Accounting 315

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White Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should

Accounting recognition should be given to some or all of the gain realized on a nonmonetary exchange of plant assets except when the exchange has

Adjustments are often prepared

Although many objections have been raised about the historical cost principle, it is still widely supported for financial reporting because it

An income statement shows "income before income taxes and extraordinary items" in the amount of $2,055,000. The income taxes payable for the year are $1,080,000, including $360,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is

An income statement shows "income before income taxes and extraordinary items" in the amount of $685,000. The income taxes payable for the year are $360,000, including $120,000 that is applicable to an extraordinary gain. Thus, the "income before extraordi-nary items" is

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Assets that qualify for interest cost capitalization include

Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?

One-half of the rented premises is occupied by the sales department. Bowen's total selling expenses for 2008 are

Operating losses incurred during the start-up years of a new business should be

According to the FASB's conceptual framework, the calculation of comprehensive income includes which of the following?

According to the FASB's conceptual framework, which of the following relates to both relevance and reliability?

Accounting information is considered to be relevant when it

Accrual accounting is used because

According to Statement of Financial Accounting Concepts No. 2, timeliness is an ingredient of the primary quality of

Accounting principles are "generally accepted" only when

Which of the following methods of amortization is normally used for intangible assets?

Which of the following most accurately reflects the concept of depreciation as used in accounting?

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Which of the following reflects proper use of the term "reserve" in the preparation of financial statements?

Which of the following serves as the justification for the periodic recording of depreciation expense?

Which of the following should be reported as a prior period adjustment? Change in Estimated Lives Change from Unaccepted of Depreciable Assets Principle to Accepted Principle

Which of the following should not be reported on the income statement as an extra-ordinary item?

Which of the following statements is the assumption on which straight-line depreciation is based?

Which of the following statements is true regarding capitalization of interest?

Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?

Which of the following violates the concept of reliability?

Which statement is not true about the gross profit method of inventory valuation?

When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

When preparing a bank reconciliation, bank credits are

When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"?

Which of the following (a-c) are not true concerning a conceptual framework in accounting?

Which of the following costs should be excluded from research and development expense?

Which of the following depreciation methods does not consider salvage value in computing the depreciable base of the asset?

Which of the following facts concerning fixed assets should be included in the summary of significant accounting policies? Depreciation Method Composition

Which of the following intangible assets should not be amortized?

Which of the following is a required disclosure in the income statement when reporting the disposal of a component of the business?

Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset?

Which of the following is not a necessary characteristic for an item to be classified as property, plant, and equipment?

Which of the following is not an internal event?

Which of the following is not true?

Which of the following is properly classified as cash?

Which of the following is true when accounts receivable are factored without recourse?

Which of the following items will not appear in the retained earnings statement?

Which of the following journal entries is appropriate when a company receives payment in advance for goods or services?

Which of the following legal fees should be capitalized? Legal fees to Legal fees to successfully defend a obtain a copyright trademark

Which of the following methods is used when the collectibility of the receivable is so uncertain that gross profit (or income) is not recognized until cash is received?

Which of the following nonmonetary exchange transactions represents a culmination of the earning process?

Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States?

Which of the following represents a departure from the historical cost basis of valuing inventories?

Which of the following should be reported on the income statement as an extraordinary item?

Which of the following statements best describes the purpose of closing entries?

Which of the following statements is incorrect regarding the classification of accounts and notes receivable?

Which of the following statements is not an objective of financial reporting?

Which of the following statements is not correct regarding uncollectible accounts receivable?

Which type of account is always debited during the closing process?

Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?

It is mandatory that the essential provisions of which of the following be clearly stated in the notes to the financial statements?

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

Which of the following principles best describes the current method of accounting for research and development costs?

Which of the following publications does not qualify as a statement of generally accepted accounting principles?

Which of the following represents the best justification for the departure from the historical cost principle that results when lower-of-cost-or-market is used?

Which of the following should be excluded from long-term liabilities?

Which of the following should be recorded in Accounts Receivable?

Which of the following should be reported for capital stock?

Which of the following should not be considered as a current asset in the balance sheet?

Which of the following statements about materiality is not correct?

Which of the following statements concerning the cost-benefit relationship is not true?

Which of the following statements is not true as it pertains to the accounting process?

Which of the following statements is not valid as it applies to inventory costing methods?

Which of the following would be classified in a different major section of a balance sheet from the others?

Which of the following would not be a correct form for an adjusting entry?

Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

Which of these is generally an example of an extraordinary item?

Which of these is not a major characteristic of a plant asset?

Which one of the following types of losses is excluded from the determination of net income in income statements?

Winser, Inc. is engaged in extensive exploration for water in Utah. If, upon discovery of water, Winser does not recognize any revenue from water sales until the sales exceed the costs of exploration, the basis of revenue recognition being employed is the

Working capital is

Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor. The cost of this defense should be charge to

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Publications: 1. Accounting Research Bulletins (1953-1959) 2. Statements of Auditing Standards 3. Journal of Accountancy 4. Emerging Issues Task Force Statements 5. Opinions (1962-1973) 6. Technical Bulletins 7. Statements of Financial Accounting Standards 8. Statements of Financial Accounting Concepts 9. Statements of Position (SOPs)

D A C F E F F F B

When a corporation pays a note payable and interest,

When a portion of inventories has been pledged as security on a loan,

When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.

Use of the double-declining balance method

Users of financial reports include all of the following except

Valuing assets at their liquidation values rather than their cost is inconsistent with the

When a closely held corporation issues preferred stock for land, the land should be recorded at the

When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported

When a customer purchases merchandise inventory from a business organization, she may be given a discount which is designed to induce prompt payment. Such a discount is called a(n)

When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the

When an item of revenue or expense has been earned or incurred but not yet collected or paid, it is normally called a(n) ____________ revenue or expense.

When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of

When using a perpetual inventory system,

Whether a business is successful and thrives is determined by

Which of the following are considered pervasive constraints by Statement of Financial Accounting Concepts No. 2?

Which of the following asset disposals would qualify as a disposal of a component of a business?

Which of the following assets do not qualify for capitalization of interest costs incurred during construction of the assets?

Which of the following balance sheet classifications would normally require the greatest amount of supplementary disclosure?

Which of the following criteria must be met before an event or item should be recorded for accounting purposes?

Which of the following is a capital expenditure?

Which of the following is a contra account?

Which of the following is a current asset?

Which of the following is a limitation of the balance sheet?

Which of the following is a real (permanent) account?

Which of the following is a realistic assumption of the straight-line method of depreciation?

Which of the following is a recordable event or item?

Which of the following is an acceptable method of presenting the income statement?

Which of the following is an implication of the going concern assumption?

Which of the following is false with regard to the element "comprehensive income"?

Which of the following is never classified as an extraordinary item?

Which of the following is not a basic assumption of the gross profit method?

Which of the following is not a benefit associated with the FASB Conceptual Framework Project?

Which of the following is not a method of disclosing pertinent information?

Which of the following is not a part of generally accepted accounting principles?

Which of the following is not a principal purpose of an unadjusted trial balance?

Which of the following is not a reason why revenue is recognized at time of sale?

Which of the following is not a time when revenue may be recognized?

Which of the following is not an acceptable major asset classification?

Which of the following is not an objective of financial reporting?

Which of the following is not considered cash for financial reporting purposes?

Which of the following is true about intraperiod tax allocation?

Which of the following is true about lower-of-cost-or-market?

Which of the following is true regarding the use of LIFO for inventory valuation?

Which of the following items should be included in a company's inventory at the balance sheet date?

Which of the following items should never be included in the current assets section of the balance sheet?

Which of the following items should not be included in the Cash caption on the balance sheet?

Which of the following methods of determining bad debt expense does not properly match expense and revenue?

A principal objection to the straight-line method of depreciation is that it

A reversing entry should never be made for an adjusting entry that

A review of the December 31, 2008, financial statements of Baden Corporation revealed that under the caption "extraordinary losses," Baden reported a total of $515,000. Further analysis revealed that the $515,000 in losses was comprised of the following items: (1) Baden recorded a loss of $150,000 incurred in the abandonment of equipment formerly used in the business. (2) In an unusual and infrequent occurrence, a loss of $250,000 was sustained as a result of hurricane damage to a warehouse. (3) During 2008, several factories were shut down during a major strike by employees, resulting in a loss of $85,000. (4) Uncollectible accounts receivable of $30,000 were written off as uncollectible. Ignoring income taxes, what amount of loss should Baden report as extraordinary on its 2008 income statement?

A trial balance before adjustments included the following: Debit Credit Sales $425,000 Sales returns and allowance $14,000 Accounts receivable 43,000 Allowance for doubtful accounts 760 If the estimate of uncollectibles is made by taking 2% of net sales, the amount of the adjustment is

AJ Company had January 1 inventory of $100,000 when it adopted dollar-value LIFO. During the year, purchases were $600,000 and sales were $1,000,000. December 31 inventory at year-end prices was $143,360, and the price index was 112. What is AJ Company's gross profit?

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of the primary quality of

According to the FASB conceptual framework, earnings

According to the FASB's conceptual framework, earnings

An optional step in the accounting cycle is preparation of

An organization that has not published accounting standards is the

Any gain or loss experienced by a concern, whether directly or indirectly related to operations, contributes to the long-run profitability and should be included in the computa-tion of net income. Those who favor such a philosophy adhere to the Current Operating All-Inclusive Performance Concept Concept

Assuming that the company does use reversing entries, what entry should be made on April 1, 2008 when the annual interest payment is received?

At December 31, 2008, Sue's Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2008 for $50 each. Sue's operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2008?

At the beginning of 2007, Finney Company received a three-year, zero-interest-bearing $1,000 trade note. The market rate for equivalent notes was 8% at that time. Finney reported this note as a $1,000 trade note receivable on its 2007 year-end statement of financial position and $1,000 as sales revenue for 2007. What effect did this accounting for the note have on Finney's net earnings for 2007, 2008, 2009, and its retained earnings at the end of 2009, respectively?

Bank overdrafts, if material, should be

The economic entity assumption

The elements of financial statements include investments by owners. These are increases in an entity's net assets resulting from owners

The financial statements most frequently provided include all of the following except the

The following accounts were abstracted from Todd Co.'s unadjusted trial balance at December 31, 2008: Debit Credit Accounts receivable $750,000 Allowance for uncollectible accounts 8,000 Net credit sales $3,000,000 Todd estimates that 2% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2008, the allowance for uncollectible accounts should have a credit balance of

The following information was available from the inventory records of Neer Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 $9.77 $29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January 7 (2,500) January 31 (4,000) Balance at January 31 1,200 Assuming that Neer maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar?

The following information was extracted from the accounts of Boone Corporation at December 31, 2008: CR(DR) Total reported income since incorporation $1,700,000 Total cash dividends paid (800,000) Unrealized holding loss (120,000) Total stock dividends distributed (200,000) Prior period adjustment, recorded January 1, 2008 75,000 What should be the balance of retained earnings at December 31, 2008?

The following is true of depreciation accounting.

The following published documents are part of the "due process" system used by the FASB in the evolution of a typical FASB Statement of Financial Accounting Standards: 1. Exposure Draft 2. Statement of Financial Accounting Standards 3. Discussion Memorandum The chronological order in which these items are released is as follows:

The gross profit method of inventory valuation is invalid when

The income statement reveals

The major problem of accounting for intangibles is determining

The most authoritative category of generally accepted accounting principles includes all of the following except

The most significant current source of generally accepted accounting principles is the

The net assets of a business are equal to

The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

The purpose of the Emerging Issues Task Force is to

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

The traditional LIFO approach which tends to emphasize specific goods in costing LIFO inventories is often unrealistic because

The worksheet for Sharko Co. consisted of eight pairs of debit and credit columns. The dollar amount of one item appeared in both the credit column of the income statement section and the debit column of the balance sheet section. That item is

Trade discounts are

Transactions for the month of June were: Purchases Sales June 1 (balance) 800 @ $3.20 June 2 600 @ $5.50 3 2,200 @ 3.10 6 1,600 @ 5.50 7 1,200 @ 3.30 9 1,000 @ 5.50 15 1,800 @ 3.40 10 400 @ 6.00 22 500 @ 3.50 18 1,400 @ 6.00 25 200 @ 6.00 Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is

Travel advances should be reported as

Treasury stock should be reported as a(n)

According to the FASB's conceptual framework, comprehensive income includes which of the following?

According to the FASB's conceptual framework, predictive value is an ingredient of

According to the FASB's conceptual framework, the process of reporting an item in the financial statements of an entity is

1. Bond sinking fund 2. Common stock distributable 3. Appropriation for plant expansion 4. Bank overdraft 5. Bonds payable (due 2010) 6. Premium on common stock 7.Securities owned by another company which are collateral for that company's note 8. Trading Securities 9. Inventory 10. Unamortized discount on bonds payable 11. Patents 12. Unearned revenue

1. B 5. G 9. A 2. I 6. J 10. G 3. K 7. L 11. D 4. F 8. A 12. F

A general journal

A machine cost $120,000, has annual depreciation of $20,000, and has accumulated depreciation of $90,000 on December 31, 2007. On April 1, 2008, when the machine has a market value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper amount of cash is paid. The exchange lacked commercial substance. The gain to be recorded on the exchange is

According to Statement of Financial Accounting Concepts No. 2, predictive value is an ingredient of the primary quality of

According to the FASB Conceptual Framework, the elements⎯assets, liabilities, and equity⎯describe amounts of resources and claims to resources at/during a

At Hall Company, events and transactions during 2008 included the following. The tax rate for all items is 30%. (1) Depreciation for 2006 was found to be understated by $30,000. (2) A strike by the employees of a supplier resulted in a loss of $25,000. (3) The inventory at December 31, 2006 was overstated by $40,000. (4) A flood destroyed a building that had a book value of $500,000. Floods are very uncommon in that area. The effect of these events and transactions on 2008 income from continuing operations net of tax would be

At the time a company prepays a cost

Baker Company has been using the LIFO method of inventory valuation for 10 years, since it began operations. Its 2008 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used. Thus, if FIFO had been used, Baker's income before income taxes would have been

Carter Construction Company had a contract starting April 2008, to construct a $15,000,000 building that is expected to be completed in September 2009, at an estimated cost of $13,750,000. At the end of 2008, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $3,000,000 and the cash collected during 2008 was $2,000,000. Carter uses the percentage-of-completion method. At December 31, 2008, Carter would report Construction in Process in the amount of

Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, the entire expected loss should be

Designated market value

Dolan Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2006. Its inventory at that date was $220,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Date Current Prices Price Index December 31, 2007 $256,800 107 December 31, 2008 290,000 125 December 31, 2009 325,000 130 What is the cost of the ending inventory at December 31, 2009 under dollar-value LIFO?

During 2008, Steele Corporation sold merchandise costing $1,500,000 on an installment basis for $2,000,000. The cash receipts related to these sales were collected as follows: 2008, $800,000; 2009, $700,000; 2010, $500,000. If expenses, other than the cost of the merchandise sold, related to the 2008 installment sales amounted to $90,000, by what amount would Steele's net income for 2008 increase as a result of installment sales?

During 2008, Ted Corporation sold merchandise costing $500,000 on an installment basis for $800,000. The cash receipts related to these sales were collected as follows: 2008, $250,000; 2009, $450,000; 2010, $100,000. What amounts would be shown in the December 31, 2009 financial statements for realized gross profit on 2008 installment sales, and deferred gross profit on 2008 installment sales, respectively?

During 2008, Ted Corporation sold merchandise costing $500,000 on an installment basis for $800,000. The cash receipts related to these sales were collected as follows: 2008, $250,000; 2009, $450,000; 2010, $100,000. What is the rate of gross profit on the installment sales made by Ted Corporation during 2008?

During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?

During the year 2008, Siska Corporation had the following information available related to its income statement: Disbursements for purchases $630,000 Increase in trade accounts payable 80,000 Decrease in merchandise inventory 25,000 Cost of goods sold for 2008 amounted to

Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as

Equipment that cost $66,000 and has accumulated depreciation of $30,000 is exchanged for equipment with a fair value of $48,000 and $12,000 cash is received. The exchange lacked commercial substance. The gain to be recognized from the exchange is

Financial accounting standard-setting in the United States

For income statement purposes, depreciation is a variable expense if the depreciation method used is

Gardin Corporation uses the allowance method of accounting for uncollectible accounts. During 2008 Gardin had charges to Bad Debts Expense of $20,000 and wrote off as uncollectible, accounts receivable totaling $16,000. These transactions decreased the net receivable's realizable value by

Gear Co.'s accounts payable balance at December 31, 2008 was $1,500,000 before considering the following transactions: • Goods were in transit from a vendor to Gear on December 31, 2008. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2008. The goods were received on January 4, 2009. • Goods shipped to Gear, f.o.b. shipping point on December 20, 2008, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2009, Gear filed a $50,000 claim against the common carrier. In its December 31, 2008 balance sheet, Gear should report accounts payable of

General Products Company bought Special Products Division in 2007 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2008, the fair value of Special Products Division is $2,000,000 and it is carried on General Product's books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division's assets indicates that goodwill of $200,000 exists on December 31, 2008. What goodwill impairment should be recognized by General Products in 2008?

General-purpose financial statements are the product of

Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $12,000 and a fair market value of $15,000. The asset given up by Armstrong Co. has a book value of $20,000 and a fair market value of $19,000. Boot of $4,000 is received by Armstrong Co. What amount should Armstrong Co. record for the asset received?

Gomez Company had a gross profit of $360,000, total purchases of $420,000, and an ending inventory of $240,000 in its first year of operations as a retailer. Gomez's sales in its first year must have been

Goods in transit which are shipped f.o.b. destination should be

Gore Company's accounting records indicated the following information: Inventory, 1/1/08 $ 600,000 Purchases during 2008 3,000,000 Sales during 2008 3,800,000 A physical inventory taken on December 31, 2008, resulted in an ending inventory of $700,000. Gore's gross profit on sales has remained constant at 25% in recent years. Gore suspects some inventory may have been taken by a new employee. At December 31, 2008, what is the estimated cost of missing inventory?

Gray Football Co. had a player contract with Vance that is recorded in its books at $3,600,000 on July 1, 2008. Day Football Co. had a player contract with Simms that is recorded in its books at $4,500,000 on July 1, 2008. On this date, Gray traded Vance to Day for Simms and paid a cash difference of $450,000. The fair value of the Simms contract was $5,400,000 on the exchange date. The exchange had no commercial substance. After the exchange, the Simms contract should be recorded in Gray's books at

Green Company wrote off a client's account receivable of $400 as uncollectible. What will be the effect on net income under the following methods of recognizing bad debt expense? Direct Write-off Allowance

How do these prepaid expenses expire?

How much of the expenses listed above should be included in Meyer's general and administrative expenses for 2008?

How should an unusual event not meeting the criteria for an extraordinary item be disclosed in the financial statements?

How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion method of revenue recognition is used?

If $1,240 cash and a $4,760 note are given in exchange for a delivery truck to be used in a business,

If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

If plant assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

In Garret Wolfe's single-step income statement, gross profit

In November and December 2008, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2009 issue. Lane included the entire $90,000 in its 2008 income tax return. What amount should Lane report in its 2008 income statement for subscriptions revenue?

In a period of rising prices, the inventory method which tends to give the highest reported inventory is

In accounting for long-term construction-type contracts, construction costs are accumu-lated in an inventory account called Construction in Process under the Percentage-of- Completed- Completion Method Contract Method

In certain cases, revenue is recognized at the completion of production even though no sale has been made. Which of the following statements is not true?

In preparing its August 31, 2008 bank reconciliation, Adel Corp. has available the follow-ing information: Balance per bank statement, 8/31/08 $21,650 Deposit in transit, 8/31/08 3,900 Return of customer's check for insufficient funds, 8/30/08 600 Outstanding checks, 8/31/08 2,750 Bank service charges for August 100 At August 31, 2008, Adel's correct cash balance is

Jo Jo Chong, Inc. needs to determine if its property, plant, and equipment has been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are):

Kari, Inc.'s cash book balance on December 31, 2008, was $5,000. In addition, Kari had the following items on its premises on December 31: Check payable to Kari, Inc., dated January 3, 2009, included in December 31 book balance $ 200 Postage stamps on hand not included in December 31 book balance 100 Cashier's check payable to Kari, Inc., dated December 28, 2008, not included in December 31 book balance 1,300 The proper amount to be shown as Cash on Kari's balance sheet at December 31, 2008, is

Lopez Company received $6,400 on April 1, 2008 for one year's rent in advance and recorded the transaction with a credit to a nominal account. The December 31, 2008 adjusting entry is

Lopez Corp. incurred $420,000 of research and development costs to develop a product for which a patent was granted on January 2, 2003. Legal fees and other costs associated with registration of the patent totaled $80,000. On March 31, 2008, Lopez paid $120,000 for legal fees in a successful defense of the patent. The total amount capitalized for the patent through March 31, 2008 should be

MaBelle Corporation incurred the following costs in 2008: Acquisition of R&D equipment with a useful life of 4 years in R&D projects $600,000 Start-up costs incurred when opening a new plant 140,000 Advertising expense to introduce a new product 700,000 Engineering costs incurred to advance a product to full production stage 350,000 What amount should MaBelle record as research & development expense in 2008?

Mack Co. takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of disposition. Data relating to one of Mack's depreciable assets at December 31, 2008 are as follows: Acquisition year 2006 Cost $140,000 Residual value 20,000 Accumulated depreciation 96,000 Estimated useful life 5 years Using the same depreciation method as used in 2006, 2007, and 2008, how much depreciation expense should Mack record in 2009 for this asset?

Marr Corporation has two products in its ending inventory, each accounted for at the lower-of-cost-or-market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 Historical cost $40.00 $ 70.00 Replacement cost 45.00 54.00 Estimated cost to dispose 10.00 26.00 Estimated selling price 80.00 130.00 In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Marr use for products #1 and #2, respectively?

Miley, Inc. began work in 2008 on a contract for $8,400,000. Other data are as follows: 2008 2009 Costs incurred to date $3,600,000 $5,600,000 Estimated costs to complete 2,400,000 — Billings to date 2,800,000 8,400,000 Collections to date 2,000,000 7,200,000 If Miley uses the percentage-of-completion method, the gross profit to be recognized in 2008 is

Nominal accounts are also called

Noonan Construction Co. began operations in 2008. Construction activity for 2008 is shown below. Noonan uses the percentage-of-completion method. Estimated Contract Costs to Costs to Contract Price 12/31/08 Complete 1 $1,480,000 $250,000 $ 750,000 2 1,700,000 400,000 1,600,000 Which of the following should be shown on the income statement for 2008 related to Contract 2?

Of the following conditions, which is the only one that is not required if the transfer of receivables with recourse is to be accounted for as a sale?

Of the following items, the one which should be classified as a current asset is

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available: Sales, January 1 through April 15 $300,000 Inventory, January 1 50,000 Purchases, January 1 through April 15 250,000 Markup on cost 25% The amount of the inventory loss is estimated to be

On December 31, 2008, Eller Corporation sold for $75,000 an old machine having an original cost of $135,000 and a book value of $60,000. The terms of the sale were as follows: $15,000 down payment $30,000 payable on December 31 for each of the next two years The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2008 rounded to the nearest dollar? (The present value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.)

On Hogan's multiple-step income statement for 2008, Extraordinary loss is

On January 1, 2001, Barnes Company purchased equipment at a cost of $50,000. The equipment was estimated to have a salvage value of $5,000 and it is being depreciated over eight years under the sum-of-the-years'-digits method. What should be the charge for depreciation of this equipment for the year ended December 31, 2008?

On January 1, 2008, Dole Co. sold land that cost $210,000 for $280,000, receiving a note bearing interest at 10%. The note will be paid in three annual installments of $112,595 starting on December 31, 2008. Because collection of the note is very uncertain, Dole will use the cost-recovery method. How much revenue from this sale should Dole recognize in 2008?

On January 1, 2008, the Accumulated Depreciation—Machinery account of a particular company showed a balance of $370,000. At the end of 2008, after the adjusting entries were posted, it showed a balance of $395,000. During 2008, one of the machines which cost $125,000 was sold for $60,500 cash. This resulted in a loss of $4,000. Assuming that no other assets were disposed of during the year, how much was depreciation expense for 2008?

On January 2, 2007, Klein Co. bought a trademark from Royce, Inc. for $500,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce's books was $400,000. In Klein's 2007 income statement, what amount should be reported as amortization expense?

On January 2, 2008, Renn Corp. replaced its boiler with a more efficient one. The following information was available on that date: Purchase price of new boiler $150,000 Carrying amount of old boiler 10,000 Fair value of old boiler 4,000 Installation cost of new boiler 20,000 The old boiler was sold for $4,000. What amount should Renn capitalize as the cost of the new boiler?

On January 31, fire destroyed the entire inventory of Mojares Company. The following data are available: Sales for January $60,000 Inventory, January 1 10,000 Purchases for January 55,000 Markup on cost 25% The amount of the inventory loss is estimated to be

On March 1, 2008, Dennis Company purchased land for an office site by paying $540,000 cash. Dennis began construction on the office building on March 1. The following expenditures were incurred for construction: Date Expenditures March 1, 2008 $ 360,000 April 1, 2008 504,000 May 1, 2008 900,000 June 1, 2008 1,440,000 The office was completed and ready for occupancy on July 1. To help pay for construction, $720,000 was borrowed on March 1, 2008 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2008 was a $300,000, 12%, 6-year note payable dated January 1, 2008. The actual interest cost incurred during 2008 was

On March 1, Bakken Co. began construction of a small building. Payments of $180,000 were made monthly for four months beginning March 1. The building was completed and ready for occupancy on June 1. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are

On the December 31, 2008 balance sheet of Yount Co., the current receivables consisted of the following: Trade accounts receivable $ 75,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (November 2008) 3,000 Selling price of unsold goods sent by Yount on consignment at 130% of cost (not included in Yount 's ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000 Total $132,000 At December 31, 2008, the correct total of Yount 's current net receivables was

One of the main reasons for separating liabilities into current and long-term is to

One of the primary benefits of the multiple-step income statement over the single-step income statement is that the multiple-step income statement

Parker Construction Co. uses the percentage-of-completion method. In 2008, Parker began work on a contract for $5,500,000; it was completed in 2009. The following cost data pertain to this contract: Year Ended December 31 2008 2009 Cost incurred during the year $1,950,000 $1,400,000 Estimated costs to complete at the end of year 1,300,000 — The amount of gross profit to be recognized on the income statement for the year ended December 31, 2009 is

Peppers Corporation owns machinery with a book value of $190,000. It is estimated that the machinery will generate future cash flows of $200,000. The machinery has a fair value of $140,000. Peppers should recognize a loss on impairment of

Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

Reed Co. exchanged nonmonetary assets with Wilton Co. No cash was exchanged and the exchange had no commercial substance. The carrying amount of the asset surrendered by Reed exceeded both the fair value of the asset received and Wilton's carrying amount of that asset. Reed should recognize the difference between the carrying amount of the asset it surrendered and

Replacement cost is the designated market value used to compare to cost in determining lower-of-cost-or-market when its relationship to the items shown below is

Riley Co. incurred the following costs during 2008: Modification to the formulation of a chemical product $160,000 Trouble-shooting in connection with breakdowns during commercial production 150,000 Costs of marketing research for new product 200,000 Seasonal or other periodic design changes to existing products 185,000 Laboratory research aimed at discovery of new technology 215,000 In its income statement for the year ended December 31, 2008, Riley should report research and development expense of

Sam Hurd Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000; retained earnings, $313,000. What total amount should Sam Hurd Company report as stockholders' equity?

Sam Hurd Company has the following items: write-down of inventories, $120,000; loss on disposal of Sports Division, $185,000; and loss due to strike, $113,000. Ignoring income taxes, what total amount should Sam Hurd Company report as extraordinary losses?

Sandy, Inc. had the following bank reconciliation at March 31, 2008: Balance per bank statement, 3/31/08 $37,200 Add: Deposit in transit 10,300 47,500 Less: Outstanding checks 12,600 Balance per books, 3/31/08 $34,900 Data per bank for the month of April 2008 follow: Deposits $46,700 Disbursements 49,700 All reconciling items at March 31, 2008 cleared the bank in April. Outstanding checks at April 30, 2008 totaled $6,000. There were no deposits in transit at April 30, 2008. What is the cash balance per books at April 30, 2008?

Seeman Furniture uses the installment-sales method. No further collections could be made on an account with a balance of $18,000. It was estimated that the repossessed furniture could be sold as is for $5,400, or for $6,300 if $300 were spent reconditioning it. The gross profit rate on the original sale was 40%. The loss on repossession was

Silas Company reported the following information for 2008: Sales revenue $500,000 Cost of goods sold 350,000 Operating expenses 55,000 Unrealized holding gain on available-for-sale securities 20,000 Cash dividends received on the securities 2,000 For 2008, Silas would report comprehensive income of

Simmons Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax $ 430,000 Dividends declared 320,000 Net income 1,000,000 Retained earnings, 1/1/08, as reported 2,000,000 Simmons should report retained earnings, 1/1/08, as adjusted at

Snead, Inc. incurred the following infrequent losses during 2008: A $70,000 write-down of equipment leased to others. A $40,000 adjustment of accruals on long-term contracts. A $60,000 write-off of obsolete inventory. In its 2008 income statement, what amount should Snead report as total infrequent losses that are not considered extraordinary?

Solvency refers to the

Stanton Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000; retained earnings, $363,000. What total amount should Stanton Company report as stockholders' equity?

Stockholders' equity is not affected by all

The Financial Accounting Foundation

The accounting equation (A = L + SE) must remain in balance

The accounts receivable turnover ratio measures the

The activity method of depreciation

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

The average days to sell inventory is computed by dividing

The basic accounting concept that refers to the tendency of accountants to resolve uncertainty in favor of understating assets and revenues and overstating liabilities and expenses is known as the

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at

The current liabilities total is

The debit and credit analysis of a transaction normally takes place

The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to

When the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues, revenues are

The following information is available for October for Jordan Company. Beginning inventory $ 50,000 Net purchases 150,000 Net sales 300,000 Percentage markup on cost 66.67% A fire destroyed Jordan's October 31 inventory, leaving undamaged inventory with a cost of $3,000. Using the gross profit method, the estimated ending inventory destroyed by fire is

The following items were included in Voigt Corporation's inventory account at December 31, 2008: Goods held on consignment by Voigt $ 7,000 Merchandise out on consignment, at sales price, including 30% mark-up on selling price 12,000 Goods purchased, in transit, shipped f.o.b. shipping point 9,000 Voigt's inventory account at December 31, 2008, should be reduced by

The information provided by financial reporting pertains to

The intangible asset goodwill may be

The major difference between the service life of an asset and its physical life is that

The objective of financial reporting include all of the following except to provide information that

The office space is used equally by Nen's sales and accounting departments. What amount of the above-listed items should be classified as general and administrative expenses in Nen's multiple-step income statement?

The overriding criterion by which accounting information can be judged is that of

The period of time during which interest must be capitalized ends when

The principal advantage of the completed-contract method is that

The underlying theme of the conceptual framework is

To be classified on an income statement as an extraordinary item, the transaction or event must be material in nature and Unusual Occur Infrequently

To compute interest expense for an adjusting entry, the formula is principal × rate × a fraction. The numerator and denominator of the fraction are:

Tolan Corp.'s trademark was licensed to Eddy Co. for royalties of 15% of sales of the trademarked items. Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year. Tolan received the following royalties from Eddy: March 15 September 15 2007 $5,000 $7,500 2008 6,000 8,500 Eddy estimated that sales of the trademarked items would total $40,000 for July through December 2008. In Tolan's 2008 income statement, the royalty revenue should be

Trade-offs between the characteristics that make information useful may be necessary or beneficial. Issuance of interim financial statements is an example of a trade-off between

Two independent companies, Mintz Co. and Pine Co., are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies' records, the following information was obtained: Mintz's Land Pine's Land Cost and book value $192,000 $120,000 Fair value based upon appraisal 240,000 210,000 The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz. The exchange lacked commercial substance. The new land should be recorded on Mintz's books at

Under Statement of Financial Accounting Concepts No. 2, which of the following relates to both relevance and reliability?

Under the revenue recognition principle, revenue is generally recognized when the earning process is virtually complete and

Under which of the following conditions would material flood damage be considered an extraordinary item for financial reporting purposes?

Unearned revenue on the books of one company is likely to be a(n)

Weston Company purchased a tooling machine on January 3, 2001 for $500,000. The machine was being depreciated on the straight-line method over an estimated useful life of 10 years, with no salvage value. At the beginning of 2008, the company paid $125,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional 5 years (15 years total). What should be the depreciation expense recorded for the machine in 2008?

What accounting concept justifies the usage of accruals and deferrals?

Wheeler Corporation constructed a building at a cost of $20,000,000. Average accumulated expenditures were $8,000,000, actual interest was $1,200,000, and avoidable interest was $600,000. If the salvage value is $1,600,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is

When a company changes from one accounting principle to another, the income statement for the year of change

When a manufacturing company sells one of its plant assets at a price in excess of its book value, it should recognize Revenue Gain

When a patent is amortized, the credit is usually made to

When a plant asset is disposed of, a gain or loss may result. The gain or loss would be classified as an extraordinary item on the income statement if it resulted from

When an item of expense is paid and recorded in advance, it is normally called a(n)

When boot is involved in an exchange having commercial substance

A prepaid expense can best be described as an amount

When the fair market value of the assets acquired in a business purchase exceed the purchase price, negative goodwill (also called badwill) arises. When negative goodwill arises, GAAP requires that it be allocated to

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?

Which of the following costs of goodwill should be amortized over their estimated useful lives? Costs of goodwill from a business combination accounted for as a purchase goodwill internally Costs of developing goodwill internally

Which of the following inventory methods comes closest to stating ending inventory at replacement cost?

Which of the following is not a capital expenditure?

Which of the following is not a generally practiced method of presenting the income statement?

Which of the following is not considered an advantage of LIFO when prices are rising?

Which of the following is the recommended approach to handling interest incurred in financing the construction of property, plant, and equipment?

Which of the following methods of determining annual bad debt expense best achieves the matching concept?

Which of the following research and development related costs should be capitalized and amortized over current and future periods?

Which of the following statements is not true as it relates to the dollar-value LIFO inven¬tory method?

Which of the following would be considered an R & D activity?

"When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash" is a definition of

A change in estimate should

A common set of accounting standards and procedures are called

A company acquires a patent for a drug with a remaining legal and useful life of six years on January 1, 2005 for $1,200,000. The company uses straight-line amortization for patents. On January 2, 2007, a new patent is received for a timed-release version of the same drug. The new patent has a legal and useful life of twenty years. The least amount of amortization that could be recorded in 2007 is

A company is constructing an asset for its own use. Construction began in 2007. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in 2007 and 2008 at the end of each quarter. The total amount of interest cost capitalized in 2008 should be determined by applying the interest rate on the specific new borrowing to the

A dudad has an original cost of $15 and a replacement cost of $12. The cost of completion and disposal is $2. If the dudad has a net realizable value of $16 and a normal profit margin of $5, its inventory value should be

A journal entry to record the sale of inventory on account will include a

A loss on impairment of an intangible asset is the difference between the asset's

A machine with a five-year estimated useful life and an estimated 10% salvage value was acquired on January 1, 2006. The depreciation expense for 2008 using the double-declining balance method would be original cost multiplied by

A plant asset with a five-year estimated useful life and no residual value is sold at the end of the second year of its useful life. How would using the sum-of-the-years'-digits method of depreciation instead of the double-declining balance method of depreciation affect a gain or loss on the sale of the plant asset?

A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at

Agler Corp. had the following infrequent transactions during 2008: A $150,000 gain from selling the only investment Agler has ever owned. A $210,000 gain on the sale of equipment. A $70,000 loss on the write-down of inventories. In its 2008 income statement, what amount should Agler report as total infrequent net gains that are not considered extraordinary?

Allen Corp.'s liability account balances at June 30, 2008 included a 10% note payable in the amount of $2,400,000. The note is dated October 1, 2006 and is payable in three equal annual payments of $800,000 plus interest. The first interest and principal payment was made on October 1, 2007. In Allen's June 30, 2008 balance sheet, what amount should be reported as accrued interest payable for this note?

An adjusted trial balance

An adjusting entry should never include

An example of an item which is not an element of working capital is

An unearned revenue can best be described as an amount

Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO

At the close of its first year of operations, December 31, 2008, Linn Company had accounts receivable of $540,000, after deducting the related allowance for doubtful accounts. During 2008, the company had charges to bad debt expense of $90,000 and wrote off, as uncollectible, accounts receivable of $40,000. What should the company report on its balance sheet at December 31, 2008, as accounts receivable before the allowance for doubtful accounts?

Before year-end adjusting entries, Bass Company's account balances at December 31, 2007, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively. An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is

Bretts Construction Company had a contract starting April 2008, to construct a $6,000,000 building that is expected to be completed in September 2010, at an estimated cost of $5,500,000. At the end of 2008, the costs to date were $2,530,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $1,200,000 and the cash collected during 2008 was $800,000. Bretts uses the percentage-of-completion method. For the year ended December 31, 2008, Bretts would recognize gross profit on the building of

Carr Co. adopted the dollar-value LIFO inventory method on December 31, 2008. Carr's entire inventory constitutes a single pool. On December 31, 2008, the inventory was $320,000 under the dollar-value LIFO method. Inventory data for 2009 are as follows: 12/31/09 inventory at year-end prices $440,000 Relevant price index at year end (base year 2008) 110 Using dollar value LIFO, Carr's inventory at December 31, 2009 is

Changing the basis of inventory pricing from FIFO to average cost is an example of a(n)

Chen Company's account balances at December 31, 2008 for Accounts Receivable and the Allowance for Doubtful Accounts are $320,000 debit and $600 credit. Sales during 2008 were $900,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for

Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Colaw accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2008 are as follows: Last payroll was paid on 12/26/08, for the 2-week period ended 12/26/08. Overtime pay earned in the 2-week period ended 12/26/08 was $10,000. Remaining work days in 2008 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $180,000. Assuming a five-day work week, Colaw should record a liability at December 31, 2008 for accrued salaries of

Comprehensive income as characterized in SFAC No. 6 includes all changes in equity during a period except

Delgado Corporation had a 1/1/08 balance in the Allowance for Doubtful Accounts of $20,000. During 2008, it wrote off $14,400 of accounts and collected $4,200 on accounts previously written off. The balance in Accounts Receivable was $400,000 at 1/1 and $480,000 at 12/31. At 12/31/08, Delgado estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2008?

Depreciation is normally computed on the basis of the nearest

During 2008, Bond Company purchased the net assets of May Corporation for $950,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May's assets when acquired were as follows: Current assets $ 540,000 Noncurrent assets 1,260,000 $1,800,000 How should the $550,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($950,000) be accounted for by Bond?

During the first year of Wisnewski Co.'s operations, all purchases were recorded as assets. Store supplies in the amount of $6,450 were purchased. Actual year-end store supplies inventory amounted to $2,150. The adjusting entry for store supplies will

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

ELO Corporation purchased a patent for $180,000 on September 1, 2006. It had a useful life of 10 years. On January 1, 2008, ELO spent $44,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2008?

Eaton Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenues. This account had a balance of $1,800,000 at December 31, 2008 before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $450,000 at December 31, 2008. Service contracts still outstanding at December 31, 2008 expire as follows: During 2009 $380,000 During 2010 570,000 During 2011 350,000 What amount should be reported as Unearned Service Revenues in Eaton's December 31, 2008 balance sheet?

Fences and parking lots are reported on the balance sheet as

Financial information exhibits the characteristic of consistency when

Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008?

Flynn Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2008, Flynn entered into a fixed-price contract to construct an office building for $12,000,000. Information relating to the contract is as follows: At December 31 2008 2009 Percentage of completion 15% 45% Estimated total cost at completion $9,000,000 $9,600,000 Gross profit recognized (cumulative) 600,000 1,440,000 Contract costs incurred during 2009 were

For 2008, cost of goods available for sale for Vale Corporation was $900,000. The gross profit rate was 20%. Sales for the year were $800,000. What was the amount of the ending inventory?

For the month of December 2008, the records of White Corporation show the following information: Cash sales $20,000 Cash received on accounts receivable 25,000 Accounts receivable, December 1, 2008 70,000 Accounts receivable, December 31, 2008 64,000 Accounts receivable written off as uncollectible 1,000 White Corporation uses the direct write-off method in accounting for uncollectible accounts receivable. What are the sales for the month of December 31, 2008?

Garcia Corporation received cash of $18,000 on August 1, 2008 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2008 adjusting entry is

Goods in transit at the balance sheet date should be included in the purchaser's inventory if they are shipped: F.O.B Destination F.O.B. Shipping Point

Goods in transit which are shipped f.o.b. shipping point should be

Goods on consignment are

Hackleman Company is constructing a building. Construction began in 2008 and the building was completed 12/31/08. Hackleman made payments to the construction company of $1,500,000 on 7/1, $3,300,000 on 9/1, and $3,000,000 on 12/31. Average accumulated expenditures were

Hamilton Company has cash in bank of $10,000, restricted cash in a separate account of $3,000, and a bank overdraft in an account at another bank of $1,000. Hamilton should report cash of

Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all of the following reasons except

Holtzman Corporation had a 1/1/08 balance in the Allowance for Doubtful Accounts of $10,000. During 2008, it wrote off $7,200 of accounts and collected $2,100 on accounts previously written off. The balance in Accounts Receivable was $200,000 at 1/1 and $240,000 at 12/31. At 12/31/08, Holtzman estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2008?

Horton Company owns the following investments: Trading securities (fair value) $60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Horton will report securities in its long-term investments section of

If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as

If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

In 2005, Hume, Inc. purchased Rousseau Metals for $3 million. At December 31, 2008, the Rousseau division reported net assets of $3,300,000 (including $1,700,000 of goodwill). Hume reviewed the Rousseau division and determined that expected net future cash flows equal $2,500,000 and the fair value is estimated to be only $1,800,000. What entry should Hume record concerning the Rousseau division on December 31, 2008?

In 2008, Crane Corporation began construction work under a three-year contract. The contract price is $2,400,000. Crane uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2008, follow: Balance Sheet Accounts receivable—construction contract billings $100,000 Construction in progress $300,000 Less contract billings 240,000 Costs and recognized profit in excess of billings 60,000 Income Statement Income (before tax) on the contract recognized in 2008 $60,000 How much cash was collected in 2008 on this contract?

The 2008 financial statements of Wert Company reported a beginning inventory of $80,000, an ending inventory of $120,000, and cost of goods sold of $600,000 for the year. Wert's inventory turnover ratio for 2008 is

In January, 2003, Findley Corporation purchased a patent for a new consumer product for $720,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2008, the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2008, assuming amortization is recorded at the end of each year?

In a bank reconciliation that attempts to reconcile the bank balance to the corrected cash balance, the following items would affect the reconciliation in what way? Outstanding Checks Deposits In Transit

In a period of rising prices, the inventory method which tends to give the highest reported net income is

In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the

In general, the basic difference between the concepts of revenues and gains concerns

In no case can "market" in the lower-of-cost-or-market rule be more than

In periods of rising prices, use of LIFO rather than the FIFO inventory method will most likely have what effect on the following items?

In preparing its bank reconciliation for the month of April 2008, Gregg, Inc. has available the following information. Balance per bank statement, 4/30/08 $39,140 NSF check returned with 4/30/08 bank statement 450 Deposits in transit, 4/30/08 5,000 Outstanding checks, 4/30/08 5,200 Bank service charges for April 20 What should be the correct balance of cash at April 30, 2008?

In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

In which of the following accounts receivable assignment arrangements do all receivables serve as collateral for the promissory note given by the assignor? General Assignment Specific Assignment

Information about different entitities and about different periods of the same entity can be prepared and presented in a similar manner. Comparability and consistency are related to which of these objectives?

Jantz Corporation purchased a machine on July 1, 2005, for $750,000. The machine was estimated to have a useful life of 10 years with an estimated salvage value of $42,000. During 2008, it became apparent that the machine would become uneconomical after December 31, 2012, and that the machine would have no scrap value. Accumulated depreciation on this machine as of December 31, 2007, was $177,000. What should be the charge for depreciation in 2008 under generally accepted accounting principles?

Jeter Company purchased a new machine on May 1, 2000 for $176,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $8,000. The company has recorded monthly depreciation using the straight-line method. On March 1, 2009, the machine was sold for $24,000. What should be the loss recognized from the sale of the machine?

Johnson Company had 400 units of "Tank" in its inventory at a cost of $4 each. It purchased 600 more units of "Tank" at a cost of $6 each. Johnson then sold 700 units at a selling price of $10 each. The LIFO liquidation overstated normal gross profit by

Kerr Company purchased a patent on January 1, 2006 for $180,000. The patent had a remaining useful life of 10 years at that date. In January of 2007, Kerr successfully defends the patent at a cost of $81,000, extending the patent's life to 12/31/18. What amount of amortization expense would Kerr record in 2007?

Kiner Co. has the following data related to an item of inventory: Inventory, March 1 100 units @ $4.20 Purchase, March 7 350 units @ $4.40 Purchase, March 16 70 units @ $4.50 Inventory, March 31 130 units The value assigned to ending inventory if Kiner uses LIFO is

King Co.'s allowance for uncollectible accounts was $95,000 at the end of 2008 and $90,000 at the end of 2007. For the year ended December 31, 2008, King reported bad debt expense of $13,000 in its income statement. What amount did King debit to the appropriate account in 2008 to write off actual bad debts?

Kingman Company had 500 units of "Dink" in its inventory at a cost of $5 each. It purchased, for $2,400, 300 more units of "Dink". Kingman then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Kingman

Kirby Builders, Inc. is using the completed-contract method for a $5,600,000 contract that will take two years to complete. Data at December 31, 2008, the end of the first year, are as follows: Costs incurred to date $2,560,000 Estimated costs to complete 3,280,000 Billings to date 2,400,000 Collections to date 2,000,000 The gross profit or loss that should be recognized for 2008 is

Klein Co. purchased machinery on January 2, 2002, for $440,000. The straight-line method is used and useful life is estimated to be 10 years, with a $40,000 salvage value. At the beginning of 2008 Klein spent $96,000 to overhaul the machinery. After the overhaul, Klein estimated that the useful life would be extended 4 years (14 years total), and the salvage value would be $20,000. The depreciation expense for 2008 should be

Klugg, Inc. appropriately uses the installment-sales method of accounting to recognize income in its financial statements. Some pertinent data relating to this method of accounting include: 2008 2009 Installment sales $750,000 $720,000 Cost of installment sales 570,000 504,000 Gross profit $180,000 $216,000 Rate of gross profit 24% 30% Balance of deferred gross profit at year end: 2008 $108,000 $ 36,000 2009 198,000 Total $108,000 $234,000 What amount of installment accounts receivable should be presented in Klugg's December 31, 2009 balance sheet?

The FASB's conceptual framework classifies gains and losses based on whether they are related to an entity's major ongoing or central operations. These gains or losses may be classified as

LRF Corporation purchased a patent for $450,000 on September 1, 2006. It had a useful life of 10 years. On January 1, 2008, LRF spent $110,000 to successfully defend the patent in a lawsuit. LRF feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2008?

Lamberson Company has used the installment method of accounting since it began operations at the beginning of 2008. The following information pertains to its operations for 2008: Installment sales $1,400,000 Cost of installment sales 980,000 Collections of installment sales 560,000 General and administrative expenses 140,000 The amount to be reported on the December 31, 2008 balance sheet as Deferred Gross Profit should be

Land was purchased to be used as the site for the construction of a plant. A building on the property was sold and removed by the buyer so that construction on the plant could begin. The proceeds from the sale of the building should be

Lennon Company purchased a depreciable asset for $200,000. The estimated salvage value is $10,000, and the estimated useful life is 10,000 hours. Lennon used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

Limitations of the income statement include all of the following except

Limited-life intangibles are reported at their

Marley Company received a seven-year, zero-interest-bearing note on February 22, 2008, in exchange for property it sold to O'Rear Company. There was no established exchange price for this property and the note has no ready market. The prevailing rate of interest for a note of this type was 7% on February 22, 2008, 7.5% on December 31, 2008, 7.7% on February 22, 2009, and 8% on December 31, 2009. What interest rate should be used to calculate the interest revenue from this transaction for the years ended December 31, 2008 and 2009, respectively?

Marshell Company has cash in bank of $15,000, restricted cash in a separate account of $4,000, and a bank overdraft in an account at another bank of $2,000. Marshell should report cash of

Miley, Inc. began work in 2008 on a contract for $8,400,000. Other data are as follows: 2008 2009 Costs incurred to date $3,600,000 $5,600,000 Estimated costs to complete 2,400,000 — Billings to date 2,800,000 8,400,000 Collections to date 2,000,000 7,200,000 If Miley uses the completed-contract method, the gross profit to be recognized in 2009 is

Miller, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available: Inventory, March 1 $220,000 Purchases 172,000 Purchase returns 8,000 Sales during March 300,000 The estimate of the cost of inventory at March 31 would be

Net income is understated if, in the first year, estimated salvage value is excluded from the depreciation computation when using the

Norris Corporation purchased factory equipment that was installed and put into service January 2, 2007, at a total cost of $60,000. Salvage value was estimated at $4,000. The equipment is being depreciated over four years using the double-declining balance method. For the year 2008, Norris should record depreciation expense on this equipment of

On April 1, 2006, Reiley Co. purchased new machinery for $240,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years'-digits method. The accumulated depreciation on this machinery at March 31, 2008, should be

On April 13, 2007, Foley Co. purchased machinery for $120,000. Salvage value was estimated to be $5,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, Foley should record depreciation expense for 2008 on this machinery of

On December 1, 2008, Fiene Company acquired a new delivery truck in exchange for an old delivery truck that it had acquired in 2005. The old truck was purchased for $35,000 and had a book value of $13,300. On the date of the exchange, the old truck had a market value of $14,000. In addition, Fiene paid $45,500 cash for the new truck, which had a list price of $63,000. The exchange lacked commercial substance. At what amount should Fiene record the new truck for financial accounting purposes?

On February 1, 2008, Norton Company factored receivables with a carrying amount of $300,000 to Koch Company. Koch Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Norton Company for February. Assume that Norton factors the receivables on a with recourse basis. The recourse obligation has a fair value of $1,500. The loss to be reported is

On January 1, 2000, Hite Corporation purchased for $152,000, equipment having a useful life of ten years and an estimated salvage value of $8,000. Hite has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2008, the equipment was sold for $28,000. As a result of this sale, Hite should recognize a gain of

On January 1, 2007, Carson Company purchased a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Carson's balance sheet at December 31, 2008, net of accumulated depreciation, for this machine?

The Financial Accounting Standards Board employs a "due process" system which

The Government Accounting Standards Board

On January 2, 2005, Payne Company acquired equipment to be used in its manufacturing operations. The equipment has an estimated useful life of 10 years and an estimated salvage value of $15,000. The depreciation applicable to this equipment was $70,000 for 2008, computed under the sum-of-the-years'-digits method. What was the acquisition cost of the equipment?

On January 2, 2008, Quick Delivery Company traded in an old delivery truck for a newer model. The exchange lacked commercial substance. Data relative to the old and new trucks follow: Old Truck Original cost $24,000 Accumulated depreciation as of January 2, 2008 16,000 Average published retail value 7,000 New Truck List price $40,000 Cash price without trade-in 36,000 Cash paid with trade-in 30,000 What should be the cost of the new truck for financial accounting purposes?

On January 4, 2008, Gregg Co. leased a building to Cole Corp. for a ten-year term at an annual rental of $75,000. At inception of the lease, Gregg received $300,000 covering the first two years' rent of $150,000 and a security deposit of $150,000. This deposit will not be returned to Cole upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $300,000 should be shown as a current and long-term liability in Gregg's December 31, 2008 balance sheet? Current Liability Long-term Liability

On July 1, 2007, Rodriguez Corporation purchased factory equipment for $150,000. Salvage value was estimated to be $4,000. The equipment will be depreciated over ten years using the double-declining balance method. Counting the year of acquisition as one-half year, Gonzalez should record depreciation expense for 2008 on this equipment of

On September 1, 2007, Lowe Co. issued a note payable to National Bank in the amount of $600,000, bearing interest at 12%, and payable in three equal annual principal payments of $200,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2008. At December 31, 2008, Lowe should record accrued interest payable of

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

Paul Konerko Company sells product 2005WSC for $20 per unit. The cost of one unit of 2005WSC is $18, and the replacement cost is $17. The estimated cost to dispose of a unit is $4, and the normal profit is 40%. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?

Petty County owned an idle parcel of real estate consisting of land and a factory building. Petty gave title to this realty to Larson Co. as an incentive for Larson to establish manufacturing operations in Petty County. Larson paid nothing for this realty, which had a fair market value of $250,000 at the date of the grant. Larson should record this nonmonetary transaction as a

Prepaid expenses are included in the current assets section of the balance sheet because

Quayle Corporation's inventory cost on its balance sheet was lower using first-in, first-out than it would have been using last-in, first-out. Assuming no beginning inventory, in what direction did the cost of purchases move during the period?

Ramos, Inc. began work in 2008 on contract #3814, which provided for a contract price of $7,200,000. Other details follow: 2008 2009 Costs incurred during the year $1,200,000 $3,675,000 Estimated costs to complete, as of December 31 3,600,000 0 Billings during the year 1,350,000 5,400,000 Assume that Ramos uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized as income in 2008 is

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Remington Company sells product 1976NLC for $40 per unit. The cost of one unit of 1976NLC is $36, and the replacement cost is $34. The estimated cost to dispose of a unit is $8, and the normal profit is 40%. At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market?

Sandler Company has the following account balances at year end: Accounts receivable $80,000 Allowance for doubtful accounts 4,800 Sales discounts 3,200 Sandler should report accounts receivable at a net amount of

Simpson Company has the following account balances at year end: Accounts receivable $60,000 Allowance for doubtful accounts 3,600 Sales discounts 2,400 Simpson should report accounts receivable at a net amount of

Smith Co. bought a window franchise from Paine, Inc., on January 2, 2008, for $100,000. A highly regarded independent research company estimated that the remaining useful life of the franchise was 50 years. Its unamortized cost of Paine's books at January 1, 2008, was $15,000. Smith has decided to write off the franchise over the longest possible period. How much should be amortized by Smith Co. for the year ended December 31, 2008?

Which of the following is not an intangible asset?

The King-Kong Corporation exchanges one plant asset for another plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will

The Nathan Company is involved in the construction of an asset under a long-term construction contract. At the end of the third year of the five-year contract, the cost estimates indicate that a loss will result on the completion of the entire contract. In accounting for this contract, the entire expected loss must be recognized in the current period under the Percentage-of- Completed- Completion Method Contract Method

The accountant for Orion Sales Company is preparing the income statement for 2008 and the balance sheet at December 31, 2008. The January 1, 2008 merchandise inventory balance will appear

The accountant for the Orion Sales Company is preparing the income statement for 2008 and the balance sheet at December 31, 2008. Orion uses the periodic inventory system. The January 1, 2008 merchandise inventory balance will appear

The accounting principle of matching is best demonstrated by

The accounting profession does not allow the immediate write-off of goodwill. The best reason for this requirement seems to be that

The acquisition cost of a heavily used raw material changes frequently. The inventory amount of this material at year end will be the same if perpetual records (units and costs) are kept as it would be under a periodic inventory method only if the inventory amount is computed under the

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a balance sheet and which is based on an estimate of bad debts, is an application of the

The amortization of goodwill

The basic accounting issues for both accounts receivable and notes receivable would center around which of the following? Recognition Valuation

The basis for classifying assets as current or noncurrent is conversion to cash within the

The carrying amount of an intangible is

The cash account shows a balance of $45,000 before reconciliation. The bank statement does not include a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of $940 and a customer's check for $320 was returned because it was NSF. A customer's check for $450 was recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the cash account was

The correct order to present current assets is

The cost of the land that should be recorded by Seiler Co. is

The difference between the accounting process and the accounting cycle is

The following information is available for Barkley Company's patents: Cost $1,720,000 Carrying amount 860,000 Expected future net cash flows 800,000 Fair value 640,000 Barkley would record a loss on impairment of

The following information was available from the inventory records of Neer Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 $9.77 $29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January 7 (2,500) January 31 (4,000) Balance at January 31 1,200 Assuming that Neer does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

The journal entries for a bank reconciliation

The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

The major objective of the consistency principle is to

The method most commonly used to report defaults and repossessions is

The occurrence that most likely would have no effect on 2008 net income (assuming that all amounts involved are material) is the

The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the

The pricing of issues from inventory must be deferred until the end of the accounting period under which method of inventory valuation?

The primary purpose of the balance sheet is to reflect

The principal disadvantage of using the percentage-of-completion method of recognizing revenue from long-term contracts is that it

The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization's operations is called

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is

The reason goodwill is sometimes referred to as a master valuation account is because

The single-step income statement emphasizes

The use of LIFO under a perpetual inventory system (units and costs)

Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008?

Two independent companies, Mintz Co. and Pine Co., are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies' records, the following information was obtained: Mintz's Land Pine's Land Cost and book value $192,000 $120,000 Fair value based upon appraisal 240,000 210,000 The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz. The exchange lacked commercial substance. For financial reporting purposes, Mintz should recognize a pre-tax gain on this exchange of

Under current accounting practice, intangible assets are classified as

Under the completed-contract method of accounting for long-term construction contracts, interim charges and/or credits to the income statement are made for Revenues Costs Gross Profit

Under the cost-recovery method of revenue recognition,

Under the installment-sales method,

Under the lower-of-cost-or-market method, the replacement cost of an inventory item would be used as the designated market value

Vinson Co. purchased machinery that was installed and ready for use on January 3, 2007, at a total cost of $69,000. Salvage value was estimated at $9,000. The machinery will be depreciated over five years using the double-declining balance method. For the year 2008, Vinson should record depreciation expense on this machinery of

Wagner Company sold some machinery to Granger Company on January 1, 2008. The cash selling price would have been $568,620. Granger entered into an installment sales contract which required annual payments of $150,000, including interest at 10%, over five years. The first payment was due on December 31, 2008. What amount of interest income should be included in Wagner's 2009 income statement (the second year of the contract)?

When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to

When goods or services are exchanged for cash or claims to cash (receivables), revenues are

When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?

When preparing a bank reconciliation for the purpose of arriving at the correct cash balance

When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct?

When work to be done and costs to be incurred on a long-term contract can be estimated dependably, which of the following methods of revenue recognition is preferable?

Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory Cost of Goods Sold

Which item below is not a current liability?

Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

Which of the following best illustrates the accounting concept of conservatism?

Which of the following disclosures is not required in the financial statements regarding depreciation?

Which of the following elements of financial statements is not a component of compre-hensive income?

Which of the following is a change in accounting principle?

Which of the following is a characteristic describing the primary quality of relevance?

Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?

Which of the following is a method to generate cash from accounts receivable? Assignment Factoring

Which of the following is a nominal (temporary) account?

Which of the following is an example of an accrued expense?

Which of the following is an incorrect statement regarding the matching principle?

Which of the following is considered cash?

Which of the following is correct?

Which of the following is not a condition that must be present for a company to recognize revenue at the time of sale when the company gives the buyer the right to return the product?

Which of the following is not a current asset?

Which of the following is not a long-term investment?

Which of the following is not a major characteristic of a plant asset?

Which of the following is not a publication of the FASB?

Which of the following is not a selling expense?

Which of the following is not an accurate representation concerning revenue recognition?

Willingham Construction Company uses the percentage-of-completion method. During 2008, the company entered into a fixed-price contract to construct a building for Richman Company for $30,000,000. The following details pertain to the contract: At December 31, 2008 At December 31, 2009 Percentage of completion 25% 60% Estimated total cost of contract $22,500,000 $25,000,000 Gross profit recognized to date 1,875,000 3,000,000 The amount of construction costs incurred during 2009 was

Yarbow Corporation has a normal gross profit on installment sales of 30%. A 2007 sale resulted in a default early in 2009. At the date of default, the balance of the installment receivable was $24,000, and the repossessed merchandise had a fair value of $13,500. Assuming the repossessed merchandise is to be recorded at fair value, the gain or loss on repossession should be

72. Winsor Construction Company uses the percentage-of-completion method of accounting. In 2008, Winsor began work on a contract it had received which provided for a contract price of $15,000,000. Other details follow: 2008 Costs incurred during the year $7,200,000 Estimated costs to complete as of December 31 4,800,000 Billings during the year 6,600,000 Collections during the year 3,900,000 What should be the gross profit recognized in 2008?

A Cash Over and Short account

A characteristic of all assets and liabilities comprising working capital is that they are

A compensating balance as defined by the SEC is best reflected by which of the following?

A decrease in net assets arising from peripheral or incidental transactions is called a(n)

A graph is set up with "yearly depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the graphs for straight-line and sum-of-the-years'-digits depreciation, respectively, be drawn?

A journal entry to record a payment on account will include a

A liability to be paid next year would not be included in the current liability section of the balance sheet if the debt is expected to be refinanced through another long-term issue, or

A material item which is unusual in nature or infrequent in occurrence, but not both should be shown in the income statement Net of Tax Disclosed Separately

A plant asset has a cost of $24,000 and a salvage value of $6,000. The asset has a three-year life. If depreciation in the third year amounted to $3,000, which depreciation method was used?

A sale should not be recognized as revenue by the seller at the time of sale if

Ace Corporation's computation of cost of goods sold is: Beginning inventory $ 60,000 Add: Cost of goods purchased 405,000 Cost of goods available for sale 465,000 Ending inventory 80,000 Cost of goods sold $385,000 The average days to sell inventory for Ace are

Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between

Amidei Company adopts dollar-value LIFO inventory on 12/31/07 when its inventory at current price is $45,000. The inventory value on 12/31/08 at current 2008 prices is $65,000. If prices increased by 30% during 2008, what is the dollar-value LIFO inventory at 12/31/08?

An accrued revenue can best be described as an amount

An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be

Application of the full disclosure principle

Assuming that the company does not use reversing entries, what entry should be made on April 1, 2008 when the annual interest payment is received?

Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because

Blue Sky Company's 12/31/08 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of Blue Sky's assets' book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/08, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky. What amount of goodwill should Horace Wimp record as a result of this purchase?

Bobby Jenks Company purchased machinery for $160,000 on January 1, 2004. Straight-line depreciation has been recorded based on a $10,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2008 at a gain of $3,000. How much cash did Bobby Jenks receive from the sale of the machinery?

Bretts Construction Company had a contract starting April 2008, to construct a $6,000,000 building that is expected to be completed in September 2010, at an estimated cost of $5,500,000. At the end of 2008, the costs to date were $2,530,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $1,200,000 and the cash collected during 2008 was $800,000. Bretts uses the percentage-of-completion method. At December 31, 2008, Bretts would report Construction in Process in the amount of

Brown Company's account balances at December 31, 2008 for Accounts Receivable and the related Allowance for Doubtful Accounts are $460,000 debit and $700 credit, respectively. From an aging of accounts receivable, it is estimated that $12,500 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for

Carpino Corporation has an extraordinary loss of $200,000, an unusual gain of $140,000, and a tax rate of 40%. At what amount should Carpino report each item? Extraordinary loss Unusual gain

Carter Construction Company had a contract starting April 2008, to construct a $15,000,000 building that is expected to be completed in September 2009, at an estimated cost of $13,750,000. At the end of 2008, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $3,000,000 and the cash collected during 2008 was $2,000,000. Carter uses the percentage-of-completion method. For the year ended December 31, 2008, Carter would recognize gross profit on the building of

Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the

Cole Company, with an applicable income tax rate of 30%, reported net income of $210,000. Included in income for the period was an extraordinary loss from flood damage of $30,000 before deducting the related tax effect. The company's income before income taxes and extraordinary items was

Comprehensive income includes all of the following except

Continuation of an accounting entity in the absence of evidence to the contrary is an example of the basic concept of

Costs incurred internally to create intangibles are

Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with a plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be

Cushing Corporation recently received a long-term contract to construct a luxury liner. The contract will take 3 years to complete at a cost of $3,500,000. The price of the liner is set at $5,000,000. Cost estimates at the end of the first year are in line with original estimates, and $1,050,000 of costs were incurred during the first year. At the end of the first year which of the following entries would be made to recognize revenue on the contract?

Dark Co. recorded the following data pertaining to raw material X during January 2008: Units Date Received Cost Issued On Hand 1/1/08 Inventory $8.00 3,200 1/11/08 Issue 1,600 1,600 1/22/08 Purchase 4,000 $9.40 5,600 The moving-average unit cost of X inventory at January 31, 2008 is

Decision makers vary widely in the types of decisions they make, the methods of decision making they employ, the information they already possess or can obtain from other sources, and their ability to process information. Consequently, for information to be useful there must be a linkage between these users and the decisions they make. This link is

Deferred gross profit on installment sales is generally treated as a(n)

Depreciation accounting

What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

Dillman Corporation owns machinery with a book value of $190,000. It is estimated that the machinery will generate future cash flows of $175,000. The machinery has a fair value of $140,000. Dillman should recognize a loss on impairment of

During 2008, Aber Corporation constructed assets costing $1,000,000. The weighted-average accumulated expenditures on these assets during 2008 was $600,000. To help pay for construction, $440,000 was borrowed at 10% on January 1, 2008, and funds not needed for construction were temporarily invested in short-term securities, yielding $9,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was a $500,000, 10-year, 9% note payable dated January 1, 2002. What is the amount of interest that should be capitalized by Aber during 2008?

During 2008, Gannon Co. incurred average accumulated expenditures of $400,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2008 was a $500,000, 10%, 5-year note payable dated January 1, 2006. What is the amount of interest that should be capitalized by Gannon during 2008?

During 2008, Geiger Co. sold equipment that had cost $98,000 for $58,800. This resulted in a gain of $4,300. The balance in Accumulated Depreciation—Equipment was $325,000 on January 1, 2008, and $310,000 on December 31. No other equipment was disposed of during 2008. Depreciation expense for 2008 was

During 2008, Gomez Corporation disposed of Pine Division, a major component of its business. Gomez realized a gain of $1,200,000, net of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were $1,400,000 in 2008. How should these facts be reported in Gomez's income statement for 2008? Total Amount to be Included in Income from Results of Continuing Operations Discontinued Operations

During 2008, Leon Co. incurred the following costs: Testing in search for process alternatives $350,000 Costs of marketing research for new product 250,000 Modification of the formulation of a process 510,000 Research and development services performed by Beck Corp. for Leon 325,000 In Leon's 2008 income statement, research and development expense should be

During the lifetime of an entity, accountants produce financial statements at artificial points in time in accordance with the concept of

Earl Co. was formed on January 2, 2008, to sell a single product. Over a two-year period, Earl's acquisition costs have increased steadily. Physical quantities held in inventory were equal to three months' sales at December 31, 2008, and zero at December 31, 2009. Assuming the periodic inventory system, the inventory cost method which reports the highest amount of each of the following is

Earnings per share should always be shown separately for

Eaton Construction Co. uses the percentage-of-completion method. In 2008, Eaton began work on a contract for $3,300,000 and it was completed in 2009. Data on the costs are: Year Ended December 31 2008 2009 Costs incurred $1,170,000 $840,000 Estimated costs to complete 780,000 — For the years 2008 and 2009, Eaton should recognize gross profit of 2008 2009

Edmonds Corporation reports the following information: Net income $500,000 Dividends on common stock 140,000 Dividends on preferred stock 60,000 Weighted-average common shares outstanding 200,000 Edmonds should report earnings per share of

FASB Technical Bulletins

Financial statements in the early 2000s provide information related to

For 2008, Colaw Company reports beginning of the year total assets of $900,000, end of the year total assets of $1,100,000, net sales of $1,250,000, and net income of $250,000. The rate of return on assets for Colaw in 2008 is

For Nicholson Company, the following information is available: Capitalized leases $200,000 Trademarks 65,000 Long-term receivables 75,000 In Nicholson's balance sheet, intangible assets should be reported at

For a nonmonetary exchange of plant assets, accounting recognition should not be given to

For accounting purposes, the operating cycle concept

Gant Co. purchased a machine on July 1, 2008, for $400,000. The machine has an estimated useful life of five years and a salvage value of $80,000. The machine is being depreciated from the date of acquisition by the 150% declining-balance method. For the year ended December 31, 2008, Gant should record depreciation expense on this machine of

Generally Accepted Accounting Principles include: 1) FASB Technical Bulletins, 2) APB Opinions, and 3) Widely-accepted industry practices. These three items rank from most authoritative to least authoritative as follows

Generally accepted accounting principles

George Martin Corporation purchased a depreciable asset for $300,000 on January 1, 2005. The estimated salvage value is $30,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. In 2008, George Martin changed its estimates to a total useful life of 5 years with a salvage value of $50,000. What is 2008 depreciation expense?

Goodwill

Grant Co. began operations on January 1, 2008 and appropriately uses the installment method of accounting. The following information pertains to Grant's operations for 2008: Installment sales 1,800,000 Cost of installment sales 1,080,000 General and administrative expenses 180,000 Collections on installment sales 825,000 The balance in the deferred gross profit account at December 31, 2008 should be

Green Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2007 was $80,000. The balance in the same account at the end of 2008 is $120,000. Green's Cost of Goods Sold account has a balance of $600,000 from sales transactions recorded during the year. What amount should Green report as Cost of Goods Sold in the 2008 income statement?

Gross billings for merchandise sold by Otto Company to its customers last year amounted to $15,720,000; sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000. Net sales last year for Otto Company were

Hall Co. incurred research and development costs in 2008 as follows: Materials used in research and development projects $ 450,000 Equipment acquired that will have alternate future uses in future research and development projects 3,000,000 Depreciation for 2008 on above equipment 300,000 Personnel costs of persons involved in research and development projects 750,000 Consulting fees paid to outsiders for research and development projects 150,000 Indirect costs reasonably allocable to research and development projects 225,000 $4,875,000 The amount of research and development costs charged to Hall's 2008 income statement should be

Hardin Company received $40,000 in cash and a used computer with a fair value of $120,000 from Page Corporation for Hardin Company's existing computer having a fair value of $160,000 and an undepreciated cost of $150,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be recorded, respectively?

Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

Henry Co. assigned $400,000 of accounts receivable to Easy Finance Co. as security for a loan of $335,000. Easy charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Henry collected $110,000 on assigned accounts after deducting $380 of discounts. Henry accepted returns worth $1,350 and wrote off assigned accounts totaling $2,980. Entries for Henry during the first month would include a

Henry Co. assigned $400,000 of accounts receivable to Easy Finance Co. as security for a loan of $335,000. Easy charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Henry collected $110,000 on assigned accounts after deducting $380 of discounts. Henry accepted returns worth $1,350 and wrote off assigned accounts totaling $2,980. The amount of cash Henry received from Easy at the time of the transfer was

Horvath Company has the following items at year end: Cash in bank $20,000 Petty cash 300 Short-term paper with maturity of 2 months 5,500 Postdated checks 1,400 Horvath should report cash and cash equivalents of

How are the following items handled in computing the total stockholders' equity section of the balance sheet?

How should the balances of progress billings and construction in process be shown at reporting dates prior to the completion of a long-term contract?

If a company converted a short-term note payable into a long-term note payable, this transaction would

If a company purchases merchandise on terms of 1/10, n/30, the cash discount available is equivalent to what effective annual rate of interest (assuming a 360-day year)?

If inventory levels are stable or increasing, an argument which is not an advantage of the LIFO method as compared to FIFO is

If the Inventory account at the end of the year is understated, the effect will be to

In Garret Wolfe's multiple-step income statement, gross profit

In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is

In classifying the elements of financial statements, the primary distinction between revenues and gains is

In complying with the full disclosure principle, an accountant must determine the amount of disclosure necessary. How much disclosure is enough?

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity. This guidance comes from the

In preparing its May 31, 2008 bank reconciliation, Dogg Co. has the following information available: Balance per bank statement, 5/31/08 $30,000 Deposit in transit, 5/31/08 5,400 Outstanding checks, 5/31/08 4,900 Note collected by bank in May 1,250 The correct balance of cash at May 31, 2008 is

Isa Company has equipment that, due to changes in use, is reviewed for possible impairment. The asset's carrying amount is $400,000 ($500,000 cost less $100,000 accumulated depreciation). The expected future net cash flows (undiscounted) from the use of the asset and its eventual disposition are determined to be $380,000 and it has a current market value of $350,000. What is the amount of the impairment, if any, that should be recorded by Isa Company?

Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2006. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008?

When a company develops a trademark or trade name, the costs directly related to securing it should be capitalized. Which of the following costs associated with a trademark or trade name would not be allowed to be capitalized?

Joe Novak Corporation factored, with recourse, $100,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Joe Novak estimates the recourse obligation at $2,400. What amount should Joe Novak report as a loss on sale of receivables?

Lott Co. records all sales using the installment method of accounting. Installment sales contracts call for 36 equal monthly cash payments. According to the FASB's conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the balance sheet date should be reported in the

Lower-of-cost-or-market

Martin Inc. incurred the following costs during the year ended December 31, 2008: Laboratory research aimed at discovery of new knowledge $180,000 Costs of testing prototype and design modifications 45,000 Quality control during commercial production, including routine testing of products 270,000 Construction of research facilities having an estimated useful life of 6 years but no alternative future use 360,000 The total amount to be classified and expensed as research and development in 2008 is

Martinez Corporation has two products in its ending inventory. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows: Product A Product B Historical cost $22.00 $ 55.00 Replacement cost 20.00 56.00 Estimated cost to dispose 7.00 31.00 Estimated selling price 35.00 110.00 In pricing its ending inventory using the lower-of-cost-or-market method, what unit values should Martinez use for products A and B, respectively?

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000. What net effect do these entries have on owners' equity?

Mike McKinney Corporation had accounts receivable of $100,000 at 1/1. The only transactions affecting accounts receivable were sales of $600,000 and cash collections of $550,000. The accounts receivable turnover is

Mining Company acquired a patent on an oil extraction technique on January 1, 2007 for $5,000,000. It was expected to have a 10 year life and no residual value. Mining uses straight-line amortization for patents. On December 31, 2008, the expected future cash flows expected from the patent were expected to be $600,000 per year for the next eight years. The present value of these cash flows, discounted at Mining's market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2008 balance sheet?

Morganstern Company purchased machinery for $320,000 on January 1, 2004. Straight-line depreciation has been recorded based on a $20,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2008 at a gain of $6,000. How much cash did Morganstern receive from the sale of the machinery?

Mortonson Corporation factored, with recourse, $300,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Mortonson estimates the recourse obligation at $7,200. What amount should Mortonson report as a loss on sale of receivables?

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners' equity?

Neber Co., which began operations on January 1, 2008, appropriately uses the installment-sales method of accounting. The following information pertains to Neber's operations for the year 2008: Installment sales $1,200,000 Regular sales 480,000 Cost of installment sales 720,000 Cost of regular sales 300,000 General and administrative expenses 96,000 Collections on installment sales 288,000 The deferred gross profit account in Neber's December 31, 2008 balance sheet should be

Negative goodwill arises when the ________ of the net assets acquired is higher than the purchase of the assets

Noll Co. had 450 units of product A on hand at January 1, 2008, costing $42 each. Purchases of product A during January were as follows: Date Units Unit Cost Jan. 10 600 $44 18 750 46 28 300 48 A physical count on January 31, 2008 shows 600 units of product A on hand. The cost of the inventory at January 31, 2008 under the LIFO method is

Nottingham Corporation had accounts receivable of $100,000 at 1/1. The only transactions affecting accounts receivable were sales of $900,000 and cash collections of $850,000. The accounts receivable turnover is

On December 1, 2008, Logan Co. purchased a tract of land as a factory site for $800,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2008 were as follows: Cost to raze old building $70,000 Legal fees for purchase contract and to record ownership 10,000 Title guarantee insurance 16,000 Proceeds from sale of salvaged materials 8,000 In Logan 's December 31, 2008 balance sheet, what amount should be reported as land?

On December 1, Wynne Corporation exchanged 2,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Wynne at a cost of $40 per share, and on the exchange date the common shares of Wynne had a fair market value of $50 per share. Wynne received $6,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at

On Hogan's multiple-step income statement for 2008, Income before extraordinary item is

When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as a(n)

On January 1, 2007, Marr Co. exchanged equipment for a $400,000, zero-interest-bearing note due on January 1, 2010. The prevailing rate of interest for a note of this type at January 1, 2007 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be included in Marr's 2008 income statement?

On January 1, 2008, Stein Co. sold a used machine to Mays, Inc. for $350,000. On this date, the machine had a depreciated cost of $245,000. Mays paid $50,000 cash on January 1, 2008 and signed a $300,000 note bearing interest at 10%. The note was payable in three annual installments of $100,000 beginning January 1, 2009. Stein appropriately accounted for the sale under the installment method. Mays made a timely payment of the first installment on January 1, 2009 of $130,000, which included interest of $30,000 to date of payment. At December 31, 2009, Stein has deferred gross profit of

On January 1, 2008, the merchandise inventory of Colaw, Inc. was $800,000. During 2008 Colaw purchased $1,600,000 of merchandise and recorded sales of $2,000,000. The gross profit rate on these sales was 25%. What is the merchandise inventory of Colaw at December 31, 2008?

On January 2, 2005, Koll, Inc. purchased a patent for a new consumer product for $180,000. At the time of purchase, the patent was valid for 15 years; however, the patent's useful life was estimated to be only 10 years due to the competitive nature of the product. On December 31, 2008, the product was permanently withdrawn from sale under governmental order because of a potential health hazard in the product. What amount should Koll charge against income during 2008, assuming amortization is recorded at the end of each year?

On January 3, 2006, Lopez Co. purchased machinery. The machinery has an estimated useful life of eight years and an estimated salvage value of $30,000. The depreciation applicable to this machinery was $65,000 for 2008, computed by the sum-of-the-years'-digits method. The acquisition cost of the machinery was

On June 1, 2008, Nott Corp. loaned Horn $400,000 on a 12% note, payable in five annual installments of $80,000 beginning January 2, 2009. In connection with this loan, Horn was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Horn after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2008. Horn made timely payments through November 1, 2008. On January 2, 2009, Nott received payment of the first principal installment plus all interest due. At December 31, 2008, Nott's interest receivable on the loan to Horn should be

On June 1, 2008, Watt Corp. loaned Hall $300,000 on a 12% note, payable in five annual installments of $60,000 beginning January 2, 2009. In connection with this loan, Hall was required to deposit $3,000 in a zero-interest-bearing escrow account. The amount held in escrow is to be returned to Hall after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2008. Hall made timely payments through November 1, 2008. On January 2, 2009, Watt received payment of the first principal installment plus all interest due. At December 31, 2008, Watt's interest receivable on the loan to Hall should be

On June 30, 2008, Cey, Inc. exchanged 2,000 shares of Seely Corp. $30 par value common stock for a patent owned by Gore Co. The Seely stock was acquired in 2008 at a cost of $55,000. At the exchange date, Seely common stock had a fair value of $45 per share, and the patent had a net carrying value of $110,000 on Gore's books. Cey should record the patent at

On September 19, 2007, Rosen Co. purchased machinery for $190,000. Salvage value was estimated to be $10,000. The machinery will be depreciated over eight years using the sum-of-the-years'-digits method. If depreciation is computed on the basis of the nearest full month, Rosen should record depreciation expense for 2008 on this machinery of

One argument against the use of the specific identification inventory method is

One factor that is not considered in determining the useful life of an intangible ass is

One objective of financial reporting is to provide

Panda Corporation paid cash of $18,000 on June 1, 2008 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2008 adjusting entry is

Pappy Corporation received cash of $13,500 on September 1, 2008 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent. The December 31, 2008 adjusting entry is

Parker Construction Co. uses the percentage-of-completion method. In 2008, Parker began work on a contract for $5,500,000; it was completed in 2009. The following cost data pertain to this contract: Year Ended December 31 2008 2009 Cost incurred during the year $1,950,000 $1,400,000 Estimated costs to complete at the end of year 1,300,000 — If the completed-contract method of accounting was used, the amount of gross profit to be recognized for years 2008 and 2009 would be 2008 2009

Peterson Company has the following items at year end: Cash in bank $30,000 Petty cash 500 Short-term paper with maturity of 2 months 8,200 Postdated checks 2,100 Peterson should report cash and cash equivalents of

Pinkowski sold land to Ewell for $100,000 cash and a zero-interest-bearing note with a face amount of $400,000. The fair value of the land at the date of sale was $450,000. Pinkowski should value the note receivable at

Quayle Company acquired machinery on January 1, 2003 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2008, Quayle estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by Quayle?

Ramos, Inc. began work in 2008 on contract #3814, which provided for a contract price of $7,200,000. Other details follow: 2008 2009 Costs incurred during the year $1,200,000 $3,675,000 Estimated costs to complete, as of December 31 3,600,000 0 Billings during the year 1,350,000 5,400,000 Assume that Ramos uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2009 is

Reese Construction Corporation contracted to construct a building for $1,500,000. Construction began in 2008 and was completed in 2009. Data relating to the contract are summarized below: Year ended December 31 2008 2009 Costs incurred $600,000 $450,000 Estimated costs to complete 400,000 — Reese uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2008, and 2009, respectively, Reese should report gross profit of

Revenue is generally recognized when realized or realizable and earned. This statement describes the

Rich Corporation purchased a limited-life intangible asset for $180,000 on May 1, 2006. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008?

Rise Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Rise Corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be

Rubber Soul Company reported the following data: 2008 2009 Sales $2,000,000 $2,600,000 Net Income 300,000 400,000 Assets at year end 1,800,000 2,500,000 Liabilities at year end 1,100,000 1,500,000 What is Rubber Soul's asset turnover for 2009?

Sears Corporation, which has a calendar year accounting period, purchased a new machine for $40,000 on April 1, 2003. At that time Sears expected to use the machine for nine years and then sell it for $4,000. The machine was sold for $22,000 on Sept. 30, 2008. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be

Slowe Company has been using the LIFO cost method of inventory valuation for 8 years. Its 2008 ending inventory was $135,000 but it would have been $180,000 if FIFO had been used. Thus, if FIFO had been used, Slowe's net income before income taxes would have been a. $45,000 less in 2008. b. $45,000 more in 2008. c. $45,000 greater over the 8-year period. d. $45,000 less over the 8-year period.

Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

Starr Corporation loaned $90,000 to another corporation on December 1, 2008 and received a 3-month, 8% interest-bearing note with a face value of $90,000. What adjusting entry should Starr make on December 31, 2008?

TJones Manufacturing Company has the following account balances at year end: Office supplies $ 4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 72,000 Prepaid insurance 6,000 What amount should TJones report as inventories in its balance sheet?

Tanner, Inc.'s checkbook balance on December 31, 2008 was $21,200. In addition, Tanner held the following items in its safe on December 31. (1) A check for $450 from Peters, Inc. received December 30, 2008, which was not included in the checkbook balance. (2) An NSF check from Garner Company in the amount of $900 that had been deposited at the bank, but was returned for lack of sufficient funds on December 29. The check was to be redeposited on January 3, 2009. The original deposit has been included in the December 31 checkbook balance. (3) Coin and currency on hand amounted to $1,450. The proper amount to be reported on Tanner's balance sheet for cash at December 31, 2008 is

Taylor Company buys a delivery van with a list price of $30,000. The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $400 and the company paid an extra $300 to have a special horn installed. What should be the recorded cost of the van?

The Government Accounting Standards Board's main purpose is to develop standards for

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as

The approach most companies use to provide information related to the components of other comprehensive income is a

The balance sheet contributes to financial reporting by providing a basis for all of the following except

The balance sheet is useful for analyzing all of the following except

The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the

The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement methods is

The cost of land does not include

The cost of land typically includes the purchase price and all of the following costs except

The dollar-value inventory method is an improvement over the traditional LIFO pool approach because

The double-entry accounting system means

The economic entity assumption in account¬ing is best reflected by which of the following statements?

The final retained earnings balance is

The following account balances (normal balances) were taken from the journal entry used to transfer various merchandise accounts under a periodic inventory system into the Cost of Goods Sold account: Cost of Goods Sold $235,000 Inventory (beginning) 62,500 Transportation-In 6,700 Purchase Discounts 4,500 Purchases 214,000 Purchase Allowances 5,700 Based on the above facts, what was ending inventory?

When a company uses a periodic inventory system, the year-end entry to adjust the inventory account will debit and credit inventory as follows:

The following information is available for Reagan Company: Allowance for doubtful accounts at December 31, 2007 $ 8,000 Credit sales during 2008 400,000 Accounts receivable deemed worthless and written off during 2008 9,000 As a result of a review and aging of accounts receivable in early January 2009, however, it has been determined that an allowance for doubtful accounts of $5,500 is needed at December 31, 2008. What amount should Reagan record as "bad debt expense" for the year ended December 31, 2008?

The general ledger of Vance Corporation as of December 31, 2008, includes the following accounts: Copyrights $ 20,000 Deposits with advertising agency (will be used to promote goodwill) 27,000 Discount on bonds payable 67,500 Excess of cost over fair value of identifiable net assets of acquired subsidiary 390,000 Trademarks 90,000 In the preparation of Vance's balance sheet as of December 31, 2008, what should be reported as total intangible assets?

The gross profit of Fordyce Company for 2008 is $75,000, cost of goods manufactured is $320,000, the beginning inventories of goods in process and finished goods are $22,000 and $25,000, respectively, and the ending inventories of goods in process and finished goods are $30,000 and $32,000, respectively. The sales of Fordyce Company for 2008 must have been

The installment-sales method of recognizing profit for accounting purposes is acceptable if

The inventory turnover ratio is computed by dividing the cost of goods sold by

The major elements of the income statement are

The occurrence that most likely would have no effect on 2008 net income is the

The percentage-of-completion method must be used when certain conditions exist. Which of the following is not one of those necessary conditions?

The primary reason the income statement is so important to investors and creditors relates to its ability to provide information helpful in

The purpose of the International Accounting Standards Board is to

The purpose of the Statements of Financial Accounting Concepts is to

The realization of income on installment sales transactions involves

The revenue recognition principle provides that revenue is recognized when

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

The stockholders' equity section is usually divided into what three parts?

The total amount of patent cost amortized to date is usually

The two primary qualities that make accounting information useful for decision making are

Thresher Corporation sold its accounts receivable outright to Kari Company, a financing company which normally buys accounts receivable of other companies without recourse. The accounts receivable have been

Thucydides Company purchased a new machine on May 1, 1999, for $25,000. At the time of acquisition, the machine was estimated to have a useful life of 10 years and an estimated salvage value of $1,000. The company has recorded monthly depreciation using the straight-line method. On March 1, 2008, the machine was sold for $800. What should be the loss recognized from the sale of the machine?

Turner Company's 12/31/08 balance sheet reports assets of $6,000,000 and liabilities of $2,500,000. All of Turner's assets' book values approximate their fair value, except for land, which has a fair value that is $400,000 greater than its book value. On 12/31/08, Benedict Corporation paid $6,100,000 to acquire Turner. What amount of goodwill should Benedict record as a result of this purchase?

Tyson Chandler Company purchased equipment for $10,000. Sales tax on the purchase was $500. Other costs incurred were freight charges of $200, repairs of $350 for damage during installation, and installation costs of $225. What is the cost of the equipment?

Under Statement of Financial Accounting Concepts No. 2, representational faithfulness is an ingredient of the primary quality of

Under Statement of Financial Accounting Concepts No. 5, which of the following, in the most precise sense, means the process of converting noncash resources and rights into cash or claims to cash?

Under current GAAP, inflation is ignored in accounting due to the

Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account

Under the completed-contract method

Under the installment-sales accounting method, certain items related to the sale are recognized in the period of the sale and certain items are recognized in the period in which cash is collected. Of the following items, which are recognized in the period of sale and which are recognized in the period in which the cash is collected? Revenues Cost of Sales Gross Profit Other Expenses

Under the lower-of-cost-or-market rule, market will be replacement cost except when replacement cost is

Use of the sum-of-the-years'-digits method

Valuation of inventories requires the deter¬mination of all of the following except

Weaver Boxing Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are)

Wildcat Baseball Company had a player contract with Carter that was recorded in its accounting records at $5,800,000. Aggie Baseball Company had a player contract with Jeter that was recorded in its accounting records at $5,600,000. Wildcat traded Carter to Aggie for Jeter by exchanging each player's contract. The fair value of each contract was $6,000,000. What amount should be shown in the accounting records after the exchange of player contracts?

A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and

A correction of an error in prior periods' income will be reported In the income statement Net of tax

A depreciable asset has an estimated 15% salvage value. At the end of its estimated useful life, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?

A general description of the depreciation methods applicable to major classes of depreci-able assets

A general description of the depreciation methods applicable to major classes of depreciable assets

A generally accepted account title is

A generally accepted method of valuation is 1. trading securities at market value. 2. accounts receivable at net realizable value. 3. inventories at current cost.

A journal entry to record a receipt of rent revenue in advance will include a

A large publicly held company has developed and registered a trademark during 2008. How should the cost of developing and registering the trademark be accounted for if it is considered to have a limited life?

A patent should be amortized over

A soundly developed conceptual framework of concepts and objectives should

A trial balance

A trial balance may prove that debits and credits are equal, but

According to Statement of Financial Account Concepts No. 2, which of the following relates to both relevance and reliability?

According to Statement of Financial Accounting Concepts No. 2, verifiability is an ingredient of the primary quality of

According to the FASB's conceptual framework, comprehensive income includes which of the following?

Adjusting entries are necessary to

Adjusting entries that should be reversed include

Adjusting entries that should be reversed include those for prepaid or unearned items that

An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the

An accrued expense can best be described as an amount

An alternative available when the seller is exposed to continued risks of ownership through return of the product is

An effective capital allocation process

An expenditure made in connection with a machine being used by an enterprise should be

An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is not true?

An item that should be classified as an extraordinary item is

Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and dividends of $30,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

Burnett Corporation had a 1/1/08 balance in the Allowance for Doubtful Accounts of $15,000. During 2008, it wrote off $10,800 of accounts and collected $3,150 on accounts previously written off. The balance in Accounts Receivable was $300,000 at 1/1 and $360,000 at 12/31. At 12/31/08, Burnett estimates that 5% of accounts receivable will prove to be uncollectible. What should Burnett report as its Allowance for Doubtful Accounts at 12/31/08?

Calvin Company incurred the following costs related to the start-up of the business: Attorney's fee $10,000 Underwriter's fee 15,000 State incorporation fee 7,000 $32,000 The company wishes to amortize these costs over the maximum period allowed under generally accepted accounting principles. Assuming that Calvin Company began operation on January 1, 2008, what amount of the start-up costs should be amortized in 2009?

Classification as an extraordinary item on the income statement would be appropriate for the

Companies that are listed on a stock exchange are required to submit their financial statements to the

Copyrights should be amortized over

Cushing Corporation recently received a long-term contract to construct a luxury liner. The contract will take 3 years to complete at a cost of $3,500,000. The price of the liner is set at $5,000,000. Cost estimates at the end of the first year are in line with original estimates, and $1,050,000 of costs were incurred during the first year. The amount of income recognized during the first year using the percentage-of-completion method is

Debit always means

Deposits held as compensating balances

Distributor Company purchases Supplier Company for $800,000 cash on January 1, 2009. The book value of Supplier Company's net assets, as reflected on its December 31, 2008 balance sheet is $620,000. An analysis by Distributor on December 31, 2008 indicates that the fair value of Supplier's tangible assets exceeded the book value by $60,000, and the fair value of identifiable intangible assets exceeded book value by $45,000. How much goodwill should be recognized by Distributor Company when recording the purchase of Supplier Company?

During 2008, Eaton Corp. started a construction job with a total contract price of $3,500,000. The job was completed on December 15, 2009. Additional data are as follows: 2008 2009 Actual costs incurred $1,350,000 $1,525,000 Estimated remaining costs 1,350,000 — Billed to customer 1,200,000 2,300,000 Received from customer 1,000,000 2,400,000 Under the completed-contract method, what amount should Eaton recognize as gross profit for 2009?

During 2008, Steele Corporation sold merchandise costing $1,500,000 on an installment basis for $2,000,000. The cash receipts related to these sales were collected as follows: 2008, $800,000; 2009, $700,000; 2010, $500,000. What amount would be shown in the December 31, 2009 financial statement for realized gross profit on 2008 installment sales, and deferred gross profit on 2008 installment sales, respectively?

During 2008, Steele Corporation sold merchandise costing $1,500,000 on an installment basis for $2,000,000. The cash receipts related to these sales were collected as follows: 2008, $800,000; 2009, $700,000; 2010, $500,000. What is the rate of gross profit on the installment sales made by Steele Corporation during 2008?

During 2008, Ted Corporation sold merchandise costing $500,000 on an installment basis for $800,000. The cash receipts related to these sales were collected as follows: 2008, $250,000; 2009, $450,000; 2010, $100,000. If expenses, other than the cost of the merchandise sold, related to the 2008 installment sales amounted to $60,000, by what amount would Ted's net income for 2008 increase as a result of installment sales?

During the year, Jantz Company made an entry to write off a $4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $50,000 and the balance in the allowance account was $4,500. The net realizable value of accounts receivable after the write-off entry was

Earnings per share is computed by dividing net income

Economic factors that shorten the service life of an asset include

Ely Co. bought a patent from Baden Corp. on January 1, 2008, for $300,000. An independent consultant retained by Ely estimated that the remaining useful life is 30 years. Its unamortized cost on Baden 's accounting records was $150,000; the patent had been amortized for 5 years by Baden. How much should be amortized for the year ended December 31, 2008?

Equity or debt securities held to finance future construction of additional plants should be classified on a balance sheet as

Estimates of price-level changes for specific inventories are required for which of the following inventory methods?

External events do not include

Factors considered in determining an intangible asset's useful life include all of the following except

Factors that shape an accounting information system include the

Financial information does not demonstrate consistency when

For 2008, Colaw Company reports beginning of the year total assets of $900,000, end of the year total assets of $1,100,000, net sales of $1,250,000, and net income of $250,000. Colaw's 2008 asset turnover ratio is

For Mitchell Company, the following information is available: Capitalized leases $280,000 Trademarks 90,000 Long-term receivables 105,000 In Mitchell's balance sheet, intangible assets should be reported at

For the year ended December 31, 2008, Colt Co. estimated its allowance for uncollectible accounts using the year-end aging of accounts receivable. The following data are available: Allowance for uncollectible accounts, 1/1/08 $56,000 Provision for uncollectible accounts during 2008 (2% on credit sales of $2,000,000) 40,000 Uncollectible accounts written off, 11/30/08 46,000 Estimated uncollectible accounts per aging, 12/31/08 69,000 After year-end adjustment, the uncollectible accounts expense for 2008 should be

Garret Company owns the following investments: Trading securities (fair value) $60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Garret will report investments in its current assets section of

Generally accepted accounting principles

Generally, revenue from sales should be recognized at a point when

Gibson Company paid $3,600 on June 1, 2008 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2008 adjusting entry is

Harber Co. uses the installment-sales method. When an account had a balance of $8,400, no further collections could be made and the dining room set was repossessed. At that time, it was estimated that the dining room set could be sold for $2,400 as repossessed, or for $3,000 if the company spent $300 reconditioning it. The gross profit rate on this sale was 70%. The gain or loss on repossession was a

Herman Company exchanged 400 shares of Daily Company common stock, which Herman was holding as an investment, for equipment from West Company. The Daily Company common stock, which had been purchased by Herman for $50 per share, had a quoted market value of $58 per share at the date of exchange. The equipment had a recorded amount on West's books of $21,000. What journal entry should Herman make to record this exchange?

Hooker Corporation acquired a franchise to operate a Good Pet Dog Kennel in January, 2003. The cost of the franchise was $125,000 and was estimated to have a limited life of 40 years. Early in the year 2009, the franchise was deemed worthless due to significant law suits that cause the franchisor to go out of business. What amount of cost or expense should be charged to the income statement of Hooker Corporation for years noted below?

How much of the expenses listed above should be included in Meyer's selling expenses for 2008?

How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?

If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on the

If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts

If a unit of inventory has declined in value below original cost, and the market value is less than the net realizable value less a normal profit margin, the amount to be used for purposes of inventory valuation is

If accounting information is verifiable, representationally faithful, and neutral, it can be considered

If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

If expenses are greater than revenues, the Income Summary account will be closed by a debit to

If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

In 2008, Crane Corporation began construction work under a three-year contract. The contract price is $2,400,000. Crane uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2008, follow: Balance Sheet Accounts receivable—construction contract billings $100,000 Construction in progress $300,000 Less contract billings 240,000 Costs and recognized profit in excess of billings 60,000 Income Statement Income (before tax) on the contract recognized in 2008 $60,000 What was the initial estimated total income before tax on this contract?

In 2008, Edwards Corporation incurred research and development costs as follows: Materials and equipment $ 80,000 Personnel 120,000 Indirect costs 150,000 $350,000 These costs relate to a product that will be marketed in 2009. It is estimated that these costs will be recouped by December 31, 2011. The equipment has no alternative future use. What is the amount of research and development costs that should be expensed in 2008?

In accounting, an economic entity may be defined as

In order for a cost to be capitalized (capital expenditure), the following must be present:

In order to be classified as an extraordinary item in the income statement, an event or transaction should be

In the House of GAAP, is the following on the highest level of authoritative status (meaning among the most authoritative)?

In the conceptual framework for financial reporting, what provides "the why"--the goals and purposes of accounting?

Income taxes are allocated to

Information in the income statement helps users to

Information is neutral if it

Interest cost that is capitalized should

Under Statements of Financial Accounting Concepts, comprehensive income includes which of the following?

Joe Novak Corporation reports the following information: Correction of overstatement of depreciation expense in prior years, net of tax $ 215,000 Dividends declared 160,000 Net income 500,000 Retained earnings, 1/1/08, as reported 1,000,000 Joe Novak should report retained earnings, 12/31/08, at

Long-term liabilities include

Lynne Corporation acquired a patent on May 1, 2008. Lynne paid cash of $20,000 to the seller. Legal fees of $800 were paid related to the acquisition. What amount should be debited to the patent account?

Maintaining an accounting system that ensures reliable information is reported in the financial statements is

Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2007 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2008, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom's market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2008 balance sheet?

Maris Corporation acquired a patent on May 1, 2008. Maris paid cash of $25,000 to the seller. Legal fees of $1,000 were paid related to the acquisition. What amount should be debited to the patent account?

May Co. prepared an aging of its accounts receivable at December 31, 2008 and determined that the net realizable value of the receivables was $300,000. Additional information is available as follows: Allowance for uncollectible accounts at 1/1/08—credit balance $ 29,000 Accounts written off as uncollectible during 2008 23,000 Accounts receivable at 12/31/08 320,000 Uncollectible accounts recovered during 2008 5,000 For the year ended December 31, 2008, May's uncollectible accounts expense would be

McCartney Company purchased a depreciable asset for $250,000 on April 1, 2005. The estimated salvage value is $25,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on May 1, 2008 when the asset is sold?

Members of the Financial Accounting Standards Board are

Moluf Corporation receives a 5-year, $20,000 zero-interest-bearing note, the present value of which is $11,348.60. What is the implicit interest rate that equates the total cash to be received to the present value of the future cash flows?

Murphy Company sublet a portion of its warehouse for five years at an annual rental of $24,000, beginning on May 1, 2008. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rental Income. Murphy reports on a calendar-year basis. The adjustment on December 31, 2008 for Murphy should be

Net realizable value is

Noland Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2008, Noland started work on a $35,000,000 construction contract that was completed in 2009. The following information was taken from Noland's 2008 accounting records: Progress billings $11,000,000 Costs incurred 10,500,000 Collections 7,000,000 Estimated costs to complete 21,000,000 What amount of gross profit should Noland have recognized in 2008 on this contract?

Of the following statements, which best illustrates the fact that the formal distinction made between current and noncurrent assets is somewhat arbitrary?

On April 1, Renner Corporation purchased for $855,000 a tract of land on which was located a warehouse and office building. The following data were collected concerning the property: Current Assessed Valuation Vendor's Original Cost Land $300,000 $280,000 Warehouse 200,000 180,000 Office building 400,000 340,000 $900,000 $800,000 What are the appropriate amounts that Renner should record for the land, warehouse, and office building, respectively?

On February 1, 2008, Morgan Corporation purchased a parcel of land as a factory site for $200,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2008. Costs incurred during this period are listed below: Demolition of old building $ 20,000 Architect's fees 35,000 Legal fees for title investigation and purchase contract 5,000 Construction costs 1,090,000 (Salvaged materials resulting from demolition were sold for $10,000.) Morgan should record the cost of the land and new building, respectively, as

On Hogan's multiple-step income statement for 2008, Inventory purchases are

On January 1, 2004, Unruh Company purchased a copyright for $800,000, having an estimated useful life of 16 years. In January 2008, Unruh paid $120,000 for legal fees in a successful defense of the copyright. Copyright amortization expense for the year ended December 31, 2008, should be

On January 1, 2008, Mann Company borrows $2,000,000 from National Bank at 11% annual interest. In addition, Mann is required to keep a compensatory balance of $200,000 on deposit at National Bank which will earn interest at 5%. The effective interest that Mann pays on its $2,000,000 loan is

On May 5, 2008, Flynn Corp. exchanged 2,000 shares of its $25 par value treasury common stock for a patent owned by Denson Co. The treasury shares were acquired in 2006 for $45,000. At May 5, 2008, Flynn's common stock was quoted at $32 per share, and the patent had a carrying value of $55,000 on Denson's books. Flynn should record the patent at

On September 10, 2008, Flint Co. incurred the following costs for one of its printing presses: Purchase of attachment $55,000 Installation of attachment 5,000 Replacement parts for renovation of press 18,000 Labor and overhead in connection with renovation of press 7,000 Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized?

One of the elements of financial statements is comprehensive income. As described in Statement of Financial Accounting Concepts No. 6, "Elements of Financial Statements," comprehensive income is equal to

One of the more common techniques that companies use to determine the progress toward completion in the percentage-of-completion method is the

Plant assets may properly include

Plato Corporation purchased a machine with a cost of $165,000 and a salvage value of $9,000 on April 1, 2008. The machine will be depreciated over a 12-year useful life using the sum-of-the-years'-digits method. The amount of depreciation Plato Corporation would record for the year ended 12/31/09 would be

Purchased goodwill should

Reese Corp.'s trial balance reflected the following account balances at December 31, 2008: Accounts receivable (net) $24,000 Trading securities 6,000 Accumulated depreciation on equipment and furniture 15,000 Cash 11,000 Inventory 30,000 Equipment 25,000 Patent 4,000 Prepaid expenses 2,000 Land held for future business site 18,000 In Reese's December 31, 2008 balance sheet, the current assets total is

Rent collected in advance by a landlord is a(n)

Revenue generally should be recognized

Reversing entries are 1. normally prepared for prepaid, accrued, and estimated items. 2. necessary to achieve a proper matching of revenue and expense. 3. desirable to exercise consistency and establish standardized procedures.

Rusch Corporation had a 1/1/08 balance in the Allowance for Doubtful Accounts of $12,000. During 2008, it wrote off $8,640 of accounts and collected $2,520 on accounts previously written off. The balance in Accounts Receivable was $240,000 at 1/1 and $288,000 at 12/31. At 12/31/08, Rusch estimates that 5% of accounts receivable will prove to be uncollectible. What should Rusch report as its Allowance for Doubtful Accounts at 12/31/08?

Shank Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation. The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as

Singer Company sells plasma-screen televisions on an installment basis and appropri-ately uses the installment-sales method of accounting. A customer with an account balance of $5,600 refuses to make any more payments and the merchandise is repossessed. The gross profit rate on the original sale is 40%. Singer estimates that the television can be sold as is for $1,750, or for $2,100 if $140 is spent to refurbish it. The loss on repossession is

Tate Company purchased equipment on November 1, 2008 and gave a 3-month, 9% note with a face value of $20,000. The December 31, 2008 adjusting entry is

Teel Distribution Co. has determined its December 31, 2008 inventory on a FIFO basis at $250,000. Information pertaining to that inventory follows: Estimated selling price $255,000 Estimated cost of disposal 10,000 Normal profit margin 30,000 Current replacement cost 225,000 Teel records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2008, the loss that Teel should recognize is

The FASB concluded that if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction shall be recognized at the time of sale only if all of six conditions have been met. Which of the following is not one of these six conditions?

The Financial Accounting Standards Board

The Financial Accounting Standards Board (FASB) was proposed by the

The accounts receivable turnover ratio is computed by dividing

The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the

The allowance method is preferable to the direct write-off method because the allowance method

The asset turnover ratio is computed by dividing

The assumption that a business enterprise will not be sold or liquidated in the near future is known as the

The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in

The category "trade receivables" includes

The concept referred to by the matching principle is that

The concept that reports extraordinary items in the income statement is called the

The cost of an intangible asset includes all of the following except

The cost of purchasing patent right for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

The cost of the building that should be recorded by Seiler Co. is

The costs of organizing a corporation include legal fees, fees paid to the state of incorporation, fees paid to promoters, and the costs of meetings for organizing the promoters. These costs are said to benefit the corporation for the entity's entire life. These costs should be

The criteria for recognition of revenue at the completion of production of precious metals and farm products include

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