11. Any method of accounting under which revenues and expenses are measured separately from the receipt and expenditure of cash is known as: ( ) a. cash accounting b. creative accounting c. accrual accounting d. deferral accounting

12. For the year, 20x2, Richards Corporation account balances include the following: ( ) Retained Earnings, December 31 $60,000 Dividends $10,000 Net Income $50,000 Determine the amount of retained earnings as of January 1, 20x2. a. $20,000 b. $120,000 c. $100,000 d. $35,000

13. Which of the following represents a closing entry to close out expenses? ( ) a. debit retained earnings credit expenses b. debit expenses credit retained earnings c. debit expenses credit revenue d. debit expenses credit cash 3

14. The repurchase of common shares represent a(n): ( ) a. revenue b. operating activity c. financing activity d. investing activity

15. The Darcy Co. uses the indirect method to calculate cash flows. The following information pertains to operations for the accounting period January 1, 20x1~December 31, 20x1. Net Income: $430,000 Amortization expense: $10,000 Depreciation expense: $30,000 Accounts receivable balance (Jan. 1) $40,000 Accounts receivable balance (Dec. 31) $50,000 Inventory balance (Jan. 1) $80,000 Inventory balance (Dec. 31) $87,000 Accounts payable balance (Jan. 1) $20,000 Accounts payable balance (Dec. 31) $23,000 Interest payable balance (Jan. 1) $17,000 Interest payable balance (Dec. 31) $19,000 Based upon the above information, determine the amount of cash flows from operations: ( ) a. $458,000 b. $482,000 c. $430,000 d. $378,000

16. The Tull Company uses the indirect method to calculate cash flows. The following information pertains to operations for the period, January 1, 20x2~December 31, 20x2. Net Income: ????? Amortization expense: $20,000 Depreciation expense: $60,000 Accounts receivable balance (Jan. 1) $50,000 Accounts receivable balance (Dec. 31) $60,000 Inventory balance (Jan. 1) $90,000 Inventory balance (Dec. 31) $99,000 Accounts payable balance (Jan. 1) $30,000 Accounts payable balance (Dec. 31) $45,000 Interest payable balance (Jan. 1) $27,000 Interest payable balance (Dec. 31) $29,000 Assuming that cash flow from operations totals $378,000, what must have been the amount of net income for the period? ( ) a. $82,000 b. $481,000 c. $418,000 d. $300,000 4

17. On a conceptual level, the economic value of an asset equals: ( ) a. the maturity value b. the present value of the principal amount to be paid at maturity c. the present value of the cash flows to be generated over the life of the asset d. none of the above

18. Suppose your bank account indicates a balance of $219.11 on December 31, 2019. Assuming that you initially deposited $100 on January 1, 2010 and made no withdrawals, what interest rate must have you earned? Assume that interest is compounded semi-annually. ( ) a. 4% b. 4.2% c. 4.3% d. none of the above

19. You are entitled to receive $100 at the end of each year forever, starting on December 31 of year 3. Assuming that you can sell your right to receive these cash flows, at what price are you willing to sell it now (that is, on January 1 of year 1)? Your time value of money is 3% per annum. ( ) a. $3,236.25 b. $3,333.33 c. $3,141.99 d. none of the above

20. If you deposited $100 in a bank at 3% interest on January 1, 2015 how much would you have in the account on December 31, 2019 if you withdrew $3 on each December 31 from December 31, 2015 to December 31, 2019? (Assume the December 31, 2019 withdrawal was made). Interest is compounded annually. ( ) a. $115.93 b. $109.57 c. $103.93 d. $100.00

21. Suppose a bond with $2,000 face value, 4% coupon will mature 10 years from today. The coupon will be paid quarterly. How much are you willing to pay for this bond, assuming that the market interest rate for a similar bond is 5%. ( ) a. $1,869.98 b. $1,843.37 c. $1,813.73 d. $1,809.31

22. You will receive $100 at the beginning of each year forever, starting now. Assuming that you can sell your right to receive these cash flows, at what price are you willing to sell it now? Your time value of money is 3% per annum. ( ) a. $3,433.33 b. $3,333.33 c. $3,141.99 d. none of the above

23. If you deposited $100 in a bank at 3% interest at the beginning of each year, starting on January 1, 2015, how much would you have in the account on December 31, 2019? (Note: the January 1, 2019 deposit is the last one). Interest is compounded annually. ( ) a. $530.91 b. $546.84 c. $646.84 d. $730.91 5

24. If a company neglects to make the adjusting entry for interest payable at year end, this will result in: ( ) a. understatement of liabilities and understatement of net income for the year. b. understatement of liabilities and overstatement of net income for the year. c. understatement of equity and overstatement of net income for the year. d. understatement of equity and understatement of net income for the year.

25. Which of the following can be an adjusing entry at year end? ( ) a. debit assets credit revenues b. debit expenses credit retained earnings c. debit cash credit revenue d. debit expenses credit cash

26. Lu Company realizes a $2,000 loss on the sale of a computer. If it is sold for $10,000, what must be the book value of the computer at the time of the sale? ( ) a. $10,000 b. $8,000 c. $4,000 d. $12,000

27. Common stock cash dividends paid out by a company represent: ( ) a. expenses b. revenues c. assets d. distributions to owner

28. Below is a trial balance for the Joyal Company: ( ) cash $1,000 accounts receivable $2,000 supplies $500 equipment ???? common stock $5,000 revenue $2,000 expenses $500 Determine the amount of equipment. a. $7,000 b. $5,000 c. $1,000 d. $3,000

29. The following journal entry represents: ( ) Allowance for doubtful accounts XXX Accounts receivable XXX a. recognition of sales on credit b. collection of cash from a previous credit sale c. writing off accounts that the firm knows will not be collected d. recording bad debt expense in anticipation of not collecting 100 percent of receivables

30. Smythe Company expects that 2.25% of their gross accounts receivable will not be collected. If Smythe has net accounts receivables of $499,000, what must be the balance in the allowance for doubtful accounts? ( ) a. $83,000.00 b. $75,000.00 c. $150,000.00 d. $11,485.93 6

31. The following information applies to Destafano Company for the year 20x3: ( ) Sales on account $800,000 Average accounts receivable $100,000 Determine the days receivable outstanding: a. 54.36 days b. 365 days c. 8 days d. 45.63 days

Use the following information to answer questions 32~34

: During 20x1, Rogerio Corporation experienced the following: credit sales: $2,000,000 collections on credit sales: $1,500,000 write-offs of accounts deemed uncollectible: $20,000 an aging analysis of accounts deemed uncollectible at 12/31/2x1 shows $40,000 of potentially uncollectible accounts Note:The balance of allowance for doubtful accounts on 1/1/20x1: $23,000

32. The journal entries for the write-offs during 20x1 is: ( ) a. Accounts receivable 20,000 Allowance for doubtful accounts 20,000 b. Bad debt expense 20,000 Accounts receivable 20,000 c. Allowance for doubtful accounts 20,000 Accounts receivable 20,000 d. Bad debt expense 20,000 Allowance for doubtful accounts 20,000

33. How much bad debt expense will be reported in Rogerios 20x1 income statement? ( ) a. $37,000 b. $38,000 c. $40,000 d. $43,000

34. What is the net realizable value of Rogerios accounts receivable at 12/31/20x1? ( ) a. $480,000 b. $460,000 c. $443,000 d. $440,000

35. In the perpetual inventory system a physical count of inventory will still be taken at the end of each period: ( ) a. to determine the economic value of the ending inventory b. to determine the cost of purchases during the period c. to determine the amount of inventory shrinkage from evaporation (as in case of gasoline), damage, theft, etc. d. to determine the cost of goods sold 7

36. If inventory prices are falling, the LCM rule pushes the market-to-book ratio (= the market value divided by the book value of inventory): ( ) a. to zero b. towards one c. away from one d. none of the above

37. The following information pertains to the Moreau Corporation for 20x2: ( ) Net income: $345,000 Cost of goods sold: $143,000 January 1, 20x2 inventory: $75,000 December 31, 20x2 inventory: $85,000 Based upon the above information, determine the inventory turnover. a. 1.79 times b. 0.56 times c. 17.9 times d. 5.6 times

38. Upon graduation, you secure a position as a financial analyst with Low Company. Unfortunately, your predecessor did not keep good records. Your supervisor has asked you to forecast sales based upon only the following information: Days inventory held: 14.6 days Average inventory: $300,000 Gross profit ratio: 0.75 Based upon the above information, determine the expected amount of sales. ( ) a. $400,000 b. $225,000 c. $1,300,000 d. $30,000,000

39. Virtual Memory Tech uses the Lower of Cost or Market approach to inventory valuation. On December 31, 20x5, Virtual Memorys inventory book value indicated a cost of $320,000. The corresponding replacement cost of this inventory (market value) on the same date is $330,000. After making any necessary adjustment on December 31, 20x5, what will be the book value of its inventory on January 1, 20x6? ( ) a. $330,000 b. $10,000 c. $320,000 d. $35,000

40. __________ would produce the least amount of inventory in periods of falling prices. ( ) a. FIFO b. LIFO c. Average cost d. It depends on whether the inventory level has decreased or increased

. 41. ___________ would be the preferred method in the U.S. for start-ups and companies paying no income taxes in periods of rising prices. ( ) a. FIFO b. LIFO c. Average cost d. It depends on whether the inventory level has decreased or increased. 8 Use the following information to answer questions

42~44. The inventory information pertains to Cellular Solutions Inc. Number of units Cost per unit Total cost Inventory, January 1 10,000 $5.00 $ 50,000 First purchase Feb. 10 30,000 $7.00 $210,000 Second purchase July 15 10,000 $8.00 $ 80,000 Goods available for sale 50,000 $340,000 Units sold during the year 30,000 Inventory, December 31 20,000

42. Based upon the above information, determine the cost of goods sold assuming that FIFO is used to compute inventory cost. ( ) a. $190,000 b. $220,000 c. $200,000 d. $204,000

43. Based upon the above information, determine the cost of goods sold assuming that LIFO is used to compute inventory cost. ( ) a. $190,000 b. $220,000 c. $200,000 d. $204,000

44. Based upon the above information, determine the cost of goods sold assuming that average costing is used to compute inventory cost. ( ) a. $190,000 b. $220,000 c. $200,000 d. $204,000

45. A very low inventory turnover means: ( ) a. a very long period inventory held. b. a potential signal of obsolete inventories. c. the firm is incurring high opportunity costs. d. all of the above.

46. Suppose by mistake you have counted less of inventory than you actually have at the end of the current accounting period under the periodic system. Which of the following statements is true with respect to your inventory errors? ( ) a. Net income of the current year is understated. b. Cost of goods sold in the next period will be understated. c. Retained earnings as of the end of the next period will be self-corrected after all income statement accounts are closed. d. All of the above

47. The IFRS prohibits the use of LIFO because: ( ) a. LIFO allows firms to maximize corporate income taxes in inflationary periods. b. LIFO inventory costs tend to differ significantly from the current costs. c. LIFO is less likely to allow the application of the lower of cost or market rule. d. All of the above. 9

48. Based upon the following information, determine the amount of sales. ( ) Gross profit ratio: 0.5 Days inventory held: 73 days Average inventory: $150,000 a. $ 500,000 b. $ 750,000 c. $1,500,000 d. None of the above

49. A key difference between active investors and passive investors is that active investors: a. are interested only in earning dividends on their investments ( ) b. are interested only in the market appreciation of shares of stock they own c. seek to purchase stocks in companies with high levels of assets d. seek control over other corporations for strategic purposes

Please answer this questions about multiply choice