1.Which of the following characteristics may result in the classification of a liability being changed from current to noncurrent:
a) violation of a subjective acceleration clause
b) violation of a objective acceleration clause
c) a demand provision for payment
d) refiancing after the balance sheet date
2.Pending litigation would generally be considered:
a) nonmonetary liabilty
b) contingent liability
c) estimated liability
d) current liability
3.Barrons Co. current ratio is 2:1. Which of the following transactions would normally increase Barney's current ratio?
a) purchasing inventory on account
b) borring money by signing a long-term note
c) collecting an account receivable
d) purchasing land for cash
4.On multiple step income statement, gains or losses on sale of equipment would be shown
a) before gross profit on sales
b) after gross profit on sales but before income from conitnuing operations
c) after income from continuing operations but before income from extraordinary items
d) after income before extraordinary items but before net income
5.A single step income statement is a format that
a) compares the current years income with last year's income
b) recongnizes subtotals at intermediate stages such as gross margin
c) combines revenues and gains and subtracts from them expenses and losses, resulting in income from operations
d) reports sales revenue, cost of goods sold, gross margin, and all other expenses
6.In contrast with a multiple-step income statement, a single step income statement does NOT show the amount of
a) income taxes on continuing operations
b) cost of goods sold
c) gross profit
d) earnings per share
7.The amount of income reported for tax purposes
a) is nomally greater than the net income reported to stockholders
b) must be computed according to GAAP
c) is used to compute earnings per share
d) may differ from the amount of income detemined for financial reporting purposes
8.Under the general rule of revenue recognition, revenue is recognized when
a) marketability and market price are assured
b) a contractual agreement exists, and cash collection is assured
c) the earnings process is complete, and a valid promise of payment has been received
d) all related expenses have been incurred
9.Seaworth Company's gross sales in 2014 were 3930000. Assuming sales returns and allowances were 74000 sales discounts were 35000 and freight-out was 28000 what were Seaworthy's net sales in 2014?
a) 3792000
b) 3821000
c)3856000
d) 3930000
10.On June 30, 2014 Sonata COmpanys operating facilities in Nebraska were detroyed by a flood. The loss of $700000 was not covered by insurance. Sonata's tax rate for 2014 is 40 percent. In Sonatas income statement for the year ended sept 30 2014 this event should be reported as an extraordinary loss of
a) 0
b) 280000
c) 420000
d) 700000
11.In a statement of cash flows, payments to acquire debt instruments of other entities would typically be classified as cash outflows for
a) financing activities
b) equity activities
c) operating activities
d) investing activities
12.A gain on the sale of a plan asset in the ordinary course of business should be presented in a staement of cash flows prepared using the indirect method as
a) a cash inflow from investing activities
b) a cash inflow from financing activities
c) a deduction from net income
d) a addition to net income
13.In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from
a) brokerage activities
b) financing activities
c) investing activites
d) operating activities
14.When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a
a) increase in cash flows from investing activities
b) reduction in cash flows from investing activities
c) increase in cash flows from operating activities
d) reduction in cash flows from operating activites
15.A loss in the sale of machinery in the ordinary course of business should be presented in a statement of cash flows( indirect method) as
a) an addition to net income
b) a deduction from net income
c) an inflow and outflow of cash
d) an outflow of cash
16.In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?
a) sale of a business segment
b) Issuance of bonds payable at a discount
c) purchase of treasury stock
d) sale of capital stock
17.In a statement of cash flows (indirect method), depreciation is treated as an adjustment to reported net income because depreciation
a) is an inflow of cash to reserve account for asset replacement
b) reduces the reported net income and involves an inflow of cash
c) reduces the reported net inome but does not involve an outflow of cash
d) usually represents a significant portion of operating expense
18.Which of the following characteristics may result in the classification of a liability being changed from current to noncurrent:
a) violation of a subjective acceleration clause
b) violation of a objective acceleration clause
c) a demand provision for payment
d) refiancing after the balance sheet date
19.Pending litigation would generally be considered:
a) nonmonetary liabilty
b) contingent liability
c) estimated liability
d) current liability
20.Barrons Co. current ratio is 2:1. Which of the following transactions would normally increase Barney's current ratio?
a) purchasing inventory on account
b) borring money by signing a long-term note
c) collecting an account receivable
d) purchasing land for cash
21.On multiple step income statement, gains or losses on sale of equipment would be shown
a) before gross profit on sales
b) after gross profit on sales but before income from conitnuing operations
c) after income from continuing operations but before income from extraordinary items
d) after income before extraordinary items but before net income
22.A single step income statement is a format that
a) compares the current years income with last year's income
b) recongnizes subtotals at intermediate stages such as gross margin
c) combines revenues and gains and subtracts from them expenses and losses, resulting in income from operations
d) reports sales revenue, cost of goods sold, gross margin, and all other expenses
23.In contrast with a multiple-step income statement, a single step income statement does NOT show the amount of
a) income taxes on continuing operations
b) cost of goods sold
c) gross profit
d) earnings per share
24.The amount of income reported for tax purposes
a) is nomally greater than the net income reported to stockholders
b) must be computed according to GAAP
c) is used to compute earnings per share
d) may differ from the amount of income detemined for financial reporting purposes
25.Under the general rule of revenue recognition, revenue is recognized when
a) marketability and market price are assured
b) a contractual agreement exists, and cash collection is assured
c) the earnings process is complete, and a valid promise of payment has been received
d) all related expenses have been incurred
26.Seaworth Company's gross sales in 2014 were 3930000. Assuming sales returns and allowances were 74000 sales discounts were 35000 and freight-out was 28000 what were Seaworthy's net sales in 2014?
a) 3792000
b) 3821000
c)3856000
d) 3930000
27.On June 30, 2014 Sonata COmpanys operating facilities in Nebraska were detroyed by a flood. The loss of $700000 was not covered by insurance. Sonata's tax rate for 2014 is 40 percent. In Sonatas income statement for the year ended sept 30 2014 this event should be reported as an extraordinary loss of
a) 0
b) 280000
c) 420000
d) 700000
28.In a statement of cash flows, payments to acquire debt instruments of other entities would typically be classified as cash outflows for
a) financing activities
b) equity activities
c) operating activities
d) investing activities
29.A gain on the sale of a plan asset in the ordinary course of business should be presented in a staement of cash flows prepared using the indirect method as
a) a cash inflow from investing activities
b) a cash inflow from financing activities
c) a deduction from net income
d) a addition to net income
30.In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from
a) brokerage activities
b) financing activities
c) investing activites
d) operating activities
31.When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a
a) increase in cash flows from investing activities
b) reduction in cash flows from investing activities
c) increase in cash flows from operating activities
d) reduction in cash flows from operating activites
32.A loss in the sale of machinery in the ordinary course of business should be presented in a statement of cash flows( indirect method) as
a) an addition to net income
b) a deduction from net income
c) an inflow and outflow of cash
d) an outflow of cash
33.In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?
a) sale of a business segment
b) Issuance of bonds payable at a discount
c) purchase of treasury stock
d) sale of capital stock
34.In a statement of cash flows (indirect method), depreciation is treated as an adjustment to reported net income because depreciation
a) is an inflow of cash to reserve account for asset replacement
b) reduces the reported net income and involves an inflow of cash
c) reduces the reported net inome but does not involve an outflow of cash
d) usually represents a significant portion of operating expense