Reference no: EM13376988

1. Goodwill is reported on a consolidated balance sheet only if it was acquired in the merger or acquisition.   TRUE/FALSE
2. Coleman Company has provided the following information: beginning inventory, $100,000; cost of goods sold, $450,000; and ending inventory, $80,000. How much were Coleman's inventory purchases? 
   A. $450,000
   B. $410,000
   C. $430,000
   D. $420,000
3. Patents, trademarks, and franchises are examples of tangible assets.   TRUE/FALSE
4. How is the quick ratio calculated? 
   A. It is current assets minus current liabilities.
   B. It is current assets divided by current liabilities.
   C. It is quick assets divided by current liabilities.
   D. It is current liabilities divided by current assets.
5.  Selling inventory on account increases the quick ratio.  TRUE/FALSE
6.  Which of the following bonds does not have specific assets pledged to guarantee repayment? 
   A. Debenture bond
   B. Callable bond
   C. Discount bond
   D. Convertible bond
7. There would be 100,000 shares of common stock outstanding when the number of shares authorized was 150,000, issued shares totaled 120,000, and 20,000 shares were being held in the treasury.   TRUE/FALSE
8. Idaho Company purchased 30% of the outstanding preferred stock (nonvoting) of Potato Corporation as a long-term investment. Which of the following classifications should be used by Idaho Company in accounting for the investment? 
   A. Trading securities.
   B. Held-to-maturity.
   C. Available-for-sale.
   D. Consolidation.
9. If a bond is bought at a discount, then interest revenue will be less than the cash payment. 
   TRUE/FALSE
10. Which of the following represents the maximum number of shares of stock issuable to the public? 
    A. Authorized shares
    B. Issued shares
    C. Outstanding shares
    D. Treasury shares
11. The use of raw materials in the manufacturing process is reported as an operating expense on the income statement.   TRUE/FALSE
12. Which of the following accounts would not be considered a tangible asset? 
    A. Buildings
    B. Land
    C. Equipment
    D. Patents
13. A large retail department store probably would use the specific identification inventory costing method for most of the items in its inventory.  TRUE/FALSE
14. Use of the consolidated financial statement method of accounting for a long-term investment in common stock of another company is required when the ownership of its voting stock is 
    A. 20% or more.
    B. less than 20%.
    C. between 20% and 50%.
    D. more than 50%.
15. Tangible long-lived productive assets differ from intangible long-lived productive assets in that tangible assets have physical substance whereas intangible assets have no physical substance. 
    TRUE/FALSE
16. On March 1, Wright Company purchased new equipment for $50,000 by paying cash. Other costs associated with the equipment were: transportation costs, $1,000; sales tax paid $3,000; and installation cost, $2,500. At what amount will the equipment be recorded at on a balance sheet? 
    A. $56,500
    B. $54,000
    C. $51,000
    D. $50,000
17. The FICA (social security) tax is a matching tax with a portion paid by both the employer and the employee.   TRUE/FALSE
18. Which of the following is not a current liability? 
    A. A liability due within one-year for a business with a fifteen-month operating cycle.
    B. A liability due within three months for a business with a two-month operating cycle.
    C. A liability due within one-year for a business with a nine-month operating cycle.
    D. A liability due within fifteen months for a business with a one-year operating cycle.
19. The major disadvantages of issuing a bond are the risk of bankruptcy and the negative impact on cash flow because debt must be repaid at a specified date in the future.   TRUE/FALSE
20. Which of the following statements is correct? 
    A. A secured bond has specific assets pledged as collateral to secure it.
    B. An unsecured bond can be paid at the option of the issuer.
    C. A bond trustee is appointed to represent the issuing company.
    D. The bond indenture specifies the market rate of interest the investors will earn.
21. An advantage of issuing a bond relative to stock is that the bond interest payments are tax deductible.   TRUE/FALSE
22. Which of the following represents the number of shares currently in the hands of investors? 
    A. Authorized shares
    B. Issued shares
    C. Outstanding shares
    D. Treasury shares 
23. Use of the double-declining-balance method of depreciation results in decreasing amounts of depreciation expense over an asset's life.   TRUE/FALSE
24. Which of the following accounts would not be considered an intangible asset? 
    A. Goodwill
    B. Patents
    C. Research and development costs
    D. Trademarks
25. When a liability is initially recorded, it is recorded at the future amount of all payments.  TRUE/FALSE
26.  Which of the following costs is not included as inventory on the balance sheet? 
    A. Raw materials currently being used in the manufacturing process.
    B. Work in process.
    C. Finished goods.
    D. Storage costs for finished goods.
27. Outstanding shares of stock are those shares which a corporation has the ability to issue as documented in its charter in the state where incorporated.   TRUE/FALSE
28. Which of the following statements regarding earnings per share (EPS) is correct? 
    A. It equals net income divided by the number of authorized common shares.
    B. It equals net income divided by the number of outstanding common shares.
    C. It equals net income divided by the number of issued common shares.
    D. It equals net income divided by the number of treasury shares. 
29. Costs of goods available for sale ends up being allocated to both ending inventory and cost of goods sold.   TRUE/FALSE
30. Which of the following would not be classified as property, plant and equipment on a balance sheet? 
    A. Land being held for resale.
    B. Equipment used in the manufacturing process.
    C. A building used as corporate headquarters.
    D. A natural resource being mined. 
31.  A convertible bond can be called for early retirement at the option of the issuing company. 
    TRUE/FALSE
32. Under the LIFO cost flow assumption during a period of inflation, which of the following is false? 
    A. Cost of goods sold will be lower than under FIFO.
    B. Gross margin will be lower than under FIFO.
    C. Income tax expense will be lower than under FIFO.
    D. Ending inventory will be lower than under FIFO.
33. (BONUS) How is goodwill accounted for subsequent to acquisition? 
    A. It should be written off as soon as possible against retained earnings.
    B. It should not be amortized because it has an indefinite life.
    C. It should be written off as soon as possible as an expense.
    D. It is amortized over its estimated useful life.