A preemptive right is (Points : 3) the right to vote in the election of directors and to establish corporate policies the right to share in the profits when a dividend is declared the right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportionate share of additional capital stock should such stock be issued the right to share in the distribution of the assets of the corporation should it be liquidated 2. On January 1, 2010, Wilson Corporation granted Emelia Walker, its president, a compensatory stock option plan to purchase 8,000 shares of Wilson's $10 par common stock. The option price is $25 per share and the option has a fair value of $7 per option, which is exercisable on January 1, 2014, after four years of service. How much compensation expense should Wilson recognize on December 31, 2010? (Points : 3) $0 $14,000 $56,000 $80,000 3. The Securities and Exchange Commission requires that Subscriptions Receivable be disclosed on the financial statements filed with it as a(n) (Points : 3) current asset as long as collection is to be made within one year or the normal operating cycle, whichever is longer other asset if collection is to be made beyond one year from the date of the financial statements contra-accounts receivable account contra-stockholders' equity account 4. Assume common stock is issued to employees as a result of exercising stock warrants issued under a noncompensatory stock option plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively? (Points : 3) decreased, increased, and decreased no effect, increased, and increased decreased, increased, and no effect no effect, increased, and no effect 5. On January 1, 2010, Brennen Corporation had 20,000 shares of common shares outstanding. During the year, it sold another 2,600 shares on July 1 and reacquired 600 shares on November 1. The corporation earned $337,600 net income. The company also has 15,000 shares of $10 par value, 6%, cumulative preferred stock on which no dividends have been declared for the last two years. The basic earnings per share for the year is (Points : 3) $15.92 $15.65 $15.50 $15.08 6. Under the if-converted method, the impact of various convertible securities on the diluted earnings per share calculation are ranked from (Points : 3) the lowest impact to the highest impact the highest impact to the lowest impact the least number of assumed shares issued to the most the most number of assumed shares issued to the least 7. Which statement best represents the relationship between date of declaration, date of record and ex-dividend date, and date of payment, for a cash dividend. (Points : 3) The date of payment results in the biggest decrease in the current ratio. The date of record establishes the amount to be received. The ex-dividend date establishes the decrease to cash. The date of declaration establishes the increase to liabilities. 8. The Farmer Company has issued 10%, fully participating, cumulative preferred stock with a total par value of $300,000 and common stock with a total par value of $900,000. Dividends for one previous year are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $222,000 are distributed at the end of the current year? (Points : 3) $85,500 and $136,500 $78,000 and $144,000 $60,000 and $162,000 $55,500 and $166,500 9. If the consignment-in account has a credit balance, it is reported on the consignee's balance sheet as a(n) (Points : 3) contra-asset account revenue account liability account equity account 10. Revenue recognition issues are studied because (Points : 3) there is both an income statement and balance sheet impact gross revenues must be accurate estimates should not compromise the quality of reported net income it is important to properly state expenses incurred each operating period 11. The Naples Company uses the percentage-of-completion method and the cost-to-cost method for its long-term construction contracts. On one such contract, Naples expects total revenues of $260,000 and total costs of $200,000. During the first year, Naples incurred costs of $50,000 and billed the customer $30,000 under the contract. At what net amount should Naples' Construction in Progress for this contract be reported at the end of the first year? (Points : 3) $30,000 $35,000 $50,000 $65,000 12. The following information is provided for the Tampa Company: 2010 2011 Cost of goods sold $ 8,000 $ 9,000 Cash collected: On 2010 sales 4,000 5,000 On 2011 sales 2,000 Sales 10,000 12,000 If Tampa used the installment sales method, how much gross profit did Tampa Company report in 2010? (Points : 3) $800 $2,000 $3,200 $4,000 none of these 13. When accounting for the current impact of loss carrybacks and carryforwards it is proper to (Points : 3) recognize the tax benefit of the operating loss carryback as an asset recognize the tax benefit of the operating loss carryforward as an asset recognize the tax benefit of the operating loss carryback as a deferred liability recognize the tax benefit of the operating loss carryforward as a deferred liability 14. All of the following involve a temporary difference for purposes of income tax allocation except (Points : 3) interest on municipal bonds gross profit on installment sales for tax purposes MACRS depreciation for tax purposes and straight-line for accounting purposes product warranty expenses 15. An operating loss carryforward occurs when (Points : 3) prior pretax financial income is insufficient to offset the current period operating loss prior taxable income is insufficient to offset the current period operating loss future pretax financial income is insufficient to offset a current period operating loss future taxable income is insufficient to offset a current period operating loss 16. Which one of the following transactions would result in the creation of a noncurrent deferred tax liability? (Points : 3) interest received on municipal bonds a contingent liability expensed in the current period that is expected to require a cash payment in three years royalties received in advance that are taxable when received, but that will be earned within the next three months using an accelerated depreciation method for income tax purposes and the straight-line method for financial reporting purposes 17. Current GAAP defines the required calculations for all of the following items except (Points : 3) periodic pension expense the funded status of the plan the accrued/prepaid pension cost to be reported by the employer the minimum required amount to be funded 18. Disclosures for vested benefits (Points : 3) are not required are related to the projected benefit obligation are related to the accumulated benefit obligation are related to the plan assets 19. The interest rate that may be used to compute the interest cost component of pension expense is equal to the (Points : 3) company's expected long-term rate of return on plan assets rate of return on high quality fixed-income investments rate of interest at which the pension benefits could be effectively settled rate of return on high quality fixed-income investments or rate of interest at which the pension benefits could be effectively settled 20. Which of the following is not a component of the net periodic pension expense to be reported on a company's income statement? (Points : 3) interest cost unrecognized past service cost service cost expected return on plan assets 21. From the lessee's viewpoint, all of the following are advantages of leasing except that (Points : 3) if a lease is recorded as a capital lease, the calculated rate of return on the total assets ratio and the current ratio will be improved a lease agreement may reduce the risk of obsolescence for a lessee in many cases, an asset may be leased without requiring the lessee to make a substantial down payment the lessee may be able to claim larger tax deductions through leasing the asset than if the asset were purchased 22. If a lease is classified as a capital lease because the lease agreement contains a bargain purchase option, the time period to be used by the lessee to amortize the leased property is (Points : 3) the lease term the expected economic life of the property the lease term or the expected economic life of the property, whichever is shorter the maximum amortization period for intangible assets 23. The lessee should report capital lease obligations on the balance sheet as (Points : 3) a current liability a long-term liability a current liability for the current portion and a long-term liability for the remaining amount a note to the financial statements only 24. On January 1, Lessor Company incorrectly recorded a sales-type lease as an operating lease. As a result of this error, the reported amount for Lessor Company's property, plant, and equipment leased to others is (Points : 3) not affected Overstated Understated not determinable 25. The lessee should classify a noncancelable long-term lease as a capital lease if (Points : 3) there is a purchase option at the end of the lease term the present value of the minimum lease payments is at least 75% of the fair value of the leased property the present value of the minimum lease payments is at least 90% of the fair market value of the leased property to the lessor the estimated residual value of the leased property at the termination of the lease is equal to 90% of the lessee's guaranteed residual value 26. The following information relates to the Stockton Company: Paid note payable$ 150 Bought equipment 260 Depreciation expense500 Net income6,000 Paid dividends500 Issued bonds payable1,100 Issued common stock900 Sold land2,400 What is the net cash provided by financing activities? (Points : 3) $1,350 $1,850 $2,350 $5,850 27. The IFRS categories of cash flows are (Points : 3) long-term changes and short-term changes operating and other operating, investing, and financing operating and nonoperating 28. Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method? (Points : 3) gain on sale of noncurrent assets and amortization of discount on investment in bonds amortization of bonds payable premium and amortization of intangibles loss on sale of noncurrent assets and amortization of investment credit gain on sale of noncurrent assets and amortization of premium on investment in bonds 29. In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income? (Points : 3) equity-method investment income in excess of dividends received loss on the sale of an available-for-sale investment proceeds from the sale of plant assets amortization expense on a patent 30. The following information relates to the Fowler Company for 2010: Sales discounts$ 700 Beginning accounts receivable5,000 Collections on accounts receivable20,000 Total sales reported on income statement82,500 Ending accounts receivable7,000 What was the amount of cash sales? (Points : 3) $61,200 $59,800 $63,800 $65,200 31. A change from LIFO to FIFO should be accounted for (Points : 3) by footnote disclosure only prospectively only currently and prospectively Retrospectively 32. A retrospective adjustment requires a change in the (Points : 3) prior period financial statements to look like the current period financial statements current period income to reflect the cumulative effect of new method prior period financial statements to reflect how they would have been presented had the new method been used in prior periods current period accounts in the financial statements to what they would have been had the previous method been used in the current period 33. The accounting changes identified by current GAAP include all of the following except (Points : 3) correction of an error change in accounting principle change in accounting estimate change in reporting entity 34. A change in accounting estimate effected by a change in accounting principle should be reported as (Points : 3) a change in accounting principle a change in accounting estimate and a change in accounting principle a change in accounting estimate neither a change in accounting estimate nor a change in accounting principle 35. Which statement concerning accounting for accounting changes and errors is not true? (Points : 3) An error is accounted for retrospectively. A change in accounting principle is accounted for prospectively. A change in accounting principle may be accounted for retrospectively. A change in accounting estimate is accounted for prospectively.
Paper#6504 | Written in 18-Jul-2015Price : $25