Question :
81. At the end of the third year of operation, Alger : 1245895
81. At the end of the third year of operation, Alger Corporation has total assets equal to $100,000, liabilities totaling $90,000, and contributed capital of $30,000. What is the balance in retained earnings?
A. $40,000 (Dr)
B. $40,000 (Cr)
C. $20,000 (Dr)
D. $10,000 (Cr)
E. $20,000 (Cr)
82. On December 30, Year 1, Plank Company entered into a contract to purchase inventory over the next year. This is an example of a(n)
A. debit to an intangible asset.
B. debit to a tangible asset.
C. credit to a current liability.
D. executory contract.
E. anticipatory contract.
83. A prefabricated steel storage shed is purchased for $20,000 cash and a $80,000 interest-bearing note payable over a 5-year period at an annual interest rate of 10 percent per annum. The cost to be recorded as an asset (in addition to the $100,000 purchase price) should include all of the following except
A. shipping and handling charges.
B. insurance while in transit.
C. interest on the note payable.
D. reassembly and installation costs.
E. All of these answer choices are costs to be recorded as assets.
84. The value of fixed assets (such as plant, property, and equipment) included in total assets on the statement of financial position is the
A. loan value
B. wholesale or liquidation value
C. real estate tax basis assessment
D. acquisition cost reduced by accumulated deprecation
E. current net realizable value
85. (CMA adapted, Dec 94 #5) Several alternatives have been identified for measuring items on the statement of financial position. Which of the following alternatives may be used?
Present Value Current Cost Net Realizable Value
A. No No No
B. No Yes Yes
C. Yes Yes No
D. Yes Yes Yes
E. Yes No Yes
86. Assets are classified as current for reporting purposes when
A. shares of common stock in a company’s important supplier are acquired to ensure continued availability of raw materials.
B. shares of common stock in another company are acquired to diversify operations.
C. expenditures are made in developing new technologies or advertising products.
D. they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating cycle of the business.
E. None of these answer choices is correct.
87. A liability arises when a firm
A. signs a new labor union contract which includes a 6% pay raise for its union employees.
B. issues a purchase order for 100,000 units of inventory from a supplier over the next two years.
C. receives inventory previously ordered.
D. Both answers b and c are correct.
E. None of these answer choices is correct.
88. The stockholders’ equity of a firm can be defined as
A. net current assets
B. a residual interest
C. total assets plus total liabilities
D. the owners’ claim to the assets and liabilities
E. None of these answer choices is correct.
89. The shareholders’ equity section of the balance sheet for a corporation generally does not include
A. dividends paid
B. retained earnings
C. par or stated value of common stock
D. amounts contributed in excess of par or stated value
E. None of these answer choices is correct.
90. A cereal company issues coupons that can be exchanged for boxes of cereal. It issues two million coupons that promise the retailer who redeems the coupons $1 per coupon. The probability of redemption of any one coupon is 10%. What is the amount of the liability that the company recognizes?
A. $2,000
B. $20,000
C. $100,000
D. $200,000
E. $2,000,000
