HW474 Accounting MCQ

Question 1. Corresponds to CLO 2(d)

Generally, product costs are recognized as expenses (Points : 2)

In the period when the related revenue is recognized

In the period when the vendor invoice is recieved.

In the period when the expenses are paid.

In the period when the expenses are incurred

  

Question 2. Corresponds to CLO 1(b)

The due process system used by the FASB (Points : 2)

identifies the most important accounting issues

requires that all accountants must receive a copy of the financial standards

enables interested parties to express their views on issues under consideration

is an efficient system for collecting dues from members.

  

Question 3. Corresponds to CLO 1(c)

Which of the following best describes generally accepted accounting principles? (Points : 2)

standards and principles based on federal statutes

a common set of standards and principles

acceptance requires an affirmative vote of Certified Public Accountants

practices that have been accepted for at least a year by all industry members

  

Question 4.Corresponds to CLO 1(d)

Which of the following is a major challenge facing the accounting profession? (Points : 2)

Timeliness

Forward-looking data

Nonfinancial measurements

All of the above

Question 5. Corresponds to CLO 2(a)

Accounting information is made useful for decision making by which two fundamental qualities? (Points : 2)

Faithful representation and comparability

Comparability and timeliness

Relevance and faithful representation

Materiality and neutrality

Question 6. Corresponds to CLO 2(b)

In the financial statements, under what qualitative characteristic of accounting information should a change in inventory valuation method be reported? (Points : 2)

Verifiability

Consistency

Neutrality

Timeliness

Question 7.Corresponds to CLO 2(c)

Accountants produce financial statements at arbitrary points in time during the lifetime of an entity in accordance with which basic accounting concept? (Points : 2)

Going concern assumption

Historical cost assumption

Periodicity assumption

Monetary unit assumption

Question 8. Corresponds to CLO 1(a)

All of the following are considered primary user of financial reports, except: (Points : 2)

Employees

investors

creditors

all of these are primary users.

Question 9. Corresponds to CLO 3(a)

Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $2,100,000; estimated costs to complete as of December 31, 2013 were $1,400,000; billings during the year were $3,600,000; collections during the year totaled $3,000,000. What amount should Jot recognize as gross profit for the project in 2013? (Points : 2)

$700,000

$1,000,000

$1,500,000

$2,500,000

Question 10. Corresponds to CLO 3(b)

Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013, the end of the first year of the contract, additional information related to the project includes: costs incurred to date were $290,000; estimated costs to complete were $180,000; billings to date were $325,000; collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013? (Points : 2)

$ -0-

a $20,000 loss

a $40,000 loss

a $110,000 loss

  

Question 11. Corresponds to CLO 3(c)

Miller Company appropriately uses the installment method of accounting to recognize income in its financial statements. Pertinent data relating to this method of accounting includes:

installment sales totaled $400,000 for 2013 and $500,000 for 2014;

cost of sales were $260,000 for 2013 and $300,00 for 2014;

in 2013 Miller collected $280,000 from 2013 sales; in 2014 Miller collected $100,000 from 2013 sales and $300,000 from 2014 sales. What amount should Miller report as realized gross profit on the 2014 income statement? (Points : 2)

$155,000

$120,000

$98,000

$35,000

Question 12. Corresponds to CLO 3(d)

On June 1, 2013, Vision Corporation consigned 100 TVs, costing $1,000 each, to Future Electronics. The cost of shipping the TVs amounted to $2,500 and was paid by Vision Corporation. On December 31, 2013, Future Electronics emailed a report to Vision, indicating that 72 of the TVs had been sold for $1,800 each. Future also included remittance for the amount due, after deducting a commission of 5%, advertising of $500, and installation costs of $1,440. What amount should Vision Corporation include on its December 31, 2013 balance sheet for the consigned TVs? (Points : 2)

$-0-

$28,000

$28,700

$30,643

Question 13. Corresponds to CLO 4(a)

If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?

Cash in bank                          $42,600

Cash on hand                              $580

Post-dated checks                   $1,420

Certificates of deposit            $90,000

$42,600

$43,180

$44,600

$133,180

Question 14. Corresponds to CLO 4(b)

At December 31, 2013, Vega Vaccum Corporation has cash in bank of 104,000, restricted cash in a separate account of $19,000, and a bank overdraft at another bank of $500. How much should it report as cash on the balance sheet? (Points : 2)

$123,000

$122,500

$104,500

$104,000

  

Question 15. Corresponds to CLO 4(c)

Only the cash in bank should be reported as cash on the balance sheet. Which of the following are classified as cash on the balance sheet? (Points : 2)

Postage stamps

Checks from other parties presently in the cash register

Post-dated checks

Cash restricted for plant expansion

Question 16. Corresponds to CLO 4(d)

The month-end bank statement for Guthrie Motors shows a balance of $152,000 and a bank service charge of $40. Outstanding checks are $35,000, a deposit of $10,000 was in transit at month end, and a check for $1,500 was erroneously charged by the bank against the account. The correct balance in the bank account at month end is (Points : 2)

$125,000

$125,460

$128,500

$128,460

Question 17. Corresponds to CLO 5(a)

As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 2)

$115,000

$135,000

$155,000

$810,000

Question 18. Corresponds to CLO 5(b)

As of December 31, Wiliams Corporation has outstanding accounts receivable of $3.6 million. Sales on credit during the year were $12.5 million. The allowance for doubtful accounts has a credit balance of $62,000. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year? (Points : 2)

$63,000

$125,000

$187,000

$360,000

Question 19. Corresponds to CLO 5(c)

Kandris Corporation had a balance in accounts receivable of $600,000 and a balance in allowance for doubtful accounts of $55,000, when management decided the account receivable from Dunn Corporation of $2,000 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account? (Points : 2)

Debit Bad Debt Expense, credit Allowance for Doubtful Accounts, $2,000

Debit Accounts Receivable, credit Allowance for Doubtful Accounts, $2,000

Debit Allowance for Doubtful Accounts, credit Accounts Receivable, $2,000

Debit Allowance for Doubtful Accounts, credit Bad Debt Expense, $2,000

Question 20. Corresponds to CLO 5(d)

At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $920,000 and $79,000 respectively. An aging of accounts receivable indicated that $100,000 of the December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is (Points : 2)

$1,020,000

$820,000

$841,000

$999,000

Question 21.Corresponds to CLO 6(a)

The following is a record of Axis Corporation's inventory transactions for the current month:

June 1      Balance, 400 units @ $65 each       

June 16    Sale, 500 units @ $90

June 14    Purchase 900 units @ $68 each     

June 20    Sale, 300 units @ $90

June 25    Purchase 250 units @ $70 each     

Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month? (Points : 2)

$51,500

$52,000

$53,200

$54,900

Question 22. Corresponds to CLO 6(b)

The following is a record of Meyer Corporation's inventory transactions for the current month:

October 1  Balance, 600 units @ $24 each       

October 9  Sale, 600 units @ $51

October 12 Purchase 550 units @ $26 each     

October 19 Sale, 500 units @ $51

October 25 Purchase 700 units @ $27 each

Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory for the month? (Points : 2)

$18,300

$20,200

$18,000

$29,300

  

Question 23.Corresponds to CLO 6(c)

The following is a record of Tiller Corporation's inventory transactions for the current month:

January 1      Balance, 500 units @ $10 each       

January 5      Sale, 290 units @ $25

January 11    Purchase 300 units @ $12 each     

January 13    Sale, 250 units @ $25

January 23    Purchase 400 units @ $13 each     

January 27   Sale, 310 units @ $25

Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the amount of ending inventory for the month?(Points : 2)

$14,004

$9,775

$4,085

$4,025

Question 24. Corresponds to CLO 6(d)

The following is a record of Caulder Corporation's inventory transactions for the current month:

March 1      Balance, 500 units @ $40 each       

March 12   Sale, 200 units @ $85

March 16   Purchase, 300 units @ $42 each    

March 22   Sale, 350 units @ $85

March 28   Purchase, 300 units @ $43 each

Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory at March 31? (Points : 2)

$22,900

$22,100

$22,600

$23,400

Question 25. Corresponds to CLO 7(a)

In the context of dollar-value LIFO, when inventory in base year dollars increases, (Points : 2)

The LIFO reserve decreases

The LIFO price index increases

A LIFO layer is created

A LIFO layer is liquidated

Question 26. Corresponds to CLO 7(b)

Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 460,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

Date                                    Inventory at Current Prices                     Current Price Index

December 31, 2012                      $513,600                                                 107

December 31, 2013                      $580,000                                                 125

December 31, 2014                      $650,000                                                 130 

What is the cost of ending inventory at December 31, 2013 under dollar-value LIFO?

(Points : 2)

$460,000

$485,680

$481,400

$464,280

Question 27. Corresponds to CLO 7(c)

Inventories are primarily accounted for at cost on the balance sheet. In a departure from the cost basis, inventory is accounted for at market when (Points : 2)

There is any decrease in the future utility

Mangement wants to decrease the value of ending inventory

There is a decrease in the future utility below the original cost

Management wants to defer profits to a future period

  

Question 28.Corresponds to CLO 7(d)

If the historical cost of product X is $55, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $50, and the normal profit margin is 30% of sales price, what si the lower-of-cost-or-market inventory value for product X? (Points : 2)

$50

$49

$76

$55

Question 29. Corresponds to CLO 8(a)

Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 30%. The following information is available:

Inventory, November 1                 $500,000

Purchases during November          $650,000

Sales during November                 $900,000

The estimated cost of inventory at November 30 is (Points : 2)

$270,000

$630,000

$650,000

$520,000

Question 30. Corresponds to CLO 8(b)

Big Equipment Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a rate of markup on cost of 25%. The following information is available:

Inventory, November 1            $3,000,000

Purchases during November     $2,800,000

Sales during November            $6,000,000

The estimated cost of inventory at November 30 is (Points : 2)

$5,800,000

$4,800,000

$1,200,000

$1,000,000

Question 31. Corresponds to CLO 8(c)

Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:

                                              Cost                                    Retail                       

Beginning Inventory            $30,000                               $50,000

Purchases                        $160,000                             $270,000

Freight-In                            $2,500

Net Markups                                                                   $8,500

Net Markdowns                                                            $10,000

Employee Discounts                                                        $1,000

Sales                                                                           $205,000

What is the cost to retail ratio? (Points : 2)

60.16%

59.65%

58.60%

57.84%

Question 32. Corresponds to CLO 8(d)

Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:         

                                                  Cost                       Retail

Beginning Inventory             $300,000                   $420,000

Purchases                        $1,450,000                 $2,000,000

Net Markups                                                           $80,000

Net Markdowns                                                      $30,000

Sales                                                                  $1,900,000

What is the ending inventory at cost? (Points : 2)

$520,000

$399,000

$300,000

$570,000

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Gina Enna beortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning

On May 5, 2013, Gina Enna beortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning. She completed the following transactions during the month:

1. Gina invested $16,500 cash and a small truck with a value of $8,000 to start her business.


2. Prepaid $3,500 cash for 12 months’ rent on a small office.


3. Purchased office supplies for cash, $575.


4. Purchased equipment on account, $4,000.


5. Received cash for services performed, $3,350.


6. Performed services on credit, $2,350.


7. Purchased truck supplies on account, $125.


8. Received $15,350 cash in advance of providing cleaning services to a customer.


9. Paid $2,500 cash for the premium on a 6-month insurance policy.


10. Paid salary of employee, $1,550.


11. Purchased $2,500 of additional equipment by paying $400 cash and signing a long-term note payable for $2,100.


12. Paid for repairs to truck, $225.


13. Received $1,350 for the services performed in transaction f.


14. Paid utilities, $315.


15. Completed cleaning services and immediately collected $10,500.


16. Paid creditor $675 on the purchase in transaction d.


17. Provided $2,000 of cleaning services from transaction h.


18. Gina withdrew cash for personal use, $2,775.


19. Paid $5,000 cash for advertisements on the local television station during May.

Required:

1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).

2. Open a set of T accounts with the following titles: Cash (101), Accounts Receivable (106); Office Supplies (124); Truck Supplies(128); Equipment (131); Prepaid Rent (140); Prepaid Insurance (150); Truck (163); Accounts Payable (201); Notes Payable (202); Unearned Cleaning Revenue (203); Gina Ennabeortiz, Capital (301); Gina Ennabeortiz, Drawing (302); Cleaning Revenue (403); Salaries Expense (620); Truck Expense (630); Utilities Expense (640) and Advertising Expense (650). Post journal entries from Part 1 to the T accounts and calculate the account balance for each account.

3. Prepare a trial balance as of the end of this month’s operations.

4. Using the trial balance created above, prepare an income statement, statement of owner’s equity and a balance sheet for the month ended May 31st.

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ACCT505 Midterm

(TCO A) Within the relevant range, variable costs can be expected to

                                                 vary in total in direct proportion to changes in the activity level.      

                                                 remain constant in total as the activity level changes.

                                                 increase on a per-unit basis as the activity level increases.

                                                 increase on a per-unit basis as the activity level decreases.

                                                 None of the above

                Points Received:              6 of 6

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ACCT505 midterm Exam

3.           Question :           (TCO A)  Property taxes on a company's factory building would be classified as a(n)

                                                 sunk cost.

                                                 opportunity cost.

                                                 period cost.

                                                 variable cost.

                                                 manufacturing cost.

                Points Received:              6 of 6

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A cost incurred in the past that is not relevant to any current decision is classified as

2.           Question :           (TCO A)  A cost incurred in the past that is not relevant to any current decision is classified as a(n)

                                                 period cost.

                                                 incremental cost.

                                                 opportunity cost.

                                                 None of the above

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Wages paid to an assembly line worker in a factory are a

1.            Question :           (TCO A)  Wages paid to an assembly line worker in a factory are a

                                                 Prime Cost YES.....Conversion Cost NO.

                                                 Prime Cost YES.....Conversion Cost YES.

                                                 Prime Cost NO....Conversion Cost NO.

                                                 Prime Cost NO.....Conversion Cost YES.

                Points Received:              6 of 6

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ACCT 505 MIDTERM EXAM

1.            Question :           (TCO A)  Wages paid to an assembly line worker in a factory are a

                                                 Prime Cost YES.....Conversion Cost NO.

                                                 Prime Cost YES.....Conversion Cost YES.

                                                 Prime Cost NO....Conversion Cost NO.

                                                 Prime Cost NO.....Conversion Cost YES.

                Points Received:              6 of 6

 2.           Question :           (TCO A)  A cost incurred in the past that is not relevant to any current decision is classified as a(n)

                                                 period cost.

                                                 incremental cost.

                                                 opportunity cost.

                                                 None of the above

                Points Received:              6 of 6

 3.           Question :           (TCO A)  Property taxes on a company's factory building would be classified as a(n)

                                                 sunk cost.

                                                 opportunity cost.

                                                 period cost.

                                                 variable cost.

                                                 manufacturing cost.

                Points Received:              6 of 6

 4.           Question :           (TCO A) Within the relevant range, variable costs can be expected to

                                                 vary in total in direct proportion to changes in the activity level.      

                                                 remain constant in total as the activity level changes.

                                                 increase on a per-unit basis as the activity level increases.

                                                 increase on a per-unit basis as the activity level decreases.

                                                 None of the above

                Points Received:              6 of 6

 5.           Question :           (TCO F)  Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.

II. Overhead application may be made in a single application at the time of completion of the job.

III. Overhead application should be made to any job not completed at year end in order to properly value the work in process inventory.

                                                 Only statement I is true.

                                                 Only statement II is true.

                                                 Both statements I and II are true.

                                                 Statements I, II, and III are all true.

                Points Received:              6 of 6

 6.           Question :           (TCO F)  Under a job-order costing system, the product being manufactured

is homogeneous.

  passes from one manufacturing department to the next before being completed.

can be custom manufactured.

 has a unit cost that is easy to calculate by dividing total production costs by the units produced.

                Points Received:              6 of 6

 7.           Question :           (TCO F)  The FIFO method only provides a major advantage over the weighted-average method in that

the calculation of equivalent units is less complex under the FIFO method.

 the FIFO method treats units in the beginning inventory as if they were started and completed during the current period.

the FIFO method provides measurements of work done during the current period.

the weighted-average method ignores units in the beginning and ending work-in-process inventories.

                Points Received:              6 of 6

 8.           Question :           (TCO B)  The contribution margin equals

                                                 sales - expenses.

                                                 sales - cost of goods sold.

                                                 sales - variable costs.

                                                 sales - fixed costs.

                Points Received:              6 of 6

 9.           Question :           (TCO B)  To obtain the break-even point in terms of dollar sales, total fixed expenses are divided by which of the following?

                                                 Variable expense per unit

                                                 Variable expense per unit/Selling price per unit

                                                 Fixed expense per unit

                                                 (Selling price per unit - Variable expense per unit) /Selling price per unit.

                Points Received:              6 of 6

 10.         Question :           (TCO E) In an income statement prepared using the variable costing method, fixed manufacturing overhead would

not be used.

be used in the computation of the contribution margin.

 be used in the computation of net operating income but not in the computation of the contribution margin.

                                 be treated the same as variable manufacturing overhead.

                Points Received:              6 of 6

 1.           Question :           (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year:

                Sales.................................................................................          $910

                Purchases of raw materials................................................          $225

                Direct labor.......................................................................          $245

                Manufacturing overhead....................................................        $265

                Administrative expenses....................................................        $150

                Selling expenses................................................................         $140

                Raw materials inventory, beginning.....................................       $15

                Raw materials inventory, ending.........................................        $45

                Work-in-process inventory, beginning.................................       $20

                Work-in-process inventory, ending.....................................        $55

                Finished goods inventory, beginning...................................        $100

                Finished goods inventory, ending.......................................         $135

Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

                Points Received:              15 of 15

2.            Question :           (TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

                                                                        Percentage Completed

                                                   Units            Materials     Conversion

Work in process, June 1              150,000             75%          55%

Work in process, Jun 30              145,000             85%          75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

                Points Received:              20 of 20

 3.           Question :           (TCO B) A tile manufacturer has supplied the following data:

Boxes of tile produced and sold                                      625,000

Sales revenue                                                               $2,975,000

Variable manufacturing expense                                    $1,720,000

Fixed manufacturing expense                                         $790,000

Variable selling and admin expense                                $152,000

Fixed selling and admin expense                                    $133,000

Net operating income                                                    $180,000

Required:

a. Calculate the company's unit contribution margin.

b. Calculate the company's unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

                Points Received:              25 of 25

4.            Question :           (TCO E) Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price                        $         175

                                 

Units in beginning inventory                      0

Units produced                9,500

Units sold                           8,000

Units in ending Inventory                            1,500

                                 

Variable costs per unit:                  

Direct materials                                $           55

Direct labor                         $           38

Variable manufacturing overhead                            $             2

Variable selling and admin                                  $             10

                                 

Fixed costs:                        

Fixed manufacturing overhead                  $ 300,000

Fixed selling and admin                 $     125,000

Required:

a. What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?

c. Prepare an income statement for the month using the variable costing method.

d. Prepare an income statement for the month using the absorption costing method.

                Points Received:              30 of 30

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hahn company uses the percentage of sales method for recording bad debts expense

1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?
A. Bad Debts Expense 15000 Allowances for Doubtful Accounts 15000
B. Bad Debts Expense 12000 Allowances for Doubtful Accounts 12000
C. Bad Debts Expense $12,000 Accounts Receivable $12,000
D. Bad Debts Expense $15,000 Accounts Receivable $15,000

 

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ACC 291 Final Exam

1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?
A. Bad Debts Expense 15000 Allowances for Doubtful Accounts 15000
B. Bad Debts Expense 12000 Allowances for Doubtful Accounts 12000
C. Bad Debts Expense $12,000 Accounts Receivable $12,000
D. Bad Debts Expense $15,000 Accounts Receivable $15,000

2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?
A. $15,000
B. $12,000
C. $18,000
D. $8,000

3) Intangible assets
A. should be reported under the heading Property, Plant, and Equipment
B. should be reported as a separate classification on the balance sheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physical substance

4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that
A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain

5) The book value of an asset is equal to the
A. asset’s market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset’s cost less accumulated depreciation

6) Gains on an exchange of plant assets that has commercial substance are
A. deducted from the cost of the new asset acquired
B. deferred
C. not possible
D. recognized immediately

7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
A. capital expenditures
B. expense expenditures
C. improvements
D. revenue expenditures

8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
A. capital expenditures
B. expense expenditures
C. ordinary repairs
D. revenue expenditures

9) When an interest-bearing note matures, the balance in the Notes Payable account is
A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and the face value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner

10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
A. $12,000
B. $6,000
C. $3,000
D. $2,000

11) If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
A. $3,000,000
B. $90,000
C. $300,000
D. $210,000

12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?
A. Long-term debt, $300,000
B. Long-term debt, $225,000
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000

13) A corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is
A. $30,000
B. $24,000
C. $32,434
D. $25,946

14) When the effective-interest method of bond discount amortization is used  
A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued

15) If a corporation has only one class of stock, it is referred to as
A. classless stock
B. preferred stock
C. solitary stock
D. common stock

16) Capital stock to which the charter has assigned a value per share is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock

17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share

18) Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2011. There were no dividends declared in 2010. The board of directors declares and pays a $45,000 dividend in 2011. What is the amount of dividends received by the common stockholders in 2011?
A. $0
B. $25,000
C. $45,000
D. $20,000

19) When the selling price of treasury stock is greater than its cost, the company credits the difference to
A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock

20) The purchase of treasury stock
A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding
21) Marsh Company has other operating expenses of $240,000. There has been an increase in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Marsh's cash payments for operating expenses?
A. $228,000
B. $232,000
C. $200,000
D. $280,000

22) Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?
A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow

23) In performing a vertical analysis, the base for cost of goods sold is
A. total selling expenses
B. net sales
C. total revenues
D. total expenses

24) Blanco, Inc. has the following income statement (in millions):
Using vertical analysis, what percentage is assigned to Net Income?
A. 100%
B. 82%
C. 18%
D. 25%

25) Dawson Company issued 500 shares of no-par common stock for $4,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share?
A. Cash $4,500 Common Stock 4,500
B. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess of Par 3,500
C. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess of Stated Value 3,500
D. Common Stock $4,500 Cash 4,500

26) Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a
A. credit to Paid-In Capital from Treasury Stock for $9,000¬¬¬¬¬¬¬¬¬¬¬¬
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000

27) Which of the following is a fundamental factor in having an effective, ethical corporate culture?
A. Efficient oversight by the company’s Board of Directors
B. Workplace ethics
C. Code of conduct
D. Ethics management programs

28) Two individuals at a retail store work the same cash register. You evaluate this situation as
A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification

29) The Sarbanes-Oxley Act imposed which new penalty for executives?
A. Fines
B. Suspension
C. Criminal prosecution for executives
D. Return of ill-gotten gains

30) The Sarbanes-Oxley Act requires that all publicly traded companies maintain a system of internal controls. Internal controls can be defined as a plan to
A. safeguard assets
B. monitor balance sheets
C. control liabilities
D. evaluate capital stock

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