1) Which of the following is NOT considered cash for financial reporting purposes?
2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?
3) Which of the following items should NOT be included in the Cash caption on the balance sheet?
4) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?
5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because
6) Which of the following methods of determining bad debt expense does NOT
properly match expense and revenue?
7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear
8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be
9) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inven tory results in
10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its
11) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for
12) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
13) In no case can market in the lower-of-cost-or-market rule be more than
14) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?
15) When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term market ?
16) The retail inventory method is based on the assumption that the
17) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported
18) When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because
19) Which of the following is NOT a major characteristic of a plant asset?
20) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
21) The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to
22) The period of time during which interest must be capitalized ends when
23) Which of the following costs are capitalized for self-constructed assets?
24) When computing the amount of interest cost to be capitalized, the concept of avoidable interest refers to
25) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be
27) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is
28) Which of the following most accurately reflects the concept of depreciation as used in accounting?
29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
30) The term depreciable cost, or depreciable base, as it is used in accounting, refers to
31) Lennon Company purchased a depreciable asset for $200,000. The estimated salvage value is $10,000, and the estimated useful life is 10,000 hours. Lennon used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?
32) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
33) Pine Company purchased a depreciable asset for $360,000. The estimated salvage value is $24,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?
34) Under current accounting practice, intangible assets are classified as
35) Factors considered in determining an intangible assets useful life include all of the following EXCEPT
36) Which of the following methods of amortization is normally used for intangible assets
37) Mining Company acquired a patent on an oil extraction technique on January 1, 2006 for $5,000,000. It was expected to have a 10 year life and no residual value. Mining uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $600,000 per year for the next eight years. The present value of these cash flows, discounted at Minings market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?
38) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008?
39) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Products books for a total of $1,700,000, including the goodwill. An analysis of Special Products Divisions assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007?
40) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some negative goodwill. Proper accounting treatment by Easton is to report the amount as
42) The reason goodwill is sometimes referred to as a master valuation account is because
43) Which of the following items is a current liability?
44) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT
45) Stock dividends distributable should be classified on the
46) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
48) Wellman Company self insures its property for fire and storm damage. If the company were to obtain insurance on the property, it would cost them $1,000,000 per year. The company estimates that on average it will incur losses of $800,000 per year. During 2007, $350,000 worth of losses were sustained. How much total expense and/or loss should be recognized by Wellman Company for 2007?
49) A contingency can be accrued when
50) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?
51) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroads offer. The Railroads 2007 financial statements should include the following related to the incident:
52) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
53) An example of an item which is NOT a liability is
54) Bonds for which the owners names are NOT registered with the issuing corporation are called
55) Which of the following best describes current practice in accounting for leases?
56) Minimum lease payments may include a
57) Which of the following is a correct statement of one of the capitalization criteria?
58) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income
59) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as
60) The amount to be recorded as the cost of an asset under capital lease is equal to the