Intermediate 2 final

Sales discounts is debited for the amount of discounts taken by customers.

A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct? Sales discounts is debited for the amount of discounts taken by customers. Sales discounts is credited for the amount of discounts taken by customers. Interest expense is debited for the amount of discounts taken by customers. Accounts receivable is credited for the amount of discounts taken by customers.

$7,500

A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation for the second year of the asset's life using the double declining balance method is: Multiple Choice $7,500 $6,750 $4,500 All of these answer choices are incorrect.

$7,000

A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation for the second year of the asset's life using the sum-of-the-years'-digits method is: Multiple Choice $4,500 $7,000 $8,000 All of these answer choices are incorrect.

As a reduction of the face amount of the bond.

A discount on bonds should be reported in the balance sheet: At the present value of the future addition to bond interest expense due to the discount. As a reduction in bond issue costs. As a reduction of the face amount of the bond. As a deferred credit.

Option a

A loss contingency should be accrued when the amount of loss is known and the occurrence of the loss is: Remote Reasonably possible a. No No b. Yes Yes c. Yes No d. No Yes

$26,250

A machine is purchased on September 30, 2018, for $60,000. Useful life is estimated at four years and no residual value is anticipated. Assume that the company instead used the double declining balance depreciation method. Depreciation for 2019 should be: Multiple Choice $15,000 $30,000 $26,250 All of these answer choices are incorrect.

$3,750

A machine is purchased on September 30, 2018, for $60,000. Useful life is estimated at four years and no residual value is anticipated. The straight-line depreciation method is used. The company's fiscal year ends on December 31. Depreciation for 2018 should be: A machine is purchased on September 30, 2018, for $60,000. Useful life is estimated at four years and no residual value is anticipated. The straight-line depreciation method is used. The company's fiscal year ends on December 31. Depreciation for 2018 should be: Multiple Choice $6,000 $30,000 $11,250 $3,750

Paid but not yet incurred.

A prepaid expense is an expense:

Increase each year during the term to maturity.

AMC Corporation issued bonds at a discount. The long-term liability reported in AMC's balance sheet will: Multiple Choice Increase each year during the term to maturity. Decrease each year during the term to maturity. Remain the same each year during the term to maturity. Increase or decrease each year depending upon the market rate of interest.

Receivables likely will be overstated.

Allister Company does not use the allowance method to account for bad debts and instead any bad debts that do arise are written off as bad debt expense. What problem might this create if bad debts are material? Multiple Choice Receivables likely will be understated. No problems are created. Receivables likely will be overstated. The matching principle is violated when the write-off occurs in the same period that the receivable is initially recorded.

Is based on relative standalone selling prices.

Allocation of the transaction price to performance obligations: Multiple Choice Is based on relative standalone selling prices. Cannot be based on estimated selling prices. May not use the residual method when selling prices are uncertain. Is not allowed when bad debts are material.

$7,140

Alvin Electronics is in the process of reconciling its bank account for the month of November. The following information is available: Balance per bank statement $ 8,325 Outstanding checks 2,400 Deposits outstanding 1,215 Bank service charges for November 35 Check written by Alvin for $300 but recorded incorrectly by Alvin as a $30 disbursement. What should be the corrected cash balance at the end of November? Multiple Choice $6,870 $7,140 $6,835 $7,105

The company does not have the intent and ability to hold the investment until fair value recovers

An OTT impairment for an equity investment is recognized if fair value declines below amortized cost and Multiple Choice The company has incurred non-credit losses The company does not have the intent and ability to hold the investment until fair value recovers The company has incurred credit losses None of the above.

The amount of compensation is known.

An enterprise should accrue a liability for compensation of employees' unpaid vacations if certain conditions exist. Each of the following is a condition for accrual except: Compensation for the vacations is probable. The employee has the right to carry forward the vacation time beyond the current period. The amount of compensation is known. The employee benefit has been earned.

Assure the promotion of the most qualified employees.

An internal control system is designed to do all but which of the following? Multiple Choice Promote operational efficiency. Safeguard assets. Encourage adherence to company policies. Assure the promotion of the most qualified employees.

Patent.

An item not generally classified as a current asset is: Multiple Choice Patent. Trade receivables. Prepaid rent. Inventories.

Bonds payable.

An item not generally classified as a current liability is: Multiple Choice Revenue received in advance. Accrued interest payable. Accounts payable. Bonds payable.

Restructuring costs.

An item typically included in the income from continuing operations section of the income statement is: Multiple Choice Discontinued operations. Restructuring costs. Prior period adjustment. All of these answer choices are incorrect.

Ignore the time value of money.

Assume a prepayment is made six months in advance of delivery of a product. The seller is likely to do which of the following with respect to the time value of money over the life of the contract? Recognize interest expense. Recognize interest revenue. Ignore the time value of money. None of the above.

A gain of $5,000.

Assume the same facts as in question 8, except that the machine is exchanged for a similar machine rather than for a patent. Wolf should recognize: Multiple Choice A gain of $11,000. A loss of $1,000. A gain of $5,000. No gain or loss.

$50 million.

Assuming that Cordant is considered a cash-generating unit, the amount of goodwill impairment loss that Cordova should recognize according to International Financial Reporting Standards is: Multiple Choice None. $40 million. $50 million. $60 million.

$6,000

At the end of June, the Marquess Company factored $200,000 in accounts receivable with Homemark Finance. The transfer is made without recourse. Homemark charges a fee of 3% of receivables factored. During July, $150,000 of the factored receivables are collected. What amount of loss on sale of receivables would Marquess record in June? Multiple Choice $6,000 $4,500 $1,500 Zero.

Interest expense to be recorded over three years

BVA Corporation exchanged a $96,000, noninterest-bearing, 3-year note for land with a fair value of $60,000. The $36,000 difference represents: Multiple Choice A loss on the purchase of land. A premium on notes payable. Interest expense to be recorded over three years. None of the above.

Must be recognized as an expense

Bad debts: Must be recognized as an expense. Must be recognized as a contra-revenue. Are only a concern in the case of installment sales. Reduce the transaction price that is allocated to separate performance obligations.

Report long-term assets and liabilities before current assets and liabilities.

Balance sheets prepared using International Financial Reporting Standards often: Multiple Choice Report property and equipment as a current asset. Report long-term assets and liabilities before current assets and liabilities. Report long-term debt as part of shareholders' equity. All of these answer choices are incorrect.

A premium if the stated rate exceeds the market rate.

Bonds will sell at: Their face value if the stated rate is equal to the nominal rate. Their face value unless the stated rate is less than the market rate. A discount if the stated rate exceeds the market rate. Incorrect A premium if the stated rate exceeds the market rate.

Loss from continuing operations.

Brown Corporation exercised its call option to retire long-term notes. The excess of the cash paid over the book value of the notes should be reported as a(an): Multiple Choice Gain from discontinued operations. Gain from continuing operations. Loss from discontinued operations. Loss from continuing operations.

A gain from change in the fair value of debt of $5,309.

Brubaker Company issued 11% bonds, dated January 1, with a face amount of $400,000 on January 1, 2018. The bonds sold for $369,908 and mature in 2035 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Brubaker determines interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $365,000 as determined by their market value on the NYSE. Brubaker's statement of comprehensive income for the year will include: Multiple Choice A gain from change in the fair value of debt of $5,309. A loss from change in the fair value of debt of $5,309. A gain from change in the fair value of debt of $5,102. A loss from change in the fair value of debt of $5,102.

Purchases.

By the gross method of accounting for purchase discounts, a discount not taken is recorded as: Multiple Choice Purchases. Interest expense. A reduction in sales revenue. All of these answer choices are incorrect.

Interest expense.

By the net method of accounting for purchase discounts, a discount not taken is recorded as: Multiple Choice Purchases. Interest expense. A reduction in sales revenue. All of these answer choices are incorrect.

$480,000; $320,000; $160,000.

Cello Corporation purchased three patents at a total cost of $960,000. The appraised values of the individual patents were as follows: Patent 1 $ 600,000 Patent 2 400,000 Patent 3 200,000 The costs that should be assigned to Patents 1, 2, and 3, respectively, are: Multiple Choice $320,000; $320,000; $320,000. $480,000; $320,000; $160,000. $600,000; $400,000; $200,000. All of these answer choices are incorrect.

Commercial paper usually is sold in minimum denominations of $25,000 with maturities of greater than 270 days.

Commercial paper has become an increasingly popular way for companies to raise funds. Which of the following is not true regarding commercial paper? Multiple Choice Commercial paper is often purchased by other companies as a short-term investment. Commercial paper usually is sold in minimum denominations of $25,000 with maturities of greater than 270 days. Interest often is discounted at the issuance of the note. Usually the interest rate is lower than in a bank loan.

Expected future cash flows multiplied by the effective interest rate that existed when the investment was acquired.

Credit losses are calculated as the difference between the amortized cost of debt and: Multiple Choice Current cash flows multiplied by the expected future discount rate Expected future cash flows multiplied by the expected future discount rate Expected future cash flows multiplied by the effective interest rate that existed when the investment was acquired. Current cash flows multiplied by the effective interest rate that existed when the investment was acquired.

Working capital.

Current assets minus current liabilities equals: Multiple Choice Net assets. Working capital. The current ratio. Cash equivalents.

$30 million.

Declarmen Corporation owns factory in the United Kingdom. A change in business climate indicates that Declarmen should investigate for possible impairment. Below are date related to the factory's assets ($ in millions): Book value $ 570 Undiscounted sum of future estimated cash flows 630 Present value of future cash flows 525 Fair value less cost to sell (determined by appraisal) 540 The amount of impairment loss that Declarmen should recognize according to International Financial Reporting Standards is None. $30 million. $60 million. $45 million.

None.

Declarmen Corporation owns factory in the United Kingdom. A change in business climate indicates that Declarmen should investigate for possible impairment. Below are date related to the factory's assets ($ in millions): Book value $ 570 Undiscounted sum of future estimated cash flows 630 Present value of future cash flows 525 Fair value less cost to sell (determined by appraisal) 540 The amount of impairment loss that Declarmen should recognize according to U.S. GAAP is: None. $30 million. $60 million. $45 million.

Interest expense and a gain.

Douglas-Roberts has bonds outstanding during a year in which the market rate of interest has risen. Douglas-Roberts has elected the fair value option for the bonds. What will the company report for the bonds in its statement of comprehensive income for the year? Multiple Choice Interest expense and a gain. Interest expense and a loss. No interest expense and a gain. No interest expense and a loss.

$3,750

During 2016 Green Thumb Company introduced a new line of garden shears that carry a two-year warranty against defects. Experience indicates that warranty costs should be 2% of net sales in the year of sale and 3% in the year after sale. Net sales and actual warranty expenditures were as follows: Net sales Actual warranty expenditures 2016 $ 45,000 $ 1,000 2017 120,000 3,500 At December 31, 2017, Green Thumb should report as a warranty liability of: $900 $1,250 $3,750 $4,500

$160,000

During 2018 Belair Company was encountering financial difficulties and seemed likely to default on a $600,000, 10%, four-year note dated January 1, 2016, payable to Second Bank. Interest was last paid on December 31, 2017. On December 31, 2018, Second Bank accepted $500,000 in settlement of the note. Ignoring income taxes, what amount should Belair report as a gain from the debt restructuring in its 2018 income statement? Multiple Choice $40,000 $100,000 $160,000 $0

$50,000

During 2018, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Year 2018 revenues from the sale of the new software were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. Year 2018 amortization of software development costs should be: Multiple Choice $40,000 $100,000 $50,000 $200,000

Inventories.

Each of the following would be considered property, plant, and equipment or an intangible asset except: An oil well. A building. Inventories. A patent.

Operating income.

Earnings per share should be reported for each of the following income statement captions except: Income from continuing operations. Discontinued operations. Operating income. Net income.

$17,000

Enchill Company accrues bad debt expense during the year at an amount equal to 3% of credit sales. At the end of the year, a journal entry adjusts the allowance for uncollectible accounts to a desired amount based on an aging of accounts receivable. At the beginning of 2018, the allowance account had a credit balance of $18,000. During 2018, credit sales totaled $480,000 and receivables of $14,000 were written off. The year-end aging indicated that a $21,000 allowance for uncollectible accounts was required. Enchill's bad debt expense for 2018 would be: Multiple Choice $17,000 $2,600 $21,000 $14,400

Net assets increased.

Evans Company owns 450 bonds of Frazier Company classified as available-for-sale. During 2018, the fair value of those bonds increased by $9 million. What effect did this increase have on Evans' 2018 financial statements? Multiple Choice Net assets increased. Total assets decreased. Net income increased. Shareholders' equity decreased.

The investment security is not classified as held-to-maturity.

Fair value is used as the basis for valuation of a firm's investment securities when: Multiple Choice Management's intention is to dispose of the securities within one year. The market value is less than cost for each equity security in the portfolio. The investment security is not classified as held-to-maturity. The investment security is classified as held-to-maturity.

$375,000

Felix Mining acquired a copper mine at a total cost of $3,000,000. The mine is expected to produce 6,000,000 tons of copper over its five-year useful life and have no residual value. During the first year of operations, 750,000 tons of copper was extracted. Depletion for the first year should be: Multiple Choice $600,000 $375,000 $1,500,000 All of these answer choices are incorrect.

Federal income tax return

Financial statements generally include all of the following except: Income statement. Federal income tax return. Balance sheet. Statement of cash flows.

The purchase of inventory on account.

For a firm with a current ratio of 2.0, which of the following transactions would most likely cause the ratio to decrease? Multiple Choice The collection of cash from customers on account. The sale of a building for cash. The purchase of inventory on account. The issuance of capital stock for cash.

Cost of goods sold.

For a manufacturing company, each of the following items would be considered nonoperating income for income statement purposes except: Income from investments. Cost of goods sold. Interest expense. Gain on sale of investments.

The lower of cost or net realizable value.

For companies that use FIFO, average cost, or any method other than LIFO or retail inventory method, inventory is valued at: Multiple Choice Replacement cost. Net realizable value. Cost. The lower of cost or net realizable value.

40%

For its 2018 fiscal year, the King Pharmaceutical Company reported sales of $10,500,000, cost of goods sold of $6,300,000, and net income of $525,000. The company's gross profit ratio for the year is: Multiple Choice 40% 60% 5% 67%

Option d

For profitable long-term contracts, income is recognized in each year when revenue is recognized: At a Point in Time Upon Over Time According to Contract Completion Percentage of Completion a. No No b. Yes No c. Yes Yes d. No Yes

All of the above.

GAAP includes which of the following pronouncements: Statements of Financial Accounting Standards. Accounting Research Bulletins. Accounting Principles Board Opinions. All of the above.

The gain is realized.

Gain contingencies usually are recognized in the income statement when: Multiple Choice The gain is realized. The gain is probable and the amount is known. The gain is probable and the amount can be reasonably estimated. The gain is reasonably possible and the amount can be reasonably estimated.

The timing of the payments (whether they are at the beginning or end of the period).

Given a set of present value tables, an annual interest rate, the dollar amount of equal payments made, and the number of semiannual payments, what other information is necessary to calculate the present value of the series of payments? Multiple Choice The future value of the annuity. The timing of the payments (whether they are at the beginning or end of the period). The rate of inflation. No other information is required.

Fair value of the net assets acquired.

Goodwill is the excess of the purchase price of an acquired company over the: Multiple Choice Fair value of the net assets acquired. Sum of the fair values of the assets acquired. Book value of the acquired company.

$61,740

Harmon Sporting Goods received a $60,000, 6-month, 10% note from a customer. Four months after receiving the note, it was discounted at a local bank at a 12% discount rate. The cash proceeds received by Harmon were: Multiple Choice $63,000 $64,680 $61,740 $67,200

$8,114

Harry Morgan plans to make 30 quarterly deposits of $200 into a savings account at the end of each quarter. The savings account pays interest at an annual rate of 8%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $8,114 $24,469 $6,000 $8,276

$8,276

Harry Morgan plans to make 30 quarterly deposits of $200 into a savings account. The first deposit will be made immediately. The savings account pays interest at an annual rate of 8%, compounded quarterly. How much will Harry have accumulated in the savings account at the end of the seven and a half-year period? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $8,114 $24,469 $6,000 $8,276

$100,000

Hollywood Construction Company recognizes revenue over time according to percentage of completion for its long-term construction contracts. During 2018, Hollywood began work on a $3,000,000 fixed-fee construction contract, which was completed in 2021. The accounting records disclosed the following data at year-end: Cumulative contract costs incurred Estimated costs to complete at end of year 2018 $ 200,000 $ 1,800,000 2019 1,100,000 1,100,000 2020 2,000,000 400,000 For the 2020 year, Hollywood should have recognized gross profit on this contract of: Multiple Choice $100,000 $500,000 $266,667 $225,000

The ending inventory under LIFO will tend to approximate replacement cost.

Identify the statement below concerning the LIFO inventory method that is untrue. In the absence of changes in costs, the results of using LIFO would be identical to those obtained by FIFO. LIFO will provide a close matching of current revenues with current costs since the most recent costs are expensed first. The ending inventory under LIFO will tend to approximate replacement cost. In periods of declining costs, cost of goods sold using LIFO will produce a lower cost of goods sold than FIFO.

Include a credit to accrued interest payable.

If bonds are issued between interest dates the entry to record the issuance of the bonds will: Include a credit to accrued interest payable. Include a debit to interest expense. Include a debit to cash that has been reduced by accrued interest from the last interest date. Be unaffected by the timing of sale.

Will have a credit balance prior to closing.

If revenues exceed expenses for the accounting period, the income summary account:

Total assets increased by $7 million.

If the investment described in the previous question had been classified as available-for-sale, what effect would the investment have on Level's 2018 financial statements? Multiple Choice Total assets increased by $7 million. Total assets increased by $3 million. Net income increased by $7 million. Shareholders' equity increased by $1 million.

Assets will be overstated and income overstated.

If the required adjusting entry for depreciation expense is omitted:

$60 million.

In 2016, Cordova Inc. acquired Cordant Corporation and $140 million in goodwill was recorded. At the end of its 2018 fiscal year, management has provided the following information for a required goodwill impairment test ($ in millions): Fair value of Cordant (approximates fair value less costs to sell) $ 980 Fair value of Cordant's net assets (excluding goodwill) 900 Book value of Cordant's net assets (including goodwill) 1,050 Present value of estimated future cash flows 1,000 Assuming that Cordant is considered a reporting unit, the amount of goodwill impairment loss that Cordova should recognize according to U.S. GAAP is: None. $40 million. $50 million. $60 million.

$600,000 decrease.

In 2018, the Robinson Company switched its inventory method from FIFO to average cost. Inventories at the end of 2017 were reported in the balance sheet at $22 million. If the average cost method had been used, 2017 ending inventory would have been $20 million. The company's tax rate is 40%. In the question above, assume that 2018's ending inventory is $23 million using average cost, and would have been $26 million if the company had not switched from the FIFO method. The effect of the change in method on 2018 net income is a: Multiple Choice $600,000 decrease. $1,000,000 decrease. $1,800,000 decrease. $3,000,000 decrease.

A $1.2 million decrease.

In 2018, the Robinson Company switched its inventory method from FIFO to average cost. Inventories at the end of 2017 were reported in the balance sheet at $22 million. If the average cost method had been used, 2017 ending inventory would have been $20 million. The company's tax rate is 40%. The adjustment to 2018's beginning retained earnings would be: Zero. A $2 million decrease. A $1.2 million increase. A $1.2 million decrease.

$30,000 credit.

In 2019, the controller of the Green Company discovered that 2018 depreciation expense was overstated by $50,000, a material amount. Assuming an income tax rate of 40%, the prior period adjustment to 2019 beginnings retained would be: Multiple Choice $0 $30,000 debit. $30,000 credit. All of these answer choices are incorrect.

$250,000

In January of 2018, the Falwell Company began construction of its own manufacturing facility. During 2018, $6,000,000 in costs were incurred evenly throughout the year. Falwell took out a $2,500,000, 10% construction loan at the beginning of the year. The company had no other interest-bearing debt. What amount of interest should Falwell capitalize in 2018? Multiple Choice $0 $600,000 $300,000 $250,000

$113,000

In January of 2018, the Phillips Company purchased a patent at a cost of $100,000. In addition, $10,000 in legal fees were paid to acquire the patent. The company estimated a 10-year useful life for the patent and uses the straight-line amortization method for intangible assets. In 2020, Phillips spent $25,000 in legal fees for an unsuccessful defense of the patent. The amount charged to income (expense and loss) in 2018 related to the patent should be: Multiple Choice $103,000 $36,000 $113,000 All of these answer choices are incorrect.

Subtracted from the book balance.

In a bank reconciliation, NSF checks are: Multiple Choice Subtracted from the bank balance. Added to the book balance. Added to the bank balance. Subtracted from the book balance.

Added to the bank balance.

In a bank reconciliation, deposits outstanding are: Multiple Choice Subtracted from the bank balance. Added to the book balance. Added to the bank balance. Subtracted from the book balance.

The total effective interest over the term to maturity is equal to the amount of the discount plus the total cash interest paid.

In a bond amortization table for bonds issued at a discount: The effective interest expense is less with each successive interest payment. The total effective interest over the term to maturity is equal to the amount of the discount plus the total cash interest paid. The outstanding balance (book value) of the bonds declines eventually to face value. The reduction in the discount is less with each successive interest payment.

Current assets.

In a classified balance sheet, supplies would be classified among:

LIFO.

In a period of declining costs, the use of which of the following inventory cost methods would result in the highest ending inventory? Multiple Choice FIFO. LIFO. Average cost. Weighted-average cost.

Inventory is credited.

In a perpetual inventory system, if merchandise is returned to a supplier: Multiple Choice Purchase returns is credited. Inventory is credited. Purchase discounts is credited. Inventory is debited.

Either an operating or a financing cash flow.

In a statement of cash flows, International Financial Reporting Standards allow companies to report interest paid as: Multiple Choice Either an operating or investing cash flow. Either an investing or financing cash flow. An operating cash flow only. Either an operating or a financing cash flow.

Financing activity.

In a statement of cash flows, cash received from the issuance of common stock would be classified as a:

Goods or services are transferred to the customer.

In general, revenue is recognized when the earnings process is virtually complete and:

The obligation is a legally enforceable claim.

In its financial statements, an enterprise should accrue a liability for a loss contingency involving a possible cash payment if certain conditions exist. Each of the following is a condition for accrual except: The payment is probable. The cause of the loss contingency occurred prior to the end of the year. The amount of payment can be estimated before the financial statements are issued. The obligation is a legally enforceable claim.

$8,000

In question 10, if the transfer were made with recourse but is still accounted for as a sale, what amount of loss on sale of receivables would the company record in June assuming the estimated recourse liability is $2,000? Multiple Choice $6,500 $8,000 $4,000 Zero.

Obligations expected to require the creation of other current liabilities.

Included in the category of current liabilities would be: Multiple Choice Pension obligations. Lease obligations. Obligations expected to require the creation of other current liabilities. Mortgages payable.

10.0

Income statement: 2018 Sales $ 2,500,000 Cost of goods sold 1,300,000 Net income 200,000 Balance sheets: 2018 2017 Accounts receivable $ 300,000 $ 200,000 Total assets 2,000,000 1,800,000 Total shareholders' equity 900,000 700,000 The accounts receivable turnover for 2018 is: Multiple Choice 10.0 8.33 5.2 4.33

1.32

Income statement: 2018 Sales $ 2,500,000 Cost of goods sold 1,300,000 Net income 200,000 Balance sheets: 2018 2017 Accounts receivable $ 300,000 $ 200,000 Total assets 2,000,000 1,800,000 Total shareholders' equity 900,000 700,000 The asset turnover for 2018 is: Multiple Choice 1.25 0.80 1.32 0.72

25%

Income statement: 2018 Sales $ 2,500,000 Cost of goods sold 1,300,000 Net income 200,000 Balance sheets: 2018 2017 Accounts receivable $ 300,000 $ 200,000 Total assets 2,000,000 1,800,000 Total shareholders' equity 900,000 700,000 The return on shareholders' equity for 2018 is: Multiple Choice 20% 8% 22.22% 25%

A related-party transaction.

Information not generally disclosed in the summary of significant accounting policies is: Multiple Choice The company's depreciation method. The fact that the company uses the FIFO inventory method. A related-party transaction. The company's revenue recognition policy.

LIFO.

International Financial Reporting Standards allow companies to use each of the following inventory valuation methods except: FIFO. LIFO. Average cost. All of these methods are allowed.

Option b

Investment securities are reported on a balance sheet at fair value for: Trading Securities Securities Available-For-Sale a. Yes No b. Yes Yes c. No Yes d. No No

$375,000

J.T. Rider and Sons uses the dollar-value LIFO inventory method. At the end of 2019 the cost index is 1.25 and the ending inventory at base year cost is $360,000. If 2019 beginning inventory at base year cost was $300,000, 2019 ending inventory at dollar-value LIFO cost is: Multiple Choice $300,000 $450,000 $360,000 $375,000

$9,000

Jasper Company uses the allowance method to account for bad debts. During 2018, the company recorded bad debt expense of $9,000 and wrote off as uncollectible accounts receivable totaling $5,000. These transactions caused a decrease in working capital (current assets minus current liabilities) of Multiple Choice $7,000 $5,000 $9,000 $14,000

Costs are rising and inventory quantity declines.

LIFO liquidation profits occur when: Multiple Choice Costs are rising and inventory quantity increases. Costs decline. Costs increase. Costs are rising and inventory quantity declines.

Total assets increased by $3 million.

Level Company owns bonds of Leader Company classified as held-to-maturity. During 2018, the fair value of those bonds increased by $4 million. Interest was received of $3 million. What effect did the investment have on Level's 2018 financial statements? Multiple Choice Total assets increased by $7 million. Total assets increased by $3 million. Net income increased by $7 million. Shareholders' equity increased by $4 million.

$70,000.

Lewis is selling a product with some of the transaction price depending on the outcome of a future event. There is a 75% chance that the event will result in $100,000 of consideration to Lewis, and a 25% chance that the event will result in $40,000 of consideration to Lewis. Which of the following is not an appropriate estimate of the amount of uncertain consideration for purposes of Lewis estimating the transaction price? Multiple Choice $100,000. $85,000. $70,000. a-c are all appropriate estimates.

Intangible assets.

Long-lived assets used in the operations of the business refer to property, plant, and equipment, and: Multiple Choice Receivables. Inventories. Investments. Intangible assets.

The DDB method with a switch to straight line.

MACRS depreciation is equivalent to: Multiple Choice The straight-line method with a switch to SYD. The DDB method with a switch to straight line. The straight-line method. The DDB method.

$348,000

Micro Tech, Inc. made the following cash expenditures during 2018 related to the development of a new technology which was patented at the end of the year: Materials and supplies used $ 38,000 R&D salaries 120,000 Patent filing fees 3,000 Payments to external consultants 50,000 Purchase of R&D equipment 140,000 The equipment purchased has no future use beyond the current project. $10,000 of the materials and supplies used and $32,000 in salaries relate to the construction of prototypes. In its 2018 financial statements Micro Tech should report research and development expenses of: Multiple Choice $306,000 $348,000 $351,000 $208,000

$91.35 million

National Storage issued $90 million of its 10% bonds on April 1, 2018, at 99 plus accrued interest. The bonds are dated January 1, 2018, and mature on December 31, 2035. Interest is payable semiannually on June 30 and December 31. What amount did National receive from the bond issuance? Multiple Choice $86.85 million $89.10 million $90.00 million $91.35 million

A nine-month note to be paid with the proceeds from the sale of common stock.

Of the following, which usually would not be classified as a current liability? A nine-month note to be paid with the proceeds from the sale of common stock. Bonds payable maturing within the coming year. Estimated warranty liability. Subscription revenue received in advance.

$647,000

On December 31, 2018, the Charlie Company adopted the dollar-value LIFO inventory method. Inventory at the end of 2018 for its only inventory pool was $500,000 under the dollar-value LIFO method. At the end of 2019 inventory at year-end cost is $672,000 and the cost index is 1.05. Inventory at the end of 2019 at dollar-value LIFO cost is: Multiple Choice $625,000 $640,000 $647,000 $672,000

$9,600

On January 1, 2016, Yukon Company agreed to grant its employees two weeks vacation each year, with the provision that vacations earned in a particular year could be taken the following year. For the year ended December 31, 2016, all twelve of Yukon's employees earned $1,200 per week each. Eight of these vacation weeks were not taken during 2016. In Yukon's 2016 income statement, how much expense should be reported for compensated absences? $0 $9,600 $14,400 $28,800

$8,889

On January 1, 2016, the Holloran Corporation purchased a machine at a cost of $55,000. The machine was expected to have a service life of 10 years and a $5,000 residual value. The straight-line depreciation method was used. In 2018 the estimate of residual value was revised from $5,000 to zero. Depreciation for 2018 should be: In above, assume that instead of revising residual value, in 2018 the company switched to the sum-of-the-years'-digits depreciation method. Depreciation for 2018 should be $5,500 $5,625 $8,889 $10,000

$5,625

On January 1, 2016, the Holloran Corporation purchased a machine at a cost of $55,000. The machine was expected to have a service life of 10 years and a $5,000 residual value. The straight-line depreciation method was used. In 2018 the estimate of residual value was revised from $5,000 to zero. Depreciation for 2018 should be: $4,500 $5,500 $5,625 $5,000

$42,480

On January 1, 2018, Blair Company sold $800,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $708,000, priced to yield 12%. Blair records interest at the effective rate. Blair should report bond interest expense for the six months ended June 30, 2018 in the amount of: $35,400 $40,000 $42,480 $48,000

$63,000.

On January 1, 2018, Normal Plastics bought 15% of Model, Inc.'s outstanding bonds for $900,000. On October 1, 2019, the bonds were valued at $1,026,000 and Normal sold half of the amount it purchased. On December 31, 2019, the remaining bonds were valued at $580,000. How much should Normal show on its 2019 income statement from this investment, assuming that it accounts for it as an available-for-sale investment? Multiple Choice $0. $63,000. $243,000. $306,000.

credit bonds payable $9,900,000.

On January 1, 2018, Ventrini International issued $10 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Ventrini's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99. Ventrini applies International Financial Reporting Standards. Upon issuance, Ventrini should Multiple Choice credit bonds payable $9,900,000. credit premium on bonds payable $100,000. credit equity $100,000. credit bonds payable $10,100,000.

An increase in shareholders' equity of $8 million.

On January 12, Henderson Corporation purchased bonds of Honeycutt Corporation for $73 million and classified the securities as available-for-sale. At the close of the same year, the fair value of the securities is $81 million. Henderson Corporation should report: Multiple Choice A gain of $8 million on the income statement. An increase in shareholders' equity of $8 million. An investment of $73 million. None of the above.

$60.0 million.

On January 2, 2018, Garner, Inc. bought 10% of the outstanding common stock of Moody, Inc. for $60 million cash, and accounts for the investment using the cost method because fair value is not readily determinable. At the date of acquisition of the stock, Moody's net assets had a book value and fair value of $180 million. Moody's net income for the year ended December 31, 2018, was $30 million. During 2018, Moody declared and paid cash dividends of $6 million. On December 31, 2018, Garner's investment should be reported at: Multiple Choice $60.0 million. $66.9 million. $69.0 million. $71.1 million.

$67.2 million.

On January 2, 2018, Garner, Inc. bought 30% of the outstanding common stock of Moody, Inc. for $60 million cash. At the date of acquisition of the stock, Moody's net assets had a book value and fair value of $180 million. Moody's net income for the year ended December 31, 2018, was $30 million. During 2018, Moody declared and paid cash dividends of $6 million. On December 31, 2018, Garner's investment account should be reported at: Multiple Choice $60.0 million. $67.2 million. $69.0 million. $71.1 million.

$9 million.

On January 2, 2018, Germane, Inc. bought 30% of the outstanding common stock of Quality, Inc. for $56 million cash. At the date of acquisition of the stock, Quality's net assets had a book value and fair value of $120 million. Quality's net income for the year ended December 31, 2018, was $30 million. During 2018, Quality declared and paid cash dividends of $10 million. On December 31, 2018, Germane's should report investment revenue of: Multiple Choice $3 million. $6 million. $9 million. $30 million.

$9 million

On June 30, 2018, Kerr Industries had outstanding $40 million of 8%, convertible bonds that mature on June 30, 2019. Interest is payable each year on June 30 and December 31. The bonds are convertible into 2 million shares of $10 par common stock. At June 30, 2018, the unamortized balance in the discount on bonds payable account was $2 million. On June 30, 2018, half the bonds were converted when Kerr's common stock had a market price of $25 per share. When recording the conversion using the book value method, Kerr should credit paid-in capital - excess of par: Multiple Choice $8 million $9 million $11 million $12 million

$30,000

On June 30, 2018, Mabry Corporation issued $5 million of its 8% bonds for $4.6 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2018. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the 6 months ended December 31, 2018? $16,000 $20,000 $23,000 $30,000

$510,000

On March 1, 2018, Big Brands Corporation issued $600,000 of 10% bonds at 105. Each $1,000 bond was sold with 50 detachable stock warrants, each permitting the investor to purchase one share of common stock for $35. On that date, the market value of the common stock was $30 per share and the market value of each warrant was $4. Big Brands should record what amount of the proceeds from the bond issue as an increase in liabilities? Multiple Choice $510,000 $600,000 $630,000 $0

Present value of an annuity due of $1 at 10% for 10 periods.

On March 31, 2018, the Freeman Company leased a machine. The lease agreement requires Freeman to pay 10 annual payments of $6,000 on each March 31, with the first payment due on March 31, 2018. Assuming an interest rate of 10% and that this lease is treated as an installment sale, Freeman will initially value the machine by multiplying $6,000 by which of the following factors? Multiple Choice Present value of $1 at 10% for 10 periods. Present value of an ordinary annuity of $1 at 10% for 10 periods. Present value of an annuity due of $1 at 10% for 10 periods. Future value of an annuity due of $1 at 10% for 10 periods.

$800,000

On May 31, 2018, the Arlene Corporation adopted a plan to sell its cosmetics line of business, considered a component of the entity. The assets of the component were sold on October 13, 2018, for $1,120,000. The component generated operating income from January 1, 2018, through disposal of $300,000. In its income statement for the year ended December 31, 2018, the company reported before-tax income from operations of a discontinued component of $620,000. What was the book value of the assets of the cosmetics component? Multiple Choice $800,000 $1,420,000 $300,000 All of these answer choices are incorrect.

$480,000

On November 1, Epic Distributors borrowed $24 million cash to fund an expansion of its facilities. The loan was made by WW BancCorp under a short-term line of credit. Epic issued a 9-month, 12% promissory note. Interest was payable at maturity. Epic's fiscal period is the calendar year. In Epic's adjusting entry for the note on December 31, interest expense will be: Multiple Choice $0 $240,000 $480,000 $640,000

9.42%

On November 1, Shearer Shoes borrowed $18 million cash and issued a 6-month, "noninterest-bearing note." The loan was made by Third Commercial Bank whose stated "discount rate" is 9%. Shearer's effective interest rate on this loan is: Multiple Choice 8.61% 9.0% 9.42% 9.5%

$240,000

On October 1, 2016, Parton Industries borrowed $12 million cash to provide working capital. The loan was made by Second Bank under a short-term line of credit. Parton issued an 8-month, "noninterest-bearing note." 8% is the bank's stated "discount rate." Parton's fiscal period is the calendar year. In Parton's 2016 income statement interest expense for the note will be: Multiple Choice $0 $240,000 $360,000 $480,000

$400,000.

On September 1, 2018, Contemporary Products, issued $16 million of its 10% bonds at face value. The bonds are dated June 1, 2018, and mature on May 30, 2026. Interest is payable semiannually on June 1 and December 1. At the time of issuance, Contemporary Products would receive cash proceeds that would include accrued interest of: Multiple Choice Zero. $200,000 . $400,000. $1.6 million.

$804,000

On September 1, 2018, Expert Materials, issued at 98 plus accrued interest, $800,000 of its 10% bonds. The bonds are dated June 1, 2018, and mature on May 30, 2026. Interest is payable semiannually on June 1 and December 1. At the time of issuance, Expert would receive cash of: Multiple Choice $784,000 $803,600 $804,000 $820,000

the proceeds of the bond issue as part debt and part equity.

Preston Laird Company issued 5% bonds convertible into shares of the company's common stock. Preston Laird Company applies International Financial Reporting Standards. Upon issuance, Preston Laird Company should record Multiple Choice the proceeds of the bond issue as part debt and part equity. the proceeds of the bond issue entirely as debt. the proceeds of the bond issue entirely as equity. the proceeds of the bond issue entirely as debt if the bonds are manditorily redeemable.

$2,400,000

Pribuss Engineering prepares its financial statements according to International Financial Reporting Standards. During 2018, the company incurred the following costs related to a new product design: Research for new pump design $ 2,400,000 Development of the new product 1,300,000 Legal and filing fees for a patent for the new design 52,000 Total $ 3,752,000 The development costs were incurred after technological and commercial feasibility was established and after the future economic benefits were deemed probable. The project was successfully completed and the new product was patented before the end of the 2018 fiscal year. What amount should Pribuss expense in its 2018 income statement related to the above expenditures? Multiple Choice $1,300,000 $2,400,000 $3,700,000 $3,752,000

Confirmatory value.

Relevance requires that information possess predictive and/or:

$500,000 of notes payable as short-term and $3,500,000 as long-term obligations.

Reunion BBQ has $4,000,000 of notes payable due on March 11, 2017, which Reunion intends to refinance. On January 5, 2017, Reunion signed a line of credit agreement to borrow up to $3,500,000 cash on a two-year renewable basis. On the December 31, 2016, balance sheet, Reunion should classify: Multiple Choice $500,000 of notes payable as short-term and $3,500,000 as long-term obligations. $500,000 of notes payable as long-term and $3,500,000 as short-term obligations. $4,000,000 of notes payable as short-term obligations. $4,000,000 of notes payable as long-term obligations.

0.80

Sanchez Corporation Selected Financial Information 12/31/18 12/31/17 Cash $ 20,000 $ 25,000 Accounts receivable (net) 100,000 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income $ 40,000 Interest expense 10,000 Income tax expense 20,000 The debt to equity ratio for 2018 is: Multiple Choice 0.80 0.44 0.67 0.13

7.0 times

Sanchez Corporation Selected Financial Information 12/31/18 12/31/17 Cash $ 20,000 $ 25,000 Accounts receivable (net) 100,000 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income $ 40,000 Interest expense 10,000 Income tax expense 20,000 The times interest earned ratio is: Multiple Choice 4.0 times 5.0 times 6.0 times 7.0 times

1.55

Sanchez Corporation Selected Financial Information 12/31/18 12/31/17 Cash 20,000 $ 25,000 Accounts receivable (net) 100,000 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income $ 40,000 Interest expense 10,000 Income tax expense 20,000 The current ratio for 2018 is: Multiple Choice 0.80 1.55 0.60 2.25

0.60

Sanchez Corporation Selected Financial Information 12/31/18 12/31/17 Cash 20,000 25,000 Accounts receivable (net) 100,00 110,000 Inventories 190,000 155,000 Total current assets 310,000 290,000 Long-term assets 230,000 210,000 Current liabilities 200,000 190,000 Long-term liabilities 40,000 50,000 Shareholders' equity 300,000 260,000 Net income $ 40,000 Interest expense 10,000 Income tax expense 20,000 The acid-test ratio for 2018 is: Multiple Choice 0.80 1.55 0.60 0.34

$600,000

Sandlewood Construction Inc. recognizes revenue over time according to percentage of completion for its long-term construction contracts. In 2018, Sandlewood began work on a $10,000,000 construction contract, which was completed in 2019. The accounting records disclosed the following data at the end of 2018: Costs incurred $ 5,400,000 Estimated cost to complete 3,600,000 Progress billings 4,100,000 Cash collections 3,200,000 How much gross profit should Sandlewood have recognized in 2018? Multiple Choice $700,000 $1,000,000 $600,000 $0

A current asset of $1,900,000

Sandlewood Construction Inc. recognizes revenue over time according to percentage of completion for its long-term construction contracts. In 2018, Sandlewood began work on a $10,000,000 construction contract, which was completed in 2019. The accounting records disclosed the following data at the end of 2018: Costs incurred $ 5,400,000 Estimated cost to complete 3,600,000 Progress billings 4,100,000 Cash collections 3,200,000 In addition to accounts receivable, what would appear in the 2018 balance sheet related to the construction accounts? Multiple Choice A current asset of $1,300,000 A current liability of $900,000 A current asset of $900,000 A current asset of $1,900,000

Present value of an ordinary annuity of $1 for 6 periods.

Sandra wants to calculate how much money she needs to deposit today into a savings account which earns 5% in order to be able to withdraw $3,000 at the end of each of the next 6 years. She should use which present value concept? Multiple Choice Present value of $1 for 6 periods. Present value of an annuity due of $1 for 6 periods. Present value of an ordinary annuity of $1 for 6 periods. Future value of $1 for 6 periods.

$21,600

Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2018, costing $20 each. Purchases and sales of inventory during the month of March were as follows: Date Purchases Sales March 8 600 units 15 400 units @ $22 each 22 400 units @ $24 each 27 400 units Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March. If Sanfillipo instead used the perpetual inventory system, cost of goods sold for the month of March applying the LIFO inventory method would be: Multiple Choice $22,400 $21,500 $21,600 $24,000

$14,000

Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2018, costing $20 each. Purchases and sales of inventory during the month of March were as follows: Date Purchases Sales March 8 600 units 15 400 units @ $22 each 22 400 units @ $24 each 27 400 units Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March. The cost of inventory at the end of March applying the FIFO method is: Multiple Choice $12,900 $14,400 $12,000 $14,000

$12,000

Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2018, costing $20 each. Purchases and sales of inventory during the month of March were as follows: Date Purchases Sales March 8 600 units 15 400 units @ $22 each 22 400 units @ $24 each 27 400 units Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March. The cost of inventory at the end of March applying the LIFO method is: Multiple Choice $12,900 $14,400 $12,000 $14,000

$12,900

Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2018, costing $20 each. Purchases and sales of inventory during the month of March were as follows: Date Purchases Sales March 8 600 units 15 400 units @ $22 each 22 400 units @ $24 each 27 400 units Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March. The cost of inventory at the end of March applying the average cost method is: Multiple Choice $12,900 $14,400 $12,000 $14,000

$260,000

Selected information from the 2018 accounting records of Dunn's Auto Dealers is as follows: Cost of furniture purchased for cash $ 8,000 Proceeds from bank loan 100,000 Repayment of bank loan (includes interest of $4,000) 44,000 Proceeds from sale of equipment 5,000 Cash collected from customers 320,000 Purchase of stock of another corporation as an investment 20,000 Common stock issued for cash 200,000 In its 2018 statement of cash flows, Dunn's should report net cash inflows from financing activities of: Multiple Choice $260,000 $265,000 $60,000 $256,000

$23,000

Selected information from the 2018 accounting records of Dunn's Auto Dealers is as follows: Cost of furniture purchased for cash $ 8,000 Proceeds from bank loan 100,000 Repayment of bank loan (includes interest of $4,000) 44,000 Proceeds from sale of equipment 5,000 Cash collected from customers 320,000 Purchase of stock of another corporation as an investment 20,000 Common stock issued for cash 200,000 In its 2018 statement of cash flows, Dunn's should report net cash outflows from investing activities of: Multiple Choice $27,000 $32,000 $28,000 $23,000

$6,000,000

Smith Company earns a 12% return on assets. If net income is $720,000, average total assets must be: Multiple Choice $86,400 $6,000,000 $6,086,400 $3,000,000

$355,000

Symington Corporation uses the periodic inventory system. At December 31, 2018, the end of the company's fiscal year, a physical count of inventory revealed an ending inventory balance of $320,000. The following items were not included in the physical count: Goods held on consignment at Murphy Corporation $ 23,000 Merchandise shipped to a customer on 12/30 f.o.b. destination (merchandise arrived at customer's location on 1/3/17) 12,000 Merchandise shipped to a customer on 12/29 f.o.b. shipping point (merchandise arrived at customer's location on 1/2/17) 6,000 Merchandise purchased from a supplier, shipped f.o.b. destination on 12/29, in transit at year-end 24,000 Symington's 2018 ending inventory should be: Multiple Choice $320,000 $379,000 $355,000 $332,000

$325,203

The Bello Corporation wishes to accumulate $2,000,000 for plant expansion. The funds are required on January 1, 2023. Bello intends to make five equal annual deposits in a fund that will earn interest at 7% compounded annually. The first deposit is made on January 1, 2018. Present value and future value facts are as follows: Present value of $1 at 7% for 5 periods .713 Present value of an ordinary annuity of $1 at 7% for 5 periods 4.100 Future value of an ordinary annuity of $1 at 7% for 5 periods 5.750 Future value of an annuity due of $1 at 7% for 5 periods 6.150 What is the amount of the required annual deposit? Multiple Choice $325,203 $347,826 $487,805 $426,000

A credit to revenue of $200,000.

The City of San Martin gave a parcel of land to the Canova Company as part of an agreement requiring Canova to construct its office building on the donated land. The land cost the city $80,000 when purchased several years ago and had an appraised value of $200,000 on the date it was given to Canova. As a result of the donation, Canova should record: Multiple Choice A debit to land of $80,000. A credit to revenue of $200,000. A credit to paid-in capital of $200,000. A credit to gain of $120,000.

$180,000

The Compton Press Company reported income before taxes of $250,000. This amount included a $50,000 loss on discontinued operation. The amount reported as income from continuing operations, assuming a tax rate of 40%, is Multiple Choice $250,000 $180,000 $120,000 $150,000

A $45,000 loss.

The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $120,000 and had an estimated useful life of 10 years and $20,000 residual value, was depreciated for four years using the straight-line method. Cromwell should report the following on its income statement in the year of sale: Multiple Choice A $45,000 loss. A $45,000 gain. A $25,000 gain. All of these answer choices are incorrect.

$42,000

The Esquire Clothing Company borrowed a sum of cash on October 1, 2018, and signed a note payable. The annual interest rate was 12% and the company's year 2018 income statement reported interest expense of $1,260 related to this note. What was the amount borrowed?

2.55

The Esquire Company reported sales of $1,600,000 and cost of goods sold of $1,122,000 for the year ended December 31, 2018. Ending inventory for 2017 and 2018 was $420,000 and $460,000, respectively. Esquire's inventory turnover for 2018 is: Multiple Choice 2.44 2.55 3.64 3.48

$10,200,000.

The Ghirardi Company's fixed-asset turnover ratio for 2018 was 5.0 and average fixed assets employed during the year were $2,040,000. Ghirardi's net sales for the year were: Multiple Choice $408,000. $10,200,000. $12,000,000 All of these answer choices are incorrect.

$1,128,000

The Hamlet Company uses the periodic inventory system. Information for 2018 is as follows: Sales $ 2,650,000 Beginning inventory 680,000 Purchases 1,200,000 Purchase returns 12,000 Ending inventory 740,000 Hamlet's cost of goods sold for 2018 is: Multiple Choice $1,522,000 $1,188,000 $1,140,000 $1,128,000

Understated by $64,000.

The Jackson Company incorrectly omitted $100,000 of merchandise from its 2018 ending inventory. In addition, a merchandise purchase of $40,000 was incorrectly recorded as a $4,000 debit to the purchases account. As a result of these errors, 2018 before-tax income is: Multiple Choice Overstated by $64,000. Understated by $136,000. Understated by $64,000. Overstated by $136,000.:

Present value of a deferred annuity.

The Jamison Corporation agrees to pay an employee $10,000 a year for five years beginning three years from today and decides to fund the payments by depositing one lump sum in a savings account today. The company should use which present value concept to determine the required deposit? Multiple Choice Future value of $1. Present value of a deferred annuity. Future value of a deferred annuity. None of the above.

$225,000

The Pattison Company began operations on January 2, 2018, and appropriately uses the installment sales method of accounting. The following data are available for 2018 and 2019: 2018 2019 Installment sales $ 600,000 $ 750,000 Cash collections from: 2018 sales 200,000 250,000 2019 sales 300,000 Gross profit on sales 30 % 40 % The deferred gross profit that would appear in the 2019 balance sheet is: Multiple Choice $180,000 $200,000 $285,000 $225,000

$330,000

The Piazza Baseball Bat Company acquired all of the outstanding common stock of Dierdorf Lumber for $3,500,000. The book values and fair values of Dierdorf's assets and liabilities on the date of purchase were as follows: Book Value Fair Value Current assets $ 860,000 $ 830,000 Property, plant, and equipment 2,300,000 2,940,000 Liabilities 600,000 600,000 Piazza should record goodwill of:

$24,000

The Reingold Hat Company uses the allowance method to account for bad debts. During 2018, the company recorded $800,000 in credit sales. At the end of 2018, account balances were: Accounts receivable, $120,000; Allowance for uncollectible accounts, $3,000 (credit). If bad debt expense is estimated to be 3% of credit sales, the appropriate adjusting entry will include a debit to bad debt expense of Multiple Choice Zero. $27,000 $21,000 $24,000

$5,000 plus the present value of an ordinary annuity of $300 for 36 periods.

The Richards Company purchased a machine for $5,000 down and $300 a month payable at the end of each of the next 36 months. How would the cash price of the machine be calculated, assuming the annual interest rate is given? Multiple Choice $5,000 plus the present value of $10,800 ($300 x 36). $5,000 plus the present value of an annuity due of $300 for 36 periods. $15,800. $5,000 plus the present value of an ordinary annuity of $300 for 36 periods.

Monitoring the development of GAAP within the accounting profession and using its stature to influence that development.

The SEC exerts a continuing influence on the establishment of accounting standards. It does so primarily by:

Present value of $1.

The Sanchez Company purchased a delivery truck on February 1, 2018. The purchase agreement required Sanchez to pay the total amount due of $15,000 on February 1, 2019. Assuming an 8% rate of interest, the calculation of the price of the truck would involve multiplying $15,000 by the: Multiple Choice Future value of an ordinary annuity of $1. Present value of $1. Present value of an ordinary annuity of $1. Future value of $1.

$8,750,000

The Simpson Construction Company recognizes revenue over time according to percentage of completion for its long-term construction contracts. In 2018, Simpson began work on a construction contract. Information on this contract at the end of 2018 is as follows: Cost incurred during the year $ 1,500,000 Estimated additional cost to complete 6,000,000 Gross profit recognized in 2018 250,000 What is the contract price (total revenue) on this contract? Multiple Choice $7,000,000 $8,750,000 $7,500,000 $9,000,000

$60.880 million.

The Stacey Mack Corporation used the expected cash flow approach to determine the present value of a future obligation to be paid in four years. Estimated future payment possibilities were as follows: Possible payment Probability $ 50 million 20 % 70 million 40 % 90 million 40 % The risk-free interest rate is 5%. What is the estimated present value of the future obligation? Multiple Choice $57.589 million. $60.880 million. $74.043 million. $70 million.

A change in accounting principle.

The Stibbe Construction Company switched from the completed contract method to the percentage-of-completion method of accounting for its long-term construction contracts. This is an example of: Multiple Choice A change in accounting principle. A change in accounting estimate. An unusual item. A discontinued operation.

$1,994

The Strug Company purchased office furniture and equipment for $8,600 and agreed to pay for the purchase by making five annual installment payments beginning immediately. The installment payments include interest at 8%. What is the required annual installment payment? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $1,720 $2,154 $1,994 $1,466

$2,154

The Strug Company purchased office furniture and equipment for $8,600 and agreed to pay for the purchase by making five annual installment payments beginning one year from today. The installment payments include interest at 8%. What is the required annual installment payment? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $1,720 $2,154 $1,994 $1,466

$405,035

The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 2018: Cost Retail Inventory 1/1/2018 $ 390,000 $ 650,000 Net purchases for the year 1,402,000 1,835,000 Net markups 75,000 Net markdowns 45,000 Net sales 1,845,000 Applying the LIFO retail inventory method, Toso's inventory at December 31, 2018, is estimated at: $477,392 $469,000 $395,159 $405,035

$477,392

The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 2018: Cost Retail Inventory 1/1/2018 $ 390,000 $ 650,000 Net purchases for the year 1,402,000 1,835,000 Net markups 75,000 Net markdowns 45,000 Net sales 1,845,000 Applying the average cost retail inventory method, Toso's inventory at December 31, 2018, is estimated at: $477,392 $469,000 $395,159 $405,035

$469,000

The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 2018: Cost Retail Inventory 1/1/2018 $ 390,000 $ 650,000 Net purchases for the year 1,402,000 1,835,000 Net markups 75,000 Net markdowns 45,000 Net sales 1,845,000 Applying the conventional retail inventory method, Toso's inventory at December 31, 2018, is estimated at: $477,392 $469,000 $395,159 $405,035

$395,262

The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 2018: Cost Retail Inventory 1/1/2018 $ 390,000 $ 650,000 Net purchases for the year 1,402,000 1,835,000 Net markups 75,000 Net markdowns 45,000 Net sales 1,845,000 Assume that on 1/1/2018 Toso adopted the dollar-value LIFO retail inventory method and that the retail price index at the end of 2018 is 1.02. Toso's inventory at December 31, 2018, is estimated at: $477,392 $469,000 $395,262 $405,035

$9,500

The Wazoo Times Newspaper Company reported an $11,200 liability in its 2018 balance sheet for subscription revenue received in advance. During 2019, $62,000 was received from customers for subscriptions and the 2019 income statement reported subscription revenue of $63,700. What is the liability amount for deferred subscription revenue that will appear in the 2019 balance sheet?

Trading security.

The accounting for unrealized holding gains and losses will be different if the fair value option is elected for all of the following types of investments except: Multiple Choice Held-to-maturity. Trading security. Available-for-sale. Equity method.

Asset account.

The accumulated depreciation account is a contra (valuation) account to:

Inventories.

The acid-test ratio excludes which of the following elements from the numerator? Short-term investments. Receivables. Cash equivalents. Inventories.

Operating income.

The application of intraperiod income taxes requires that income taxes be apportioned to each of the following items except: Income from continuing operations. Operating income. Discontinued operations. All of these answer choices are incorrect.

Usually one year, because the operating cycle typically is less than one year.

The basis used to classify assets as current or long-term is: Multiple Choice Whether an asset is monetary or nonmonetary. The operating cycle or one year, whichever is shorter. Usually one year, because the operating cycle typically is less than one year. Whether the asset is currently used in the company's operations.

Transferring revenue and expense balances to retained earnings.

The closing process involves:

The proxy statement.

The compensation of directors and top executives is disclosed in: Multiple Choice The proxy statement. The annual report. A disclosure note. Interim financial statements.

$1,000

The correct amount of prepaid insurance shown on a company's December 31, 2018, balance sheet was $900. On July 1, 2019, the company paid an additional insurance premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2019 income statement is:

Includes beginning inventory.

The difference in the calculation of the cost-to-retail percentage applying the LIFO method and the average cost method is that the average cost method: Multiple Choice Excludes beginning inventory. Excludes markdowns. Includes beginning inventory. Includes markdowns.

Includes markdowns.

The difference in the calculation of the cost-to-retail percentage applying the conventional retail method and the average cost method is that the average cost method: Multiple Choice Excludes beginning inventory. Excludes markdowns. Includes markups. Includes markdowns.

Statements of Financial Accounting Concepts.

The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:

The investor owns between 20% and 50% of the investee's voting shares

The equity method is used when an investor can't control, but can exercise significant influence over the operating and financial policies of the investee. We presume, in the absence of evidence to the contrary, that this is so if: Multiple Choice The investor classifies the investment as available-for-sale. The investor classifies the investment as held-to-maturity. The investor owns between 51% or more of the investee's voting shares. The investor owns between 20% and 50% of the investee's voting shares.

The existence of a legal obligation.

The essential characteristics of a liability do not include: Multiple Choice The existence of a past causal transaction or event. Present obligation. The existence of a legal obligation. A future sacrifice of economic benefits.

Must be elected when a security is purchased, and is irrevocable.

The fair value option described by SFAS No. 159 Multiple Choice Must be elected when a security is purchased, and is irrevocable. Can be traded on exchanges, similar to other options. For debt is available only if anticipated to not be held to maturity. Is not available for equity investments.

10.00

The following data are available for the Hunting Balloon Company: Sales for the current year $ 1,500,000 Cost of goods sold for the current year 1,200,000 Accounts receivable, beginning of year 140,000 Accounts receivable, end of year 160,000 The accounts receivable turnover ratio for the current year is: Multiple Choice 8.00 10.71 10.00 9.375

$19,300

The following expenditures relate to machinery purchased by Callabasas Manufacturing: Purchase price $ 16,000 Transportation costs 800 Installation 500 Testing 2,000 Repair of part broken during shipment 300 At what amount should Callabasas capitalize the machinery? Multiple Choice $17,300 $19,300 $19,600 $17,600

$160

The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 180 Replacement cost 150 Selling price 195 Costs to sell 35 What should be the book value of Simon's inventory if the company prepares its financial statements according to International Financial Reporting Standards? Multiple Choice $150 $180 $160 $195

$170

The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 200 Replacement cost 170 Selling price 190 Disposal costs 10 Normal profit margin 30 Using the lower of cost or market, this item should be valued at: Multiple Choice $150 $200 $170 $190

$160

The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 180 Replacement cost 150 Selling price 195 Costs to sell 35 Applying the lower of cost or net realizable value rule, this item should be valued at: Multiple Choice $150 $180 $160 $195

$54,000

The following items appeared in the 2018 year-end trial balance for the Brown Coffee Company: Debits Credits Revenues xxxxxx $ 600,000 Operating expenses $ 420,000 xxxxx Income on discontinued operations xxxxxx 200,000 Restructuring costs 100,000 xxxxx Interest expense 20,000 xxxxx Gain on sale of investments xxxx 30,000 Income tax expense has not yet been accrued. The company's income tax rate is 40%. What amount should be reported in the company's year 2018 income statement as income from continuing operations? Multiple Choice $90,000 $66,000 $34,800 $54,000

In the preparation of annual financial statements.

The gross profit method can be used in all of the following situations except: In determining the cost of inventory destroyed in a fire. In the preparation of annual financial statements. In budgeting and forecasting. The gross profit method can be used in all of these situations.

Property taxes for the current period.

The initial cost of land would include all of the following except: Multiple Choice The cost of grading. Title search costs. Recording fees. Property taxes for the current period.

Develop a single set of global accounting standards.

The main objective of the IASB is to:

The units-of-production method.

The method that does not necessarily produce a declining pattern of depreciation over an asset's service life is: Multiple Choice The double-declining-balance method. The sum-of-the-years'-digits method. The units-of-production method. All of these answer choices produce a declining pattern.

Plus the present value of all future interest payments at the market or effective rate of interest.

The price of a corporate bond is the present value of its face amount at the market or effective rate of interest: Plus the present value of all future interest payments at the market or effective rate of interest. Plus the present value of all future interest payments at the stated rate of interest. Reduced by the present value of all future interest payments at the market or effective rate of interest. Reduced by the present value of all future interest payments at the stated rate of interest.

That is useful in decision making

The primary objective of financial reporting is to provide information:

Recognize expenses in the same period as the related revenue.

The primary objective of matching is to:

Representational faithfulness.

The qualitative characteristic that means there is agreement between a measure and a real-world phenomenon is:

$145,000

The records of California Marine Products, Inc., revealed the following information related to inventory destroyed in an earthquake: Inventory, beginning of period $ 300,000 Purchases to date of earthquake 160,000 Net sales to date of earthquake 450,000 Gross profit ratio 30 % The estimated amount of inventory destroyed by the earthquake is: Multiple Choice $325,000 $145,000 $10,000 All of these answer choices are incorrect.

Construction debt interest rates differ from the rates of other interest- bearing debt.

The specific interest and the weighted-average interest methods for determining capitalized interest will yield the same results except when: Construction debt interest rates differ from the rates of other interest- bearing debt. There is no construction-related debt. There is no interest-bearing debt other than construction related. Construction debt interest rates are the same as the rates of other interest-bearing debt.

Relevance and faithful representation.

The two primary decision-specific qualities that make accounting information useful are:

Financial accounting

The type of financial information to external decision makers is referred to as:

Periodicity.

The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:

Going concern.

The underlying assumption that presumes a company will continue indefinitely is:

Option d

There is a possibility of a safety hazard for a manufactured product. As yet, no claim has been made for damages, though there is a reasonable possibility that a claim will be made. If a claim is made, it is probable that damages will be paid and the amount of the loss can be reasonably estimated. This possible loss must be: Accrued Disclosed a. Yes Yes b. Yes No c. No Yes d. No No

Fair Value through Profit & Loss

Under IFRS No. 9, equity investments can be classified as: Multiple Choice Fair Value through Profit & Loss Held to Maturity Amortized Cost Available for Sale

Completing refinancing before the balance sheet date.

Under IFRS, a company can demonstrate their ability to refinance long-term debt for purposes of excluding the debt from current liabilities by: Multiple Choice Completing refinancing before the date of issuance of the financial statements. Completing refinancing before the balance sheet date. Promising to refinance the liabilities. None of the above.

Midpoint of the range.

Under IFRS, if every amount in a range of contingent losses is equally likely, the amount accrued is the: Multiple Choice Low end of the range. High end of the range. Midpoint of the range. None of the above.

The risks and rewards of ownership.

Under IFRS, revenue for the sale of goods is recognized when the seller has transferred to the buyer: Multiple Choice A signed invoice. The risks and rewards of ownership. Compelling evidence that substantive installation has occurred. None of the above.

Both a and b.

Under U.S. GAAP, liabilities payable within one year can be excluded from current liabilities only if: Multiple Choice The business intends to refinance the obligations on a long-term basis. The business has the demonstrated ability to refinance the obligations on a long-term basis. Both a and b. Liabilities payable within one year always must be classified as current liabilities.

The earnings process is virtually complete.

Under the realization principle, revenue is recognized as earned when there is reasonable certainty as to the collectibility of the asset to be received and: Multiple Choice The sales price has been collected. The earnings process is virtually complete. Production is completed. A purchase order has been received.

Option a

Unrealized holding gains and losses are included in an investor's earnings for: Trading Securities Securities Available-For-Sale a. Yes No b. Yes Yes c. No Yes d. No No

Reported as a separate component of the shareholders' equity section of the balance sheet.

Unrealized holding gains and losses for securities available-for-sale are: Multiple Choice Reported as a separate component of the shareholders' equity section of the balance sheet. Included in the determination of income from operations in the period of the change. Reported as extraordinary items. Not reported in the income statement nor the balance sheet.

Not reported in the income statement nor the balance sheet.

Unrealized holding gains and losses for securities to be held-to-maturity are: Multiple Choice Reported as a separate component of the shareholders' equity section of the balance sheet. Included in the determination of income from operations in the period of the change. Reported as extraordinary items. Not reported in the income statement nor the balance sheet.

Included in the determination of income from operations in the period of the change.

Unrealized holding gains and losses for trading securities are: Multiple Choice Reported as a separate component of the shareholders' equity section of the balance sheet. Included in the determination of income from operations in the period of the change. Reported as extraordinary items. Not reported in the income statement nor the balance sheet.

The cause for action occurred prior to the end of the fiscal year.

Warren Advertising becomes aware of a lawsuit after the end of the fiscal year, but prior to the issuance of financial statements. A loss should be accrued and a liability should be reported if the amount can be reasonably estimated and: Multiple Choice The cause for action occurred prior to the end of the fiscal year. The damages would be payable within a year. Both a. and b. The contingency should not be accrued.

$155,320

Wellman Company is considering investing in a two-year project. Wellman's required rate of return is 10%. The present value of $1 for one period at 10% is 0.909 and for two periods at 10% is 0.826. The project is expected to create cash flows, net of taxes, of $80,000 in the first year, and $100,000 in the second year. Wellman should invest in the project if the project's cost is less than or equal to: Multiple Choice $180,000 $163,620 $155,320 $148,680

Option a

Western Appliance Company, which began business on January 1, 2018, appropriately uses the installment sales method of accounting. The following data are available for 2018: Installment sales $ 350,000 Cash collections on installment sales 150,000 Gross profit on sales 40 % The gross profit on installment sales for 2018 should be: Realized Deferred a. $ 60,000 $ 80,000 b. $ 80,000 $ 60,000 c. $ 140,000 $ 80,000 d. $ 140,000 $ 60,000

Total assets are unchanged.

Western Manufacturing Company owns 40% of the outstanding common stock of Eastern Supply Company. During 2018, Western received a $50 million cash dividend from Eastern. What effect did this dividend have on Western's 2018 financial statements? Multiple Choice Total liabilities increased. Total assets decreased. Net income increased. Total assets are unchanged.

Revenue equal to costs are typically recognized early in the life of the contract.

When IFRS uses the cost recovery method to account for a long-term contract, Multiple Choice Revenue typically is recognized in excess of costs incurred early in the life of the contract. Costs in excess of revenue are typically recognized early in the life of the contract. Revenue equal to costs are typically recognized early in the life of the contract. Revenue is based on contract completion, not on costs, early in the life of the contract.

Higher than the stated rate of interest.

When a bond issue sells for less than its face value, the market rate of interest is: Dependent on the stated rate of interest. Equal to the stated rate of interest. Higher than the stated rate of interest. Less than the stated rate of interest.

Higher than if the straight-line method were used.

When a firm records bond interest at the effective rate for bonds issued at a discount, its net income in the bond's first year will be: Multiple Choice Less than if the straight-line method were used. Higher than if the straight-line method were used. The same as if the straight-line method were used. None of the above.

The note should be recorded at its present value, discounted at an appropriate market rate of interest, if fair values of the note and machine are unavailable.

When a note is issued in exchange for a machine, and interest on the note is not stated: Multiple Choice The machine should be depreciated over the term to maturity of the note. The note should be recorded at its present value, discounted at an appropriate market rate of interest, if fair values of the note and machine are unavailable. The note and machine are recorded at the face amount of the note or the fair value of the machine, whichever is more clearly determinable. The note is recorded at its face amount unless the fair market value of the machine is readily available.

Construction in progress.

When accounting for a long-term construction contract for which revenue is recognized over time according to the percentage of completion, gross profit is recognized in any year is debited to: Multiple Choice Construction in progress. Billings on construction contract Deferred income Accounts receivable

The cost recovery method.

When accounting for a long-term construction contract under IFRS, if the percentage-of-completion method is not appropriate, the seller should account for revenue using: Multiple Choice The cost recovery method. The completed contract method Either the cost recovery method or the completed contract method Neither the cost recovery method or the completed contract method

A reduction in the investment account.

When applying the equity method, an investor should report dividends from the investee as: Multiple Choice Dividend revenue. An extraordinary item. A reduction in the investment account. An increase in the investment account.

Less than if the straight-line method were used.

When bonds are issued at a discount and interest expense is recorded at the effective interest rate, interest expense in the earlier years of the term to maturity will be: Multiple Choice Less than the cash interest payments made. Less than if the straight-line method were used. Greater that if the straight-line method were used. The same as if the straight-line method were used.

Net realizable value less a normal profit margin.

When reporting inventory using the lower of cost or market, market should not be less than: Multiple Choice Replacement cost. Net realizable value. Selling price. Net realizable value less a normal profit margin.

Recording depreciation expense.

Which of the following adjusting entries causes a decrease in assets? Recognizing the portion of revenue collected in advance. Recording depreciation expense. Accruing unrecorded salaries expense. Accruing unrecorded interest revenue.

Accruing unrecorded interest expense.

Which of the following adjusting entries causes an increase in liabilities? Accruing unrecorded interest expense. Recording the amount of expired prepaid insurance. Accruing unrecorded interest revenue. Recording depreciation expense.

The sum of the undiscounted expected cash flows.

Which of the following approaches cannot be used to determine the fair value of an impaired asset? Prices of similar assets. The market price of the asset. The sum of the discounted expected cash flows. The sum of the undiscounted expected cash flows.

Operating income.

Which of the following captions would more likely be found in a multiple-step income statement? Total expenses. Total revenues and gains. Operating income. All of these answer choices are incorrect.

Must be legally enforceable.

Which of the following characteristics does not describe a liability? Result of a past transaction. Probable future sacrifices. Present obligation. Must be legally enforceable.

Requires the receipt of cash.

Which of the following characteristics does not describe an asset? Probable future economic benefits. Controlled by an entity. Requires the receipt of cash. Result of a past transaction.

The investor believes it is "more likely than not" that there is a non-credit loss on the investment.

Which of the following is NOT a reason why an investor might view a debt impairment as "other than temporary"? The investor intends to sell the investment The investor believes it is "more likely than not" that the investor will be required to sell the investment prior to recovering the amortized cost of the investment less any credit losses arising in the current year. The investor determines that a credit loss exists on the investment. The investor believes it is "more likely than not" that there is a non-credit loss on the investment.

If a receivable is continued, but with modified terms, no loss is typically recorded.

Which of the following is NOT true about accounting for a troubled debt restructuring? If a receivable becomes impaired, it is remeasured at the discounted present value of currently expected cash flows. If a receivable is remeasured, the discount rate is based on the loan's original effective rate. If a receivable is continued, but with modified terms, no loss is typically recorded. Sometimes receivables are settled outright at the time of a restructuring.

An extended warranty.

Which of the following is a separate performance obligation? An extended warranty. A prepayment. A right of return. An option for the customer to purchase additional products under the same terms enjoyed by other new customers.

Most likely amount to be received and expected value of the amount to be received.

Which of the following is an acceptable way to estimate uncertain consideration? Most likely amount to be received. Minimum amount considered likely to be received. Expected value of the amount to be received. Most likely amount to be received and expected value of the amount to be received.

The seller is enhancing an asset that the buyer controls as the service is performed.

Which of the following is an indicator that revenue for a service can be recognized over time? The seller is enhancing an asset that the buyer controls as the service is performed. The seller is providing continuous effort to the buyer. The seller can estimate the percent of work completed. The sales price is fixed and determinable.

Cost effectiveness.

Which of the following is considered a practical constraint on the qualitative characteristics? Verifiability. Conservatism. Cost effectiveness. Timeliness.

All of the above.

Which of the following is consistent with goods and services being distinct for purposes of identifying separate performance obligations? The seller regularly sells the good or service separately. The buyer could use the good or service on its own. The buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere. All of the above.

Interest.

Which of the following is most likely an accrued liability? Depreciation. Interest. Cost of goods sold. Office supplies.

The balance sheet reports the change in financial position.

Which of the following is not a characteristic of the balance sheet? The major classifications of the balance sheet are assets, liabilities, and owners' equity. The balance sheet reports the change in financial position. Assets generally are listed in order of their liquidity. The balance sheet provides information useful in assessing liquidity.

Buyer has scheduled delivery.

Which of the following is not an indicator that control of a good has passed from the seller to the buyer? Buyer has an unconditional obligation to pay. Buyer has legal title. Buyer has scheduled delivery. Buyer has assumed the risk and rewards of ownership.

The seller has significant experience with the customer and anticipates fulfillment of the contract.

Which of the following is not an indicator that revenue for a service can be recognized over time? The customer owns the asset as the seller is constructing it. The customer consumes the benefit of the seller's work as it performed. The asset being constructed has no alternative use to the seller, and the seller has the right to payment for progress to date even if the customer cancels the contract. The seller has significant experience with the customer and anticipates fulfillment of the contract.

Based on much experience with the customer, the seller anticipates a more-than-remote chance that the receivable will prove uncollectible.

Which of the following is not an indicator that the seller may need to constrain recognition of variable consideration? Uncertainty will not resolve until far into the future. Based on much experience with the customer, the seller anticipates a more-than-remote chance that the receivable will prove uncollectible. The seller lacks experience selling similar products. Uncertain amounts are susceptible to important factors beyond the seller's control.

Reasonable profit margin.

Which of the following is not one of the characteristics of a contract for purposes of revenue recognition? Rights. Reasonable profit margin. Approval. Commercial substance.

Estimate the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods and services in the contract.

Which of the following is not one of the steps for recognizing revenue? 1) Identify the performance obligations of the contract. 2) Identify the contract with the customer. 3) Estimate the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods and services in the contract. 4) Allocate the transaction price to the performance obligations.

Overdrafts in one cash account can typically be offset against positive balance in other cash accounts.

Which of the following is true about cash reporting under IFRS? Cash accounts are typically viewed as investments, with overdrafts treated as unrealized losses. Overdrafts in one cash account can typically be offset against positive balance in other cash accounts. Overdrafts are typically treated as current liabilities, regardless of the existence of other cash accounts. Cash accounts are typically viewed as immaterial.

Collectibility of the receivable is considered when determining whether revenue can be recognized.

Which of the following is true about revenue recognition under ASU 2014-09? a) The realization principle guides the ASU. b) Construction contracts are typically broken into the various separate goods and services that are included in them for purposes of revenue recognition. c) The time value of money is considered when estimating all transaction prices. d) Collectibility of the receivable is considered when determining whether revenue can be recognized.

Whether the risks and rewards of ownership have been transferred is sometimes the key factor for determining how to account for a transfer of receivables.

Which of the following is true regarding accounting for transfers of receivables under IFRS? Transfers of receivables can never be treated as a sale of receivables Transfers of receivables can never be treated as a secured borrowing Whether the risks and rewards of ownership have been transferred is sometimes the key factor for determining how to account for a transfer of receivables. none of the above are true.

Purchase of equipment.

Which of the following items would not be included as a cash flow from operating activities in a statement of cash flows? Collections from customers. Interest on note payable. Purchase of equipment. Purchase of inventory.

Retailers' extended warranties.

Which of the following loss contingencies generally do not require accrual? Manufacturers' product guarantees. Claims by government agencies with probable negative outcomes. Obligations due to cash rebate offers. Retailers' extended warranties.

30-day treasury bill.

Which of the following might be classified as a cash equivalent? Cash in a checking account. 30-day treasury bill. Money orders waiting to be deposited. 120-day treasury bill.

Option b

Which of the following results in an accrued liability? Interest on a Sales taxes 6 month bank loan collected on due in two months recent sales a. Yes Yes b. Yes No c. No No d. No Yes

A noncommitted line of credit is a formal agreement that usually requires the firm to pay a commitment fee to the bank.

Which of the following statements concerning lines of credit is untrue? A line of credit is an agreement that permits a company to borrow up to a prearranged limit without having to follow formal loan procedures and paperwork. A noncommitted line of credit is a formal agreement that usually requires the firm to pay a commitment fee to the bank. Banks sometimes require the company to maintain a compensating balance on deposit with the bank (say 5%) as part of the line of credit agreement. Most short-term bank loans are arranged under an existing line of credit.

If the investor owns 20-50 percent of the outstanding voting common stock, the equity method always is required.

Which of the following statements is untrue regarding investments in equity securities? If the investor owns less than 20 percent of outstanding voting common stock, the equity method usually is not used. If the investor owns more than 50 percent of the outstanding voting common stock, the financial statements are consolidated If the investor owns 20-50 percent of the outstanding voting common stock, the equity method always is required. If the investor owns less than 20 percent of outstanding voting common stock, the securities generally are reported at their fair value.

Repairs and maintenance.

Which of the following types of subsequent expenditures is not normally capitalized? Additions. Improvements. Repairs and maintenance. Rearrangements.

Debt to equity.

Which ratio most directly indicates the extent of the company's reliance on financial leverage? Multiple Choice Times interest earned. Debt to equity. Return on shareholders' equity. Current ratio.

$40.

Winchell wrote a contract that involves two performance obligations. Product A has a stand-alone selling price of $50, and product B has a stand-alone selling price of $100. The price for the combined product is $120. How much of the transaction price would be allocated to the performance obligation for delivering product A? Multiple Choice $50. $40. $30. $20.

$20.

Winchell wrote a contract that involves two separate performance obligations. Winchell cannot estimate the stand-alone selling price of product A. Product B has a stand-alone selling price of $100. The price for the combined product is $120. How much of the transaction price would be allocated to the performance obligation for delivering product A? Multiple Choice $50. $40. $30. $20.

A gain of $5,000.

Wolf Computer exchanged a machine with a book value of $40,000 and a fair value of $45,000 for a patent. In addition to the machine, $6,000 in cash was given. Wolf should recognize: Multiple Choice A gain of $11,000. A loss of $1,000. A gain of $5,000. No gain or loss.

A debit to cash and a credit to note payable.

he journal entry to record the borrowing of cash and the signing of a note payable involves:

A debit to office supplies expense.

he replenishment of a petty cash fund might include which of the following? A debit to cash. A debit to petty cash. A debit to office supplies expense. A credit to petty cash.

$891,000

to International Financial Reporting Standards. At the end of its 2016 fiscal year, the company chooses to revalue its equipment. The equipment cost $810,000, had accumulated depreciation of $360,000 at the end of the year after recording annual depreciation, and had a fair value of $495,000. After the revaluation, the equipment account will have a balance of: Multiple Choice $810,000 $891,000 $495,000 All of these answer choices are incorrect.