1.
Amortization: (Points : 2)
A Is the
systematic allocation of the cost of an intangible asset to expense over its
estimated useful life
BIs the
process of allocating to expense the cost of a plant asset to the accounting
periods benefiting from its use
C Is the
process of allocating the cost of natural resources to periods when they are
consumed
D Is an
accelerated form of expensing an asset's cost
E Is the
same as depletion
2.
Liabilities: (Points : 2)
A Must be
certain
B Must
sometimes be estimated
C Must be
for a specific amount
D Must
always have a definite date for payment
E Must
involve an outflow of cash
3.
Depreciation: (Points : 2)
A Measures
the decline in market value of an asset
B Measures
physical deterioration of an asset
C Is the
process of allocating to expense the cost of a plant asset
D Is an
outflow of cash from the use of a plant asset
E Is
applied to land
4. The
interest accrued on $3,600 at 7% for 60 days is: (Points : 2)
A $36
B $42
C $252
D$180
E $420
5. A
special bank account used solely for the purpose of paying employees, is
created by depositing the amount of each employees' net pay into the account
every pay period. This account is referred to as a(n): (Points : 2)
A Federal
depository bank account
B
Employee's Individual Earnings account
C
Employees' bank account
D Payroll
register account
E Payroll
bank account
6. A
company had a fixed interest expense of $6,000, its income before interest
expense and any income taxes was $18,000 and its net income was $8,400. The
company's times interest earned ratio is equals to (Points : 2)
A 0.33
B 0.71
C 1.40
D 3.00
E 12,000
7. A change
in an accounting estimate is: (Points : 2)
A Reflected
in past financial statements
B Reflected
in future financial statements and also requires modification of past
statements
C A change in a calculated amount that is part
of financial statements that results from new information or subsequent
developments and from better insight or improved judgment
D Not
allowed under current accounting rules
E
Considered an error in the financial statements
8. The
useful life of a plant asset is: (Points : 2)
A The
length of time it is used productively in a company's operations
B Never
related to its physical life
C Its
productive life, but not to exceed one year
D
Determined by the FASB
E
Determined by law
9. An
employee earned $4,300 working for an employer. The current rate for FICA
social security is 6.2% and the FICA Medicare rate is 1.45%. The employer's
total FICA payroll tax for this employee is: (Points : 2)
A $62.35
B $266.60
C $328.95
D$657.90
10. A
company purchased a tract of land for its natural resources at a cost of
$1,500,000. It expects to mine 2,000,000 tons of ore from this land. The
salvage value of the land is expected to be $250,000. The depletion expense per
ton of ore is: (Points : 2)
A $0.75
B $0.625
C $0.875
D $6.00
E $8.00
11. A
contingent liability: (Points : 2)
A Is always
of a specific amount
B Is a
potential obligation that depends on a future event arising out of a past
transaction or event
C Is an
obligation not requiring future payment
D Is an
obligation arising from the purchase of goods or services on credit
E Is an
obligation arising from a future event
12. On
October 10, 2010, Printfast Company sells a commercial printer for $2,350 with
a one year warranty that covers parts. Warranty expense is project to be 4% of
sales. On February 28, 2011, the printer requires repairs. The cost of the
parts for the repair is $80 and Printfast pays their technician $150 to perform
the repair. What is the warranty liability at the end of 2010? (Points : 2)
A $49.00
B $84.80
C $94.00
D $0, there
is no liability at the end of 2010
E $230.00
13. FICA
taxes include: (Points : 2)
A Social
Security taxes
B
Charitable giving
C Employee
income taxes
D
Unemployment taxes
14.
Depletion: (Points : 2)
A Is the
process of allocating the cost of natural resources to periods in which they
are consumed
B Is also
called depreciation
C Is also
called amortization
D Is an
unrealized expense reported in equity
E Is the
process of allocating the cost of intangibles to periods in which they are used
15. Pepsi's
accounts receivable turnover was 9.9 for this year and 11.0 for last year.
Coke's turnover was 9.3 for this year and 9.3 for last year. These results
imply that: (Points : 2)
A Coke has
the better turnover for both years
B Pepsi has
the better turnover for both years
C Coke's
turnover is improving
D Coke's
credit policies are too loose
E Coke is
collecting its receivables more quickly than Pepsi in both years
16. Bonds
that have an option exercisable by the issuer to retire them at a stated dollar
amount prior to maturity are known as: (Points : 2)
A
Convertible bonds
B Sinking
fund bonds
C Callable
bonds
D Serial
bonds
17.
Shamrock Company had net income of $30,000. On January 1, there were 8,000
shares of common stock outstanding. On April 1, the company issued an
additional 2,000 shares of common stock. There were no other stock
transactions. The company has an earnings per share of: (Points : 2)
A $3.75
B $3.00
C $3.33
D $15.00
E $3.16
18. A
company must repay the bank $10,000 cash in 3 years for a loan. The loan
agreement specifies 8% interest compounded annually. The present value factor
for 3 years at 8% is 0.7938. The present value of the loan is: (Points : 2)
A $10,000
B $12,400
C $7,938
D $9,200
E $7,600
19. To
provide security to creditors and to reduce interest costs, bonds and notes
payable can be secured by: (Points : 2)
A Safe
deposit boxes
B Mortgages
C Equity
D The FASB
E
Debentures
20. The market
value of a bond is equal to: (Points : 2)
A The
present value of all future cash payments provided by a bond
B The
present value of all future interest payments provided by a bond
C The
present value of the principal for an interest-bearing bond
D The
future value of all future cash payments provided by a bond
E The
future value of all future interest payments provided by a bond
21.
Dividend yield is the percent of cash dividends paid to common shareholders
relative to the: (Points : 2)
A Common
stock's market value
B Earnings
per share
C
Investors' purchase price of the stock
D Amount of
retained earnings
E Amount of
cash
22. Which
of the following statements is true? (Points : 2)
A Interest
on bonds is tax deductible
B Interest
on bonds is not tax deductible
C Dividends
to stockholders are tax deductible
D Bonds do
not have to be repaid
23. If an
issuer sells a bond at any other date than the interest payment date: (Points :
2)
A This
means the bond sells at a premium
B This
means the bond sells at a discount
C The
issuing company will report a loss on the sale of the bond
D The
issuing company will report a gain on the sale of the bond
E The buyer
normally pays the issuer the purchase price plus any interest accrued since the
prior interest payment date
24. A bond
sells at a discount when the: (Points : 2)
A Contract
rate is above the market rate
B Contract
rate is equal to the market rate
C Contract
rate is below the market rate
D Bond has
a short-term life
E Bond pays
interest only once a year
25. The
Discount on Bonds Payable account is: (Points : 2)
A A
liability
B A contra
liability
C An
expense
D A contra
expense
E A contra
equity
26. A
company purchased equipment and signed a 7-year installment loan at 9% annual
interest. The annual payments equal $9,000. The present value factor for an
annuity for 7 years at 9% is 5.0330. The present value of the loan is: (Points
: 2)
A $9,000
B $5,033
C $63,000
D $57,330
E $45,297
27. The
amount of income earned per share of a company's common stock is known as:
(Points : 2)
A
Restricted retained earnings per share
B Earnings
per share
C
Continuing operations per share
D Dividends
per share
E Book
value per share
28. The
date the board of directors votes to pay a dividend is called the: (Points : 2)
A Date of
stockholders' meeting
B Date of
declaration
C Date of
record
D Date of
payment
E
Liquidating date
29. Bonds
that give the issuer an option of retiring them prior to the date of maturity
are: (Points : 2)
A
Debentures
B Serial
bonds
C Sinking
fund bonds
D
Registered bonds
E Callable
bonds
30. A
company issues 9%, 20-year bonds with a par value of $750,000. The current
market rate is 9%. The amount of interest owed to the bondholders for each
semiannual interest payment is. (Points : 2)
A $0
B $33,750
C $67,500
D $750,000
E
$1,550,000
31.
Financial reporting refers to: (Points : 2)
A The
application of analytical tools to general-purpose financial statements
B The
communication of relevant financial information to decision makers
C Financial
statements only
D Ratio
analysis
E
Profitability
32. Net
sales divided by average accounts receivable is equal to the: (Points : 2)
A Days'
sales uncollected
B Average
accounts receivable ratio
C Current
ratio
D Profit
margin
E Accounts
receivable turnover ratio
33.
Accounting standards: (Points : 2)
A Allow
companies to omit the statement of cash flows from a complete set of financial
statements if cash is an insignificant asset
B Require
that companies omit the statement of cash flows from a complete set of
financial statements if the company has no investing activities
C Require
that companies include a statement of cash flows in a complete set of financial
statements
D Allow
companies to include the statement of cash flows in a complete set of financial
statements if the cash balance makes up more than 50% of the current assets
E Allow
companies to omit the statement of cash flows from a complete set of financial
statements if the company has no financing activities
34. The
statement of cash flows reports: (Points : 2)
A Assets,
liabilities and equity
B Revenues,
gains, expenses and losses
C Cash
inflows and outflows for an accounting period
D Equity,
net income and dividends
E Changes
in equity
35. A
machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold
for $50,000 cash. The amount that should be reported as a source of cash under
cash flows from investing activities is: (Points : 2)
A $50,000
B $5,000
C $45,000
D Zero.
This is an operating activity
E Zero.
This is a financing activity
36.
Dividing ending inventory by cost of goods sold and multiplying the result by
365 is equal to the: (Points : 2)
A Inventory
turnover ratio
B Profit
margin
C Days'
sales in inventory
D Current
ratio
E Total
asset turnover
37. The
ability to meet short-term obligations and to efficiently generate revenues is
called: (Points : 2)
A Liquidity
and efficiency
B Solvency
C
Profitability
D Market
prospects
E
Creditworthiness
38.
Internal users of financial information: (Points : 2)
A Are not
directly involved in operating a company
B Are those
individuals involved in managing and operating the company
C Include
shareholders and lenders
D Include
directors and customers
E Include
suppliers, regulators and the press
39. The
comparison of a company's financial condition and performance across time is
known as: (Points : 2)
A
Horizontal analysis
B Vertical
analysis
C Political
analysis
D Financial
reporting
E
Investment analysis
40.
Comparative financial statements in which each amount is expressed as a
percentage of a base amount and in which the base amount is expressed as 100%,
are called: (Points : 2)
A
Comparative statements
B
Common-size comparative statements
C
General-purpose financial statements
D Base line
statements
E Index
statements
41. The
measurement of key relations among financial statement items is known as:
(Points : 2)
A Financial
reporting
B
Horizontal analysis
C
Investment analysis
D Ratio
analysis
E Risk analysis
42.
External users of financial information: (Points : 2)
A Are those
individuals involved in managing and operating the company
B Include
internal auditors and consultants
C Are not
directly involved in operating the company
D Make
strategic decisions for a company
E Make
operating decisions for a company
43. One of
several ratios that reflects solvency includes the: (Points : 2)
A Acid-test
ratio
B Current
ratio
C Times
interest earned ratio
D Total
asset turnover
E Days'
sales in inventory
44. The
reporting of net cash provided or used by operating activities that lists the
major items of operating cash receipts, such as receipts from customers and
subtracts the major items of operating cash disbursements, such as cash paid
for merchandise is referred to as the: (Points : 2)
A Direct
method of reporting net cash provided or used by operating activities
B Cash
basis of accounting
C
Classified statement of cash flows
D Indirect
method of reporting net cash provided or used by operating activities
E Net
method of reporting cash flows from operating activities
45. A
company's transactions with its creditors to borrow money and/or to repay the
principal amounts of loans are reported as cash flows from: (Points : 2)
A Operating
activities
B Investing
activities
C Financing
activities
D Direct
activities
E Indirect
activities
46. Wessen
Company reports net income of $180,000 for the year ended December 31, 2010. It
also reports $45,800 depreciation expense, $21,410 amortization expense and a
$15,000 gain on the sale of machinery. Its comparative balance sheets reveal a
$28,300 increase in accounts receivable, $20,400 decrease in accounts payable,
$10,470 increase in prepaid expenses, and $33,140 decrease in wages payable.
What is the net cash flows provided (used) by operating activities using the
indirect method? (Points : 2)
A
($140,200)
B $133,490
C $139,900
D
($133,490)
E $78,300
47. A
company has a profit margin of 5%. If net income is equal to $83,000 and
average total assets is equal to $45,000, how much are net sales? (Points : 2)
A $4,150
B $2,250
C
$1,660,000
D $6,400
E $128,000
48.
Reporting of discontinued segments includes: (Points : 2)
Income or
loss from operating the discontinued segment net of tax and gain or loss from
disposal of A the segment's net assets net of tax
B
Extraordinary items
C Changes
in accounting principle
D Items
that are both unusual and infrequent
E Writing
off of receivables
49.
Activities that involve the production or purchase of merchandise and the sale
of goods and services to customers, including expenditures related to
administering the business, are classified as: (Points : 2)
A Financing
activities
B Investing
activities
C Operating
activities
D Direct
activities
E Indirect
activities
50. A
company had net cash flows from operations of $120,000, total cash flows of
$500,000 and average total assets of $2,500,000. The cash flow on total assets
ratio equals: (Points : 2)
A 4.8%
B 5.0%
C 20.0%
D 20.8%
E 24.0%
