11) Which of the following is a proactive employee strategy of fraud deterrence? A) perception of detection B) analysis of financial statement C) analysis of statistical data D) employee contracts 12) Which of the following forensic accounting services primarily focuses on determining who committed the fraud, the scheme of the fraud, the time frame and duration, how much was taken, and who else was […]
38. Which of the following activities is least likely to be limited to “year-end”? A. Closing the accounts. B. Drafting notes to accompany statements. C. Recording routine transactions. D. Undergoing an audit. 39. Depreciation is: A. An exact calculation of the decline in value of an asset. B. Only an estimate of the decline in value of an asset. C. Only recorded at the end of a year and never […]
140.Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month, and 36,000 of equivalent units remained unfinished at the end of the month. The amount that should be reported in Finished […]
73.Indicate in each case whether the item has been handled in accordance with generally accepted accounting principles (GAAP). If so, indicate the key basic concept that has been followed. If not, indicate which concept has been violated and tell how the item should have been recorded or presented. 1. A piece of machinery has a book value (cost less accumulated depreciation) of $90,000. However, […]
Multiple Choice Questions 61.Which method of depreciation is not acceptable for financial accounting purposes? A. the modified accelerated cost recovery system (MACRS) B. the sum-of-the-years’-digits method C. the declining-balance method D. the straight-line method 62.Which method of depreciation is often used to depreciate the cost of cars, trucks and other motor vehicles? A. the straight-line method B. the sum-of-the-years’-digits method C. the […]
181. Book value per common share equals A. total common shareholders’ equity divided by the number of shares outstanding on the date of the balance sheet. B. total common shareholders’ equity divided by the weighted-average number of shares outstanding during the accounting period. C. total common shareholders’ equity divided by the number of shares outstanding on the beginning date of the income statement. D. total shareholders’ equity […]
111. Oregon Adventures purchased equipment for $80,000. They sold the equipment at the end of three years for $45,000. If the expected useful life of the equipment was seven years with a residual value of $10,000, and they use straight-line depreciation, which of the following is true regarding the entry to record the sale of the equipment? a. Debit Loss $5,000. b. Credit […]
11. During March, Connor Corporation purchased supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased? A. Assets increase and stockholders’ equity decreases B. Assets and liabilities increase C. There is no net effect on the accounting equation, as one asset account increases while another asset account decreases. D. There is no […]
51. When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing: A. budgetary slack B. padding C. goal conflict D. cushions 52. The budgeting process does not involve which of the following activities: A. specific goals are established B. Periodic comparison of actual results to goals C. Execution of plans to achieve goals D. Increase of sales by increasing marketing efforts. 53. Budgets […]
91. Equipment with an original cost of $60,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would A. increase by $33,000 B. decrease by $7,000 C. increase by $40,000 D. decrease by $27,000 92. On the statement of cash flows, the cash flows from financing activities section would include A. receipts from the sale of investments […]
158. Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:
End
Beginning
Cash
$ 62,000
$73,000
Accounts receivable (net)
75,000
60,000
Inventories
54,000
47,000
Accounts payable
(merchandise creditors)
43,000
37,000
Salaries payable
2,800
3,800
Sales (on account)
210,000
Cost of merchandise sold
70,000
Operating expenses other than depreciation
67,000
Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.
159. The comparative balance sheet of Colson Company, for 2010 and the preceding year ended December 31, 2009 appears below in condensed form:
Year
Year
2010
2009
Cash
$ 45,000
$ 53,500
Accounts receivable (net)
51,300
58,000
Inventories
147,200
135,000
Investments
0
60,000
Equipment
493,000
375,000
Accumulated depreciation-equipment
(113,700)
(128,000)
$622,800
$553,500
Accounts payable
$ 61,500
$ 42,600
Bonds payable, due 2012
.....
100,000
Common stock, $10 par
250,000
200,000
Paid-in capital in excess of par--
common stock
75,000
50,000
Retained earnings
236,300
160,900
$622,800
$553,500
The income statement for the current year is as follows:
Sales
$623,000
Cost of merchandise sold
348,500
Gross profit
$274,500
Operating expenses:
Depreciation expense
$24,700
Other operating expenses
75,300
100,000
Income from operations
$174,500
Other income:
Gain on sale of investment
$ 5,000
Other expense:
Interest expense
12,000
(7,000)
Income before income tax
$167,500
Income tax
64,100
Net income
$103,400
Additional data for the current year are as follows:
(a)
Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000.
(b)
Bonds payable for $100,000 were retired by payment at their face amount.
(c)
5,000 shares of common stock were issued at 15 for cash.
(d)
Cash dividends declared were paid $28,000.
(e)
All sales are on account.
Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities.
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