1

On December 31, 2010, the CPA Company had 100,000 shares of common stock issued and outstanding. On July 1, 2011, the company sold 20,000 additional shares for cash. CPA's net income for the year ended December 31, 2011 was $650,000. During 2011, CPA declared and paid $89,000 in cash dividends on its nonconvertible preferred stock. What is the 2011 basic earnings per share?

		5.91
		5.61
		5.10
		None of the above

2.

If the market interest rate of a bond is the same as the face interest rate, then the bond is selling at

		a premium
		a discount
		at face value
		none of the above

3. Assume that on January 1, 2005, W Company issues bonds with a face value of $100,000 that pay 10 percent interest, semiannually (5 percent per period) and mature in five years. Assume that the market interest rate at the date of issuance is 8 percent (4 percent per semiannual period). What is the issue price of the bond?

		$100,000
		$108,111
		$121,880
		$126,948

4. Bonds that can be retired by the issuer at a specified price before the maturity date are called

convertible bond

serial bond

callable bond

none of the above

5. Which organization lists transparency as one of its principles of social responsibilities?

Ithe ISO

the GRI

the SASB

none of the above

6. If you were interested in reviewing J & J Products' sustainability report, which organization's website would you most likely go to?

		the ISO
		the GRI
		the SASB
		the IDMB

7. A deferred tax account should be established in order to allocate income tax differences reflecting the tax impact of

permanent differences

temporary differences

both temporary and permanent difference

none of the above

8. The Moore Company has sales of $500,000 that are recorded for book purposes in 2014. For tax purposes, the company uses the installment sales method, resulting in revenue of $150,000 in 2014 and $350,000 in 2015. A temporary difference of $350,000 originates in 2014 and reverses in 2015. Assume that the enacted tax rate for 2014 is 30 percent and that the enacted tax rate for 2015 is 40 percent and is known at the time the Deferred Tax account is established. The deferred tax for the year 2014 results in a Deferred Tax

		Asset debit entry of $105,000
		Liability credit entry of $105,000
		Asset debit entry of $140,000
		Liability credit entry of $140,000.

9. Assume the following facts for Moore Company in 2015:

Book income before tax: $800,000. The following items were included in income:

Interest income of $80,000 was received from an investment in municipal bonds. This income is exempt for tax purposes.

Rent income of $20,000 was collected in 2014 and included for tax purposes. For book purposes, it was reported as earned in 2015.

The following items were deducted from income:

An asset was purchased during 2015, and depreciation for book purposes was $40,000. There was $100,000 deducted for tax purposes.

Warranty expense of $20,000 was recognized for book purposes, while $5,000 was recognized for tax purposes. (Assume a one-year warranty contract.)

The balance of the Deferred Tax Asset account (debit) at January 1, 2015, was $8,000 as a result of the rent income temporary difference. The tax rate for all years was 40 percent. What is the amount of taxable income for tax purposes?

		655,000
		625,000
		735,000
		755,000

10. Moore Company had book income before tax of $800,000 in 2015. The following items were included in book income before tax:

Tax-exempt municipal bond interest income of $80,000.

Rent income of $20,000 that was collected and included in income for tax purposes in 2014 but reported for book purposes as earned in 2015.

Tax depreciation in excess of book depreciation of $60,000.

Warranty expense of $20,000 was recognized for book purposes, while $5,000 was recognized for tax purposes. (Assume a one-year warranty contract.)

The balance of the Deferred Tax Asset account (debit) at January 1, 2015, was $8,000 as a result of the rent income temporary difference. The tax rate for all years was 40 percent. What is the balance of the Deferred Tax Liability account at the end of 2015?

		24,000
		18,000
		8,000
		6,000

11Assume that on January 1, 2015, Walt Company issues bonds with a face value of $300,000 that pay 6 percent interest, semiannually (3 percent per period)

and mature in 10 years. Assume that the market interest rate at the date of issuance is 10 percent (5 percent per semiannual period). What is the issue price of the

bond?

		300,000
		226,265
		225,227
		210,111

12. Assume that a bond is issued with the following characteristics:

Date of bonds: January 1, 2015; maturity date: January 1, 2020; face value: $200,000; face interest rate: 10 percent paid semiannually (5 percent per period); market interest rate: 8 percent (4 percent per semiannual period); issue price: $216,222; bond premium is amortized using the straight-line method of amortization. What is the amount of bond premium amortization for the June 30, 2015, adjusting entry?

		811
		8,111
		16,222
		1,622

13. Which of the following sustainability reporting qualities is the least important when evaluating the sustainability efforts of a company?

		Balance
		Timeliness
		Accuracy
		Clarity 14.

Which of the following entities/organizations is the latest to enter the sustainability standards arena?

		the ISO
		The GRI
		The SASB
		The AICPA
15

Bond carrying value is the

		total amount due on the bond
		future value of the bond
		same as the face value of the bond
		present value of the bond