2. Employee Stock Ownership Plans (ESOPs):

MULTIPLE CHOICE

		a. will not dilute the proportional ownership of existing shareholders.
		b. may be created for a temporary purpose.
		c. do not produce any tax advantages for plan participants.
		d. may borrow funds from a bank.

3. The following relate to Data Original in 2008. What is the ending inventory?

Purchases	$540,000
Beginning Inventory	80,000
Customer Returns	10,000
Sales	800,000
Cost of Goods Sold	490,000

Multiple Choice

a.

$120,000

b.

$140,000

c.

$210,000

d.

$260,000

4. Which of the following will be disclosed in the reconciliation of retained earnings?

MULTIPLE CHOICE

		a. net income / net loss
		b. adjustment for an error of a prior period
		c. dividends
		d. all of the answers are correct

5. ____?____ are normally classified as a current liability on the balance sheet.

MULTIPLE CHOICE

		a. Prepaid expenses
		b. Land
		c. Inventories
		c. Accounts payable

6. ___?__ is considered a tangible asset.

MULTIPLE CHOICE

a. Equipment

b. A patent

c. A copyright

d. Goodwill

7. If the Investor Company owns 20% of the stock of Investee Company and Investee Company reports profits of $100,000, then Investor Company reports equity income of:

MULTIPLE CHOICE

		a. $80,000
		b. $20,000
		c. $40,000
		d. $60,000

8. A quasi-reorganization:

MULTIPLE CHOICE

		a. may produce a positive balance in retained earnings
		b. will restate retained earnings to zero.
		c. should appear on the income statement as part of continuing operations
		d. requires the approval of a bankruptcy court

9. Which of the following is seldomly a preferred stock characteristic?

MULTIPLE CHOICE

		a. voting rights
		b. call ability by the issuer
		c. accumulation of dividends
		d. preference in liquidation

10. Gross profit is the difference between:

MULTIPLE CHOICE

		a. net income and operating income
		b. revenues and expenses
		c. sales and cost of goods sold
		d. gross sales and sales discounts