013 statement of financial position?
\nA). \u00c2\u00a37,573,750
\nB).
\n\u00c2\u00a36,483,750
\nC). \u00c2\u00a37,800,000
\nD). \u00c2\u00a37,665,000<\/p>\n
5. Yocum Company
\npurchased equipment on January 1 at a list price of $100,000, with credit terms
\n2\/10, n\/30. Payment was made within the discount period and Yocum was given a
\n$2,000 cash discount. Yocum paid $5,000 sales tax on the equipment, and paid
\ninstallation charges of $1,760. Prior to installation, Yocum paid $4,000 to
\npour a concrete slab on which to place the equipment. What is the total cost of
\nthe new equipment?
\nA). $104,760
\nB).
\n$108,760
\nC). $110,760
\nD). $101,000
\n6). A company
\npurchased factory equipment for $350,000. It is estimated that the equipment
\nwill have a $35,000 salvage value at the end of its estimated 5-year useful
\nlife. If the company uses the double-declining-balance method of depreciation,
\nthe amount of annual depreciation recorded for the second year after purchase
\nwould be
\nA).
\n$84,000.
\nB). $140,000.
\nC). $126,000.
\nD). $60,480.<\/p>\n
7. On a balance
\nsheet, natural resources may be described more specifically as all of the
\nfollowing except
\nA). oil reserves.
\nB). timberlands.
\nC).
\nland improvements.
\nD). mineral
\ndeposits.<\/p>\n
8). On January 1,
\n2013, Donahue Company, a calendar-year company, issued $500,000 of notes
\npayable, of which $125,000 is due on January 1 for each of the next four years.
\nThe proper balance sheet presentation on December 31, 2013, is
\nA).
\nCurrent Liabilities, $125,000; Long-term Debt, $375,000.
\nB). Current
\nLiabilities, $375,000; Long-term Debt, $125,000.
\nC). Current
\nLiabilities, $500,000.
\nD). Long-term Debt
\n, $500,000.<\/p>\n
9). When an
\ninterest-bearing note matures, the balance in the Notes Payable account is
\nA).
\nless than the total amount repaid by the borrower.
\nB). the difference
\nbetween the maturity value of the note and the face value of the note.
\nC). equal to the
\ntotal amount repaid by the borrower.
\nD). greater than
\nthe total amount repaid by the borrower<\/p>\n
10. From the
\nstandpoint of the issuing company, a disadvantage of using bonds as a means of
\nlong-term financing is that
\nA).
\ninterest must be paid on a periodic basis regardless of earnings.
\nB). the
\nbondholders do not have voting rights.
\nC). income to
\nstockholders may increase as a result of trading on the equity.
\nD). bond interest
\nis deductible for tax purposes.<\/p>\n
11). The times
\ninterest earned ratio is computed by dividing
\nA). income before
\ninterest expense by interest expense.
\nB). net income by
\ninterest expense.
\nC).
\nincome before income taxes and interest expense by interest expense.
\nD). income before
\nincome taxes by interest expense.<\/p>\n
12. If the market
\ninterest rate is greater than the contractual interest rate, bonds will sell
\nA).
\nat a discount.
\nB). only after the
\nstated interest rate is increased.
\nC). at face value.<\/p>\n
D). at a premium.<\/p>\n
13). The market
\ninterest rate is often called the
\nA). coupon rate.
\nB). contractual
\nrate.
\nC). stated rate.
\nD).
\neffective rate.<\/p>\n
14. On October 1, Steve’s
\nCarpet Service borrows $250,000 from First National Bank on a 3-month,
\n$250,000, 8% note. The entry by Steve’s Carpet Service to record payment of the
\nnote and accrued interest on January 1 is
\nA). Notes Payable
\n255,000 Cash 255,000
\nB).
\nNotes Payable 250,000 Interest
\nPayable 5,000 Cash 255,000
\nC). Notes Payable
\n250,000 Interest Payable
\n20,000 Cash 270,000
\nD). Notes Payable
\n250,000 Interest Expense
\n5,000
\nCash 255,000<\/p>\n
15. Most companies
\npay current liabilities
\nA). by creating
\nlong-term liabilities.
\nB).
\nout of current assets.
\nC). by issuing
\ninterest-bearing notes payable.
\nD). by issuing
\nstock.<\/p>\n
Week 3, Quiz1. Transactions in
\na journal are recorded in
\nA). alphabetical
\norder.
\nB). dollar amount
\norder.
\nC).
\nchronological order.
\nD). account number
\norder.<\/p>\n
2. In the first
\nmonth of operations, the total of the debit entries to the cash account
\namounted to $900 and the total of the credit entries to the cash account
\namounted to $600. The cash account has a(n)
\nA). $300 credit
\nbalance.
\nB). $900 debit
\nbalance.
\nC). $600 credit
\nbalance.
\nD).
\n$300 debit balance.<\/p>\n
3. Which of the
\nfollowing statements is true?
\nA). Credits
\ndecrease assets and decrease liabilities.
\nB). Debits
\nincrease assets and increase liabilities.
\nC).
\nCredits decrease assets and increase liabilities.
\nD). Debits
\ndecrease liabilities and decrease assets<\/p>\n
4). The final step
\nin the recording process is to transfer the journal information to the
\nA). trial balance.<\/p>\n
B). financial
\nstatements.
\nC).
\nledger.
\nD). file cabinets.<\/p>\n
5. The usual
\nsequence of steps in the transaction recording process is:
\nA).
\nanalyze? journal ? ledger.
\nB). journal?
\nledger ? analyze.
\nC). ledger?
\njournal ? analyze.
\nD). journal?
\nanalyze ? ledger.<\/p>\n
6). Which one of the
\nfollowing represents the expanded basic accounting equation?
\nA). Assets =
\nLiabilities + Common Stock + Retained Earnings + Dividends \u00e2\u0080\u0093 Revenue \u00e2\u0080\u0093
\nExpenses.
\nB).
\nAssets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings
\n+ Revenues.
\nC). Assets \u00e2\u0080\u0093
\nLiabilities \u00e2\u0080\u0093 Dividends = Common Stock + Retained Earnings + Revenues \u00e2\u0080\u0093
\nExpenses.
\nD). Assets =
\nRevenues + Expenses \u00e2\u0080\u0093 Liabilities.<\/p>\n
7. A trial balance
\nmay balance even when each of the following occurs except when
\nA).
\na transposition error is made.
\nB). a journal
\nentry is posted twice.
\nC). incorrect
\naccounts are used in journalizing.
\nD). a transaction
\nis not journalized.
\n8). An accounting
\ntime period that is one year in length, but does not begin on January 1, is
\nreferred to as
\nA).
\na fiscal year.
\nB). an interim
\nperiod.
\nC). the time
\nperiod assumption.
\nD). a reporting
\nperiod.<\/p>\n
9). Which of the
\nfollowing reflect the balances of prepayment accounts prior to adjustment?
\nA). Balance sheet
\naccounts are understated and income statement accounts are understated.
\nB). Balance sheet
\naccounts are overstated and income statement accounts are overstated.
\nC). Balance sheet
\naccounts are understated and income statement accounts are overstated.
\nD).
\nBalance sheet accounts are overstated and income statement accounts are
\nunderstated.<\/p>\n
10). Crue Company
\nhad the following transactions during 2013: \u00e2\u0080\u00a2 Sales of $4,500 on account \u00e2\u0080\u00a2
\nCollected $2,000 for services to be performed in 2014 \u00e2\u0080\u00a2 Paid $1,625 cash in
\nsalaries \u00e2\u0080\u00a2 Purchased airline tickets for $250 in December for a trip to take
\nplace in 2014 What is Crue\u00e2\u0080\u0099s 2013 net income using cash basis accounting?
\nA). $375.
\nB). $4,875.
\nC). $4,625.
\nD).
\n$125.<\/p>\n
11). Which
\nstatement is correct?
\nA). The cash basis
\nof accounting is objective because no one can be certain of the amount of
\nrevenue until the cash is received.
\nB). As long as
\nmanagement is ethical, there are no problems with using the cash basis of
\naccounting.
\nC). As long as a
\ncompany consistently uses the cash basis of accounting, generally accepted
\naccounting principles allow its use.
\nD).
\nThe use of the cash basis of accounting violates both the revenue recognition
\nand expense recognition principles.<\/p>\n
12). Under
\naccrual-basis accounting
\nA). net income is
\ncalculated by matching cash outflows against cash inflows.
\nB). the ledger
\naccounts must be adjusted to reflect a cash basis of accounting before
\nfinancial statements are prepared under generally accepted accounting
\nprinciples.
\nC). cash must be
\nreceived before revenue is recognized.
\nD).
\nevents that change a company’s financial statements are recognized in the
\nperiod they occur rather than in the period in which cash is paid or received.<\/p>\n
13). Expenses paid
\nand recorded as assets before they are used are called
\nA). accrued expenses.<\/p>\n
B). interim
\nexpenses.
\nC).
\nprepaid expenses.
\nD). unearned
\nexpenses.<\/p>\n
14). The adjusted
\ntrial balance is prepared
\nA). after
\nfinancial statements are prepared.
\nB).
\nafter adjusting entries have been journalized and posted.
\nC). before the trial
\nbalance.
\nD). to prove the
\nequality of total assets and total liabilities<\/p>\n
15). Management
\nusually desires ________ financial statements and the IRS requires all
\nbusinesses to file _________ tax returns.
\nA). quarterly,
\nmonthly
\nB).
\nmonthly, annual
\nC). monthly,
\nmonthly
\nD). annual, annual<\/p>\n
Week 6, Quiz1. A bank
\nstatement
\nA). is a bill from
\nthe bank for services rendered.
\nB). is a credit
\nreference letter written by the depositor’s bank.
\nC).
\nshows the activity which increased or decreased the depositor’s account
\nbalance.
\nD). lets a
\ndepositor know the financial position of the bank as of a certain date.<\/p>\n
2. The principles
\nof internal control activities are used in the
\nA).
\ninternationally but not in the U.S.
\nB). in the U.S.
\nand Canada but not globally.
\nC).
\nglobally.
\nD). U.S.but not
\nglobally.<\/p>\n
3. Postage stamps
\non hand are considered to be
\nA). cash.
\nB). petty cash.
\nC). a prepaid
\nexpense.
\nD). cash
\nequivalents.<\/p>\n
4. Tangible frauds
\ninclude
\nA). asset
\nmisappropriation.
\nB). false
\npretenses.
\nC).
\ncounterfeiting.
\nD). All of these.<\/p>\n
5. All of the following requirements about
\ninternal controls were enacted under the Sarbanes- Oxley Act except;
\nA). independent
\noutside auditors must eliminate redundant internal controls.
\nB). independent
\noutside auditors must attest to the level of internal control.
\nC). companies must
\ndevelop sound internal controls over financial reporting.
\nD).
\ncompanies must continually assess the functionality of internal controls.<\/p>\n
6. A deposit made
\nby a company will appear on the bank statement as a
\nA). debit.
\nB).
\ncredit.
\nC). debit
\nmemorandum.
\nD). credit
\nmemorandum.<\/p>\n
7. In large
\ncompanies, the independent internal verification procedure is often assigned to<\/p>\n
A). computer
\noperators.
\nB). management.
\nC).
\ninternal auditors.
\nD). outside CP<\/p>\n
8. An aging of a
\ncompany’s accounts receivable indicates that $10,000 are estimated to be
\nuncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance,
\nthe adjustment to record bad debts for the period will require a
\nA).
\ndebit to Bad Debts Expense for $8,900.
\nB). credit to
\nAllowance for Doubtful Accounts for $10,000.
\nC). debit to Bad
\nDebts Expense for $10,000.
\nD). debit to
\nAllowance for Doubtful Accounts for $8,900.<\/p>\n
9. A reasonable amount
\nof uncollectible accounts is evidence
\nA). that the
\ncredit policy is too strict.
\nB). of poor
\njudgments on the part of the credit manager.
\nC). that the
\ncredit policy is too lenient.
\nD).
\nof a sound credit policy.<\/p>\n
10. Kill
\nCorporation’s unadjusted trial balance includes the following balances (assume
\nnormal balances):
\nAccounts
\nReceivable $ 750,000
\nAllowance for
\nDoubtful Accounts 15,000
\nBad debts are
\nestimated to be 6% of outstanding receivables. What amount of bad debts expense
\nwill the company record?
\nA). $15,000
\nB). $44,100
\nC).
\n$30,000
\nD). $45,000<\/p>\n
11. Using the
\npercentage-of-receivables basis, the uncollectible accounts for the year is
\nestimated to be $31,000. If the balance for the Allowance for Doubtful Accounts
\nis a $7,000 debit before adjustment, what is the amount of bad debts expense
\nfor the period?
\nA). $31,000
\nB).
\n$38,000
\nC). $7,000
\nD). $24,000<\/p>\n
12. Using the
\nfollowing information:
\n12\/31\/12
\nAccounts
\nreceivable $ 525,000
\nAllowance (35,000 )
\nCash realizable
\nvalue $ 490,000
\nDuring 2013, sales
\non account were $145,000 and collections on account were $100,000. Also during
\n2013, the company wrote off $8,000 in uncollectible accounts. An analysis of
\noutstanding receivable accounts at year end indicated that uncollectible
\naccounts should be estimated at $40,000. Bad debts expense for 2013 is
\nA). $40,000.
\nB).
\n$13,000.
\nC). $5,000.
\nD). $8,000.<\/p>\n
13. If a retailer
\nregularly sells its receivables to a factor, the service charge of the factor
\nshould be classified as a(n)
\nA). contra asset.
\nB). other expense.<\/p>\n
C).
\nselling expense.
\nD). interest
\nexpense.<\/p>\n
14. During 2013,
\nAlfred Inc. had sales on account of $132,000, cash sales of $54,000, and
\ncollections on account of $84,000. In addition, they collected $1,450 which had
\nbeen written off as uncollectible in 2012. As a result of these transactions,
\nthe change in the accounts receivable balance indicates a
\nA). $102,000
\nincrease.
\nB). $100,550
\nincrease.
\nC). $46,550
\nincrease.
\nD).
\n$48,000 increase.<\/p>\n
15. A 5%, 120-day
\nnote receivable is received from a customer to settle an existing account
\nreceivable of $75,000. Assuming a 360 day year, the accounting entry for
\nacquisition of the note will include a
\nA).
\ndebit to Notes Receivable for $75,000 and no entry for interest.
\nB). debit to Notes
\nReceivable for $76,250.
\nC). debit to Notes
\nReceivable for $78,720.
\nD). credit to
\nInterest Revenue for $1,250.<\/p>\n
Week 9, Quiz1. Eck Corporation
\nsells 250 shares of common stock being held as an investment. The shares were acquired
\nsix months ago at a cost of $25 a share. Eck sold the shares for $40 a share.
\nThe entry to record the sale is
\nA).
\nCash 10,000<\/p>\n
Gain on Sale of Stock Investments 3,750
\n Stock Investments
\n 6,250
\nB). Stock Investments 10,000
\n Cash 10,000<\/p>\n
C). Cash 10,000<\/p>\n
Stock Investments 10,000
\nD). Cash 6,250
\n Loss on Sale of Stock Investments 3,750
\n Stock Investments 10,000<\/p>\n
2. On January 1,
\nTalent Company purchased as a short-term investment a $1,000, 8% bond for
\n$1,050. The bond pays interest on January 1 and July 1. The bond is sold on
\nOctober 1 for $1,200 plus accrued interest. Interest has not been accrued since
\nthe last interest payment date. What is the entry to record the cash proceeds
\nat the time the bond is sold?<\/p>\n
A). Cash 1,200<\/p>\n
Debt Investments 1,200<\/p>\n
B).
\nCash 1,220<\/p>\n
Debt Investments 1,050
\n Gain on Sale of Debt Investments 150
\n Interest Revenue 20<\/p>\n
C). Cash 1,220<\/p>\n
Debt Investments 1,200
\n Interest Revenue 20<\/p>\n
D). Cash 1,200<\/p>\n
Debt Investments 1,050
\n Gain on Sale of Debt Investments 150<\/p>\n
3. At the end of its
\nfirst year, the trading securities portfolio consisted of the following common
\nstocks.
\n Cost
\n Fair Value
\nAtrium Corporation
\n $ 46,400 $ 50,000
\nBarnes Inc. 60,000 55,800
\nCantor Corporation
\n 80,000 76,000
\n$186,400 $181,800
\nIn the following
\nyear, the Barnes common stock is sold for cash proceeds of $56,000. The gain or
\nloss to be recognized on the sale is a<\/p>\n
A).
\nloss of $4,000.
\nB). gain of
\n$1,200.
\nC). gain of $200.
\nD). loss of
\n$4,200.<\/p>\n
4. At the time of
\nacquisition of a debt investment,
\nA). the Stock
\nInvestments account is debited when bonds are purchased.
\nB). the Investment
\naccount is credited for its cost plus brokerage fees.
\nC). no journal
\nentry is required.
\nD).
\nthe cost principle applies.<\/p>\n
5. The account,
\nStock Investments, is
\nA).
\na general ledger control account.
\nB). another name
\nfor Debt Investments.
\nC). a subsidiary
\nledger account.
\nD). a long-term
\nliability account.<\/p>\n
6. Tan Company had
\nthese transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares
\nof Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400.
\nJune 1 Received
\ncash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of
\nNorton stock for $24,000 less brokerage fees of $600. The entry to record the
\npurchase of the Norton stock would include a
\nA). credit to Cash
\nfor $48,800.
\nB). debit to Stock
\nInvestments for $48,800.
\nC).
\ndebit to Stock Investments for $50,200.
\nD). debit to
\nInvestment Expense for $1,400.<\/p>\n
7. Mission Inc.
\nearns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation
\nowns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from
\ninvestment should Cox report in 2013?
\nA).
\n$150,000
\nB). $200,000
\nC). $50,000
\nD). $100,000<\/p>\n
8. Which of the
\nfollowing reasons best explains why a company that experiences seasonal
\nfluctuations in sales may purchase investments in debt or stock securities?
\nA).
\nThe company may have excess cash.
\nB). The company
\nmay invest for speculative reasons to increase the value in pension funds.
\nC). The company
\nmay generate a significant portion of its earnings from investment income.
\nD). The company
\nmay invest for the strategic reason of establishing a presence in a related
\nindustry.<\/p>\n
9. The balance
\nsheet presentation of an unrealized loss on a non-trading security is similar
\nto the statement presentation of
\nA).
\ntreasury stock.
\nB). discount on
\nbonds payable.
\nC). prepaid
\nexpenses.
\nD). allowance for
\ndoubtful accounts.<\/p>\n
10. A company that
\nacquires less than 20% ownership interest in another company should account for
\nthe stock investment in that company using
\nA). the
\nsignificant method.
\nB). the equity
\nmethod.
\nC). consolidated
\nfinancial statements.
\nD).
\nthe cost method.<\/p>\n
11. Which of the
\nfollowing is not a true statement regarding short-term debt investments?
\nA). Investments
\nare frequently government or corporate bonds.
\nB). The securities
\nusually pay interest.
\nC). This type of
\ninvestment must be currently traded in the securities market.
\nD).
\nDebt investments are recorded at the price paid less brokerage fees.<\/p>\n
12. Revenue is
\nrecognized when cash dividends are received under
\nA).
\nthe cost method.
\nB). the equity
\nmethod.
\nC). the
\ncontrolling interest method.
\nD). both the cost and
\nequity methods.<\/p>\n
13. An unrealized
\nloss on non-trading securities is
\nA). closed-out at
\nthe end of the accounting period.
\nB). deducted from
\nthe cost of the investment.
\nC).
\nreported as a separate component of stockholders’ equity.
\nD). reported under
\nOther Expenses and Losses in the income statement.<\/p>\n
14. Mission Inc.
\nearns $600,000 and pays cash dividends of $150,000 during 2013. Cox Corporation
\nowns 70,000 of the 210,000 outstanding shares of Mission. What amount should
\nCox show in the investment account at December 31, 2013 if the beginning of the
\nyear balance in the account was $40,000?
\nA).
\n$190,000
\nB). $200,000
\nC). $175,000
\nD). $180,000<\/p>\n
15. The
\ncontra-account, Fair value Adjustment, is also called a(n)
\nA).
\nvaluation account.
\nB). offset account.<\/p>\n
C).opposite
\naccount.
\nD). adjustment
\naccount.<\/p>\n
Week 10, Quiz1. Which one of
\nthe following affects cash during a period?
\nA).
\nPayment of an accounts payable
\nB). Recording
\ndepreciation expense
\nC). Write-off of
\nan uncollectible account receivable
\nD). Declaration of
\na cash dividend<\/p>\n
2. Land acquired
\nfrom the issuance of common stock is reported
\nA). as a financing
\nactivity.
\nB).
\nin a separate schedule at the bottom of the statement.
\nC). as an
\ninvesting activity.
\nD). as an
\noperating activity.<\/p>\n
3. The information
\nto prepare the statement of cash flows usually comes from each of the following
\nexcept
\nA). the
\ncomparative balance sheet.
\nB). the current
\nincome statement.
\nC).
\nthe retained earnings statement.
\nD). additional
\ninformation.<\/p>\n
4. The statement of
\ncash flows will not report the
\nA).
\namount of checks outstanding at the end of the period.
\nB). change in the
\ncash balance for the current period.
\nC). sources of
\ncash in the current period.
\nD). uses of cash
\nin the current period.<\/p>\n
5. Starting with
\nnet income and adjusting it for items that affected reported net income but
\nwhich did not affect cash is called the
\nA).cost-benefit
\nmethod.
\nB). direct method.<\/p>\n
C).
\nindirect method.
\nD). working
\ncapital method<\/p>\n
6. In developing
\nthe cash flows from operating activities, most companies in the U. S.
\nA). prepare the
\noperating activities section on the accrual basis.
\nB). use the direct
\nmethod.
\nC).
\nuse the indirect method.
\nD). present both
\nthe indirect and direct methods in their financial reports.<\/p>\n
7. Carrot Company
\nissued common stock for proceeds of $381,000 during 2013. The company paid
\ndividends of $90,000 and issued a long-term note payable for $95,000 in
\nexchange for equipment during the year. The company also purchased treasury
\nstock that had a cost of $18,000. The financing section of the statement of
\ncash flows will report net cash inflows of
\nA). $489,000.
\nB). $183,000.
\nC). $363,000.
\nD).
\n$273,000
\n8. Each of the
\nfollowing items may be classified as operating or financing activities under
\nIFRS except
\nA). dividends
\npaid.
\nB).
\ndividends received.
\nC). interest paid.<\/p>\n
D). All of these
\nmay be classified as such.<\/p>\n
9. Accounts
\nreceivable arising from sales to customers amounted to $45,000 and $50,000 at the
\nbeginning and end of the year, respectively. Income reported on the income
\nstatement for the year was $160,000. Exclusive of the effect of other
\nadjustments, the cash flows from operating activities to be reported on the
\nstatement of cash flows is
\nA). $205,000.
\nB).
\n$155,000.
\nC). $165,000.
\nD). $160,000<\/p>\n
10. The statement
\nof cash flows will not provide insight into
\nA). whether cash
\nflow is greater than net income.
\nB). why dividends
\nwere not increased.
\nC).
\nthe exact proceeds of a future bond issue.
\nD). how the
\nretirement of debt was accomplished.<\/p>\n
11. Which one of
\nthe following items is not necessary in preparing a statement of cash flows?
\nA).
\nDetermine the cash in all bank accounts
\nB). Determine the
\nchange in cash
\nC). Determine the
\ncash provided by operations
\nD). Determine cash
\nfrom financing and investing activities<\/p>\n
12. If a company
\nreports a net loss, it
\nA). will not be
\nable to pay cash dividends.
\nB).
\nmay still have a net increase in cash.
\nC). will not be
\nable to get a loan.
\nD). will not be
\nable to make capital expenditures.<\/p>\n
13. In Flagg
\nCompany, net income is $280,000. If accounts receivable increased $145,000 and
\naccounts payable decreased $50,000, net cash provided by operating activities
\nusing the indirect method is:
\nA). $475,000.
\nB). $185,000.
\nC).
\n$85,000.
\nD). $375,000.<\/p>\n
14. The category
\nthat is generally considered to be the best measure of a company’s ability to
\ncontinue as a going concern is
\nA). usually
\ndifferent from year to year.
\nB).
\ncash flows from operating activities.
\nC). cash flows
\nfrom investing activities.
\nD). cash flows
\nfrom financing activities.<\/p>\n
15. Financing
\nactivities involve
\nA). cash receipts
\nfrom sales of goods and services.
\nB). acquiring and
\ndisposing of productive long-lived assets.
\nC). lending money
\nto other entities and collecting on those loans.
\nD).
\nlong-term liability and owners’ equity items.<\/p>\n","protected":false},"excerpt":{"rendered":"
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