1. Which of the following statements about dollar-value LIFO is not true? Dollar-value LIF

a. assumes that inventory is a quantity of value rather than a quantit

b. measures increases and decreases in inventory in dollar amounts rather than in the number of objects

c. eliminates the need for taking a physical inventory

d. None of the above is false

2. BOZ Co. has determined its year-end inventory on a FIFO basis to be $500,000. Information pertaining to that inventory follows:

Estimated selling price	$508,000
Estimated cost of disposal	20,000
Normal profit margin	60,000
Current replacement cost	455,000

BOZ records losses that result from applying the lower-of-cost-or-market (LCM) rule. At its year-end, what should be the net carrying value of BOZs inventory?

a. $500,000

b. $488,000

c. $455,000

d. None of the above is correct

3. The amount of interest to capitalize during the construction of a qualified asset is the

• lower of specific interest or avoidable interest
• lower the avoidable or actual interest
• lower the specific or actual interest
• higher of specific or lower interest

4. Which of the following has no effect on comprehensive income?

a. Unrealized gains and losses on held-to-maturity investments

b. Unrealized gains and losses on available-for-sale investments

c. Unrealized gains and losses on trading securities

d. Realized gains and losses on available-for-sale securities that were held in previous periods

5. Dede entered into a 10-year lease of equipment for $5,000 a year, payable at the beginning of each year. At the end of thelease, the equipment will probably be worthless. If Dedes incremental borrowing rate is 10 percent and the lessors implicit interest rate, which Dede is aware of, is 8 percent, Dede should record a

a. expense of $5,000

b. asset of $5,000

c. asset of $33,795

d. None of the above

6. The journal entry in the sellers books to record an account deemed uncollectible in a factoring agreement with recourse would include a

		a. debit to Bad Debt Expense
		b. debit to Allowance for Uncollectible Accounts
		c. debit to Accounts Receivable
		d. None of the above

7. Bogus Co. exchanged Building 42 which has an appraised value of $4,800,000, a cost of $7,590,000, and accumulated depreciation of $3,600,000 for Building X belonging to Good Co. Building X has an appraised value of $4,512,000, a cost of $9,030,000, and accumulated depreciation of $4,752,000. The correct amount of cash was also paid. Assume depreciation has already been updated. What gain or loss did Bogus recognize on the exchange, assuming no commercial substance?

		a. 48,600 loss
		b. 24,000 gain
		c. 0 gain/loss
		d. None of the above

8. Which of the following is not an equity security?

		a. Common stock
		b. Warrants
		c. Call Options
		d. Redeemable preferred stock with a mandatory redemption period

9. Interest received from available-for-sale debt securities should be reported as

	a. an unrealized holding gainincome
	b. an unrealized holding gainequity
	c. other revenue on the income statement
	d. a reclassification adjustment on the statement of comprehensive income

10. The Bubba Company uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. The average gross profit rate is 25 percent of sales. The following data relate to the month of May:

Inventory cost, May 1	$30,000
Purchases during the month at cost	80,400
Sales	100,800
Sales returns	3,600

Using the data above, what is the estimated ending inventory at May 31?

11. The Big Bubba Company began operations on January 1, 2004 and used the FIFO method to assign cost to its inventory. Management is considering a change to the LIFO method. Given the following information: a change to the LIFO method in 2005 would result in net income for 2005 of

Final inventory	2004		2005
FIFO	$24,000		$27,000
LIFO	20,000		21,000
Net income (per FIFO)	$12,000		$17,000

Based on the above information, a change to the LIFO method in 2005 would result in net income for 2005 of

A 11,000

B 15,000

C 17,000

D 23,000

12. Consider the following information for YumYum Inc. as of December 31, 2015:

YumYum has a service contract with a maintenance company. The contract is for cleaning services at a rate of $3,000 per month. The maintenance company bills YumYum semiannually on October 1 and April 1. The contract commenced on October 1, 2015. During 2015, YumYum received advances from customers for the first time. Total collections in 2015 were $100,000. At December 31, 2015, $30,000 of the advances had not been earned. In 2015, YumYum had 50 employees. Each employee earned 10 days of vacation pay. The actual rate for 2005 was $300 per day. During 2015, 10 employees used all of their vacation days for 2015. At January 1, 2015, the Vacation Payable account had a balance of $10,000.

What is the amount of accrued liability for maintenance at December 31, 2015?

		a. $3,000
		b. $9,000
		c. $12,000
		d. $18,000

13. Consider the following information for YumYum Inc. as of December 31, 2015: YumYum has a service contract with a maintenance company. The contract is for cleaning services at a rate of $3,000 per month. The maintenance company bills YumYum semiannually on October 1 and April 1. The contract commenced on October 1, 2015. During 2015, YumYum received advances from customers for the first time. Total collections in 2015 were $100,000. At December 31, 2015, $30,000 of the advances had not been earned.

In 2015, YumYum had 50 employees. Each employee earned 10 days of vacation pay. The actual rate for 2005 was $300 per day. During 2015, 10 employees used all of their vacation days for 2015. At January 1, 2015, the Vacation Payable account had a balance of $10,000.

What is the amount of liability for advances from customers at December 31, 2015?

• $30,000
• $70,000
• $100,000
• $130,000

14. Consider the following information for YumYum Inc. as of December 31, 2015:

YumYum has a service contract with a maintenance company. The contract is for cleaning services at a rate of $3,000 per month. The maintenance company bills YumYum semiannually on October 1 and April 1. The contract commenced on October 1, 2015. During 2015, YumYum received advances from customers for the first time. Total collections in 2015 were $100,000. At December 31, 2015, $30,000 of the advances had not been earned.

In 2015, YumYum had 50 employees. Each employee earned 10 days of vacation pay. The actual rate for 2005 was $300 per day. During 2015, 10 employees used all of their vacation days for 2015. At January 1, 2015, the Vacation Payable account had a balance of $10,000.

What is the amount of Vacation Payable at December 31, 2015?

		a. debit to Vacation Payable
		b. credit to Payroll Expense
		c. credit to Cash
		d. credit to Vacation Payable