fall10mid1_probandsoln(1)

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Name: ___________________________________ Date: ______________ 1. A common set of accounting standards and procedures are called A) financial accounting standards. B) generally accepted accounting principles. C) objectives of financial reporting. D) statements of financial accounting concepts. 2. The most significant current source of generally accepted accounting principles is the A) AICPA. B) SEC. C) APB. D) FASB. 3. The objectives of financial reporting include all of the following except to provi
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  Name: ___________________________________ Date: ______________1. A common set of accounting standards and procedures are calledA) financial accounting standards.B) generally accepted accounting principles.C) objectives of financial reporting.D) statements of financial accounting concepts.2. The most significant current source of generally accepted accounting principles is theA) AICPA.B) SEC.C) APB.D) FASB.3. The objectives of financial reporting include all of the following except to provideinformation thatA) is useful to the Internal Revenue Service in allocating the tax burden to the businesscommunity.B) is useful to those making investment and credit decisions.C) is helpful in assessing future cash flows.D) identifies the economic resources (assets), the claims to those resources (liabilities),and the changes in those resources and claims.4. Information is neutral if itA) provides benefits which are at least equal to the costs of its preparation.B) can be compared with similar information about an enterprise at other points in time.C) would have no impact on a decision maker.D) is free from bias toward a predetermined result.5. Which of the following is an argument against using historical cost in accounting?A) Fair values are more relevant.B) Historical costs are based on an exchange transaction.C) Historical costs are reliable.D) Fair values are subjective.6. Accounting concepts—identification.Presented below are a number of accounting procedures and practices in Ramirez Corp.For each of these items, choose which of the following -- Conservatism, Consistency, EconomicEntity, Historical Cost, Matching, Periodicity, Revenue Recognition -- is violated.i. Because the company's income is low this year, a switch from accelerated depreciationto straight-line depreciation is made this year.ii. The president of Ramirez Corp. believes it is foolish to report financial informationon a yearly basis. Instead, the president believes financial information should be disclosedonly when significant new information is available related to the company's operations.  iii. Ramirez Corp. decides to establish a large loss and related liability this year becauseof the possibility that it may lose a pending infringement lawsuit. The possibility of lossis considered remote by its attorneys.iv. An officer of Ramirez Corp. purchased a new home computer for personal use withcompany money, charging miscellaneous expense.v. A machine, that cost $40,000, is reported at its current market value of $45,000.7. Which of the following is a recordable event or item?A) Changes in managerial policyB) The value of human resourcesC) Changes in personnelD) None of these8. An adjusting entry should never includeA) a debit to an expense account and a credit to a liability account.B) a debit to an expense account and a credit to a revenue account.C) a debit to a liability account and a credit to revenue account.D) a debit to a revenue account and a credit to a liability account.9. An accrued revenue can best be described as an amountA) collected and currently matched with expenses.B) collected and not currently matched with expenses.C) not collected and currently matched with expenses.D) not collected and not currently matched with expenses.10. Mune Company recorded journal entries for the declaration of $50,000 of dividends, the$32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners' equity?A) Decrease of $71,000.B) Decrease of $39,000.C) Decrease of $18,000.D) Increase of $11,000.11. In November and December 2010, Lane Co., a newly organized magazine publisher,received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with theJanuary 2011 issue. Lane included the entire $90,000 in its 2010 income tax return. Whatamount should Lane report in its 2010 income statement for subscriptions revenue?A) $0.B) $5,000.C) $30,000.D) $90,000.  12. Data relating to the balances of various accounts affected by adjusting or closing entriesappear below. (The entries which caused the changes in the balances are not given.) Youare asked to supply the missing journal entries which would logically account for thechanges in the account balances.i. Interest receivable at 1/1/10 was $1,000. During 2010 cash received from debtors forinterest on outstanding notes receivable was 4,000. The 2010 income statement showedinterest revenue in the amount of $5,400. You are to provide the missing adjusting entryth ey made, assuming reversing entries are not made.ii. Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $8,000. The records indicatecash receipts from rental sources during 2010 $40,000, all of which was credited to theUnearned Rent Account. You are to prepare the missing adjusting entry.iii. Accumulated depreciation—equipment at 1/1/10 was $230,000. At 12/31/10 thebalance of the account was $270,000. During equipment was sold. The equipment had ansrcinal cost of $40,000 and was 3/4 depreciated when sold. You are to prepare the entry.iv. Allowance for doubtful accounts on 1/1/10 was $50,000. The balance in the allowanceaccount on 12/31/10 after making the annual was $65,000 and during 2010 bad debtswritten off amounted to $30,000. You are to provide the missing adjusting entry.v. Prepaid rent at 1/1/10 was $9,000. During 2010 rent payments of $120,000 were madeand charged to rent expense. The 2010 shows as a general expense the item rentexpense in the amount of $125,000. You are to prepare the missing adjusting entry thatmade, assuming reversing entries are not made.vi. Retained earnings at 1/1/10 was $150,000 and at 12/31/10 it was $210,000. During2010, cash dividends of $50,000 were paid and stock dividends of $40,000 were issued. Both dividends were pr  operly charged to retained earnings. You are to provide the missing closing entry.13. When a company discontinues an operation and disposes of the discontinued operation(component), the transaction should be included in the income statement as a gain or losson disposal reported asA) a prior period adjustment.B) an extraordinary item.C) an amount after continuing operations and before extraordinary items.D)a bulk sale of plant assets included in income from continuing operations.14. Comprehensive income includes all of the following except  A) dividend revenue.B) losses on disposal of assets.C) investments by owners.D) unrealized holding gains.15. For Mortenson Company, the following information is available:In Mortenson's multiple-step income statement, gross profitA) should not be reportedB) should be reported at $13,500.C) should be reported at $40,000.D) should be reported at $42,500.  16. An income statement shows “income before income taxes and extraordinary items” in theamount of $2,055,000. The income taxes payable for the year are $1,080,000, including$360,000 that is applicable to an extraordinary gain. Thus, the “income beforeextraordinary items” isA) $1,335,000.B) $615,000.C) $1,395,000.D)$675,000.17. Multiple-step income statement. Instructions Prepare in good form a multiple-step income statement for the year 2011. Assume a 30%tax rate and that 80,000 shares of common stock were outstanding during the year. 18. Jane wants to set aside funds to take an around the world cruise in four years. Jane expectsthat she will need $12,000 for her dream vacation. If she is able to earn 8% per annum on aninvestment, how much will she need to set aside at the beginning of each year to accumulatesufficient funds? A) $2,663.B) $16,325.C)$8,820.D)$2,466. 19. Crone Co. has machinery that cost $80,000. They would like to lease it for 15 years to Jonesand Sons with rent received at the beginning of each year. Crone wants a return of 10%.Compute the amount of the annual rent it must charge to Jones and Sons.
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