12. The Claxton Company manufactures children's toys and also has a division that makes automobile parts. Due to a change in its strategic focus, the company sold the automobile parts division. The division qualifies as a component of the entity according to GAAP. How should Claxton report the sale in its 2016 income statement?

A) Report it as restructuring costs.

B) Report it as a discontinued operation.

C) Report the income or loss from the discontinued operations in operations.

D) Report it as a gain on investments.

13. Here is the cash account in the ledger. What is the investing activities of the cash flow statement?

Cash received from:
Customers	$ 1,800
Interest on investments	200
Sale of land	100
Sale of Rowdys capital stock	600
Issuance of debt securities	2,000
Cash paid for:
Interest on debt	$ 300
Income tax	80
Debt principal reduction	1,500
Purchase of equipment	4,000
Purchase of inventory	1,000
Dividends on capital stock	200
Operating expenses	500

A) (4000)

B) 100

C) (3900)

D) (1900)

14. Rent collected in advance is:

A) An asset account in the balance sheet.

B) A liability account in the balance sheet.

C) A shareholders equity account in the balance sheet.

D) A temporary account in the balance sheet.

15. On June 1^st, Lucy received an order for 500 cupcakes which were delivered on June 25. A deposit of $50 was paid on June 5. The remaining $450 was paid on June 30. Lucy would recognize revenue on:

A) June 1

B) June 5

C) June 25

D) June 30

16. Goods and services are capable of being distinct if:

A) The seller regularly sells the good or service separately.

B) A buyer could use the good or service on its own.

C) A buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere.

D) The seller regularly sells the good or service separately, or the buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere.

17. A company received a written, approved contract to deliver economic consulting services, with service and payment commending in one month. The contract specifies the services that the company is to perform and the payment terms. The company and the customer both can cancel the contract without penalty prior to commencing the service. Does the company have a contract for revenue recognition on the day the contract is received?

A) Yes because there is a contract.

B) No, because they can cancel and nothing has been done.

C) Maybe depending on whether the receivable can be estimated.

D) Not enough data to decide.

18. At the end of each quarter, Patti deposits $500 into an account that pays 12% interest compounded quarterly. How much will Patti have in the account in three years?

A) 7096.

B) 7213.

C) 7129.

D) 8880.

19. Shelley wants to cash in her winning lottery ticket. She can either receive ten $100,000 payments starting today, or she can receive a lump sum payment now based on a 6% return. What is the equivalent lump sum amount? (We are assuming that the two values are equal.)

A) 853020.

B) 810969.

C) 744090.

D) 878611.

20. If Mary wants to know how much money she would have after investing in her interest earning checking account, she would probably use which table to get an estimate of this value?

A) FV annuity of 1

B) FV of 1

C) FV of annuity due

D) PV of annuity due.

21. An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this investment should produce a rate of return of 12%, compounded annually, what's the most the investor should be willing to pay for the investment?

A) 15146

B) 13523

C) 42000

D) 130446

22. What do we call a series of payments that are made beginning with the period after the start date?

A) A deferred annuity.

B) An ordinary annuity.

C) An annuity due.

D) A delayed annuity with present value.