On the income statement, extraordinary items are reported A. immediately after
1. On the income statement, extraordinary items are reported
A. immediately after the continuing operations section.
B. before the operating income section.
C. immediately before the discontinued operations section.
D. net of income tax or net of income tax savings.
2. _______ is added back to net income in the operating section of an indirect cash flow statement.
A. An increase in accounts receivable
B. A decrease in accounts payable
C. Depreciation
D. An increase in inventory
3. A journal entry for the sale of $10 par-common stock for $18 per share would include a
A. debit to Common Stock.
B. debit to Paid-In Capital in Excess of Par–Common Stock.
C. credit to Cash.
D. credit to Paid-In Capital in Excess of Par–Common Stock.
4. For the years 2011, 2012, and 2013, the sales of Red Line, Inc. are $40,000, $60,000 and $80,000, respectively. If 2011 is the base year, the trend percentage for 2012 was
A. 150%.
B. 0%.
C. 133%.
D. 200%.
Calculation: xxxx xxxx xxxxx
5. Cherry Corporation's outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock, and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received
A. $500.
B. $1,100.
C. $0.
D. $2,500.
Calculation: xxxxxxxxxxxxxxxxxxxxxxx
6. Other than depreciation, a company's operating expenses for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method are
A. $328,000.
B. $342,000.
C. $7,000.
D. $335,000.
Calculation = 335,000 – xxxxxxxxxxxxxxx
7. Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900 fee for assisting in setting up the new company. The entry for the issuance of the stock is a
A. debit to Paid-in Capital in Excess of Par–Common for $100.
B. credit to Common Stock for $800.
C. debit to Common Stock for $800.
D. credit to Common Stock for $900.
8. Which is not included in paid-in capital?
A. Additional Paid-in Capital
B. Common Stock
C. Cash
D. Preferred Stock
9. The following information is available for Allsport Company:
What amount was paid for merchandise during 2012?
Cost of goods sold $545,000
Merchandise inventory, 12/31/11 105,000
Merchandise inventory, 12/31/12 112,000
Accounts payable, 12/31/11 98,500
Accounts payable, 12/31/12 101,300
A. $540,800
B. $545,000
C. $549,200
D. $554,800
10. Operating activities are transactions and events associated with selling a product or providing a service related to the
A. retained earnings reported on the balance sheet.
B. net income reported on the statement of retained earnings.
C. assets and liabilities reported on the balance sheet.
D. revenues and expenses reported on the income statement.
11. Hallett Industries, Inc. reported net sales of $306,000, cost of goods sold of $192,600, operating
expenses of $58,900, and income tax expense of 12,300. What is Hallett Industries' net income percentage?
A. 37.06
B. 17.81
C. 13.79
D. 62.94
Calculation : 306000 xxxxxxxxxxxxxxxxxxxx 12300 = xxxxxxxxxx
xxxxxxxxx 306,000 = xxxxxxx
12. Stockholders receiving their proportionate share of any assets left after a company goes out of business is an example of which stockholder right?
A. Preemption
B. Voting
C. Dividends
D. Liquidation
13. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock is
A. $10,000.
B. $75,000.
C. $65,000.
D. based on the last treasury stock transaction.
14. Which of the following causes the decrease of the par value of a company's stock?
A. Cash dividend
B. Stock split
C. Sale of additional stock
D. Stock dividend
15. An example of a cash outflow from investing activities is
A. issuance of a note payable.
B. the purchase of treasury stock.
C. making a loan to another company.
D. paying cash dividends.
16. Haskins, Inc. sells 1,000 shares of $12 par common stock for $20 per share. The journal entry is
A. debit Cash $12,000; credit Common Stock $12,000.
B. debit Cash $12,000; debit Paid-In Capital in Excess of Par–Common $8,000; credit Common Stock $20,000.
C. debit Cash $20,000; credit Common Stock $12,000; credit Paid-In Capital in Excess of Par-Common Stock $8,000.
D. debit Cash $20,000; credit Common Stock $20,000.
17. Of the following, which is not classified as an investing activity on the statement of cash flows?
A. Purchasing land
B. Sale of equipment for cash
C. Selling goods and services
D. Collecting the principal on loans
18. Tucker, Inc.'s net sales decreased from $90,000 in year one to $45,000 in year two, and its cost of goods sold decreased from $30,000 in year one to $20,000 in year two. The vertical analysis based on sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is
A. 225% and 300%.
B. 33.3% and 44.4%.
C. 44.4% and 33.3%.
D. 300% and 225%.
19. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a true statement?
A. Loss on sale equals $35,000 and Cash inflow equals $35,000.
B. Loss on sale equals $21,000 and Cash inflow equals $35,000.
C. Loss on sale equals $35,000 and Cash inflow equals $21,000.
D. Loss on sale equals $56,000 and Cash inflow equals $56,000.
1. On the income statement, extraordinary items are reported
A. immediately after the continuing operations section.
B. before the operating income section.
C. immediately before the discontinued operations section.
D. net of income tax or net of income tax savings.
2. _______ is added back to net income in the operating section of an indirect cash flow statement.
A. An increase in accounts receivable
B. A decrease in accounts payable
C. Depreciation
D. An increase in inventory
3. A journal entry for the sale of $10 par-common stock for $18 per share would include a
A. debit to Common Stock.
B. debit to Paid-In Capital in Excess of Par–Common Stock.
C. credit to Cash.
D. credit to Paid-In Capital in Excess of Par–Common Stock.
4. For the years 2011, 2012, and 2013, the sales of Red Line, Inc. are $40,000, $60,000 and $80,000, respectively. If 2011 is the base year, the trend percentage for 2012 was
A. 150%.
B. 0%.
C. 133%.
D. 200%.
Calculation: xxxx xxxx xxxxx
5. Cherry Corporation's outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock, and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received
A. $500.
B. $1,100.
C. $0.
D. $2,500.
Calculation: xxxxxxxxxxxxxxxxxxxxxxx
6. Other than depreciation, a company's operating expenses for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method are
A. $328,000.
B. $342,000.
C. $7,000.
D. $335,000.
Calculation = 335,000 – xxxxxxxxxxxxxxx
7. Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900 fee for assisting in setting up the new company. The entry for the issuance of the stock is a
A. debit to Paid-in Capital in Excess of Par–Common for $100.
B. credit to Common Stock for $800.
C. debit to Common Stock for $800.
D. credit to Common Stock for $900.
8. Which is not included in paid-in capital?
A. Additional Paid-in Capital
B. Common Stock
C. Cash
D. Preferred Stock
9. The following information is available for Allsport Company:
What amount was paid for merchandise during 2012?
Cost of goods sold $545,000
Merchandise inventory, 12/31/11 105,000
Merchandise inventory, 12/31/12 112,000
Accounts payable, 12/31/11 98,500
Accounts payable, 12/31/12 101,300
A. $540,800
B. $545,000
C. $549,200
D. $554,800
10. Operating activities are transactions and events associated with selling a product or providing a service related to the
A. retained earnings reported on the balance sheet.
B. net income reported on the statement of retained earnings.
C. assets and liabilities reported on the balance sheet.
D. revenues and expenses reported on the income statement.
11. Hallett Industries, Inc. reported net sales of $306,000, cost of goods sold of $192,600, operating
expenses of $58,900, and income tax expense of 12,300. What is Hallett Industries' net income percentage?
A. 37.06
B. 17.81
C. 13.79
D. 62.94
Calculation : 306000 xxxxxxxxxxxxxxxxxxxx 12300 = xxxxxxxxxx
xxxxxxxxx 306,000 = xxxxxxx
12. Stockholders receiving their proportionate share of any assets left after a company goes out of business is an example of which stockholder right?
A. Preemption
B. Voting
C. Dividends
D. Liquidation
13. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock is
A. $10,000.
B. $75,000.
C. $65,000.
D. based on the last treasury stock transaction.
14. Which of the following causes the decrease of the par value of a company's stock?
A. Cash dividend
B. Stock split
C. Sale of additional stock
D. Stock dividend
15. An example of a cash outflow from investing activities is
A. issuance of a note payable.
B. the purchase of treasury stock.
C. making a loan to another company.
D. paying cash dividends.
16. Haskins, Inc. sells 1,000 shares of $12 par common stock for $20 per share. The journal entry is
A. debit Cash $12,000; credit Common Stock $12,000.
B. debit Cash $12,000; debit Paid-In Capital in Excess of Par–Common $8,000; credit Common Stock $20,000.
C. debit Cash $20,000; credit Common Stock $12,000; credit Paid-In Capital in Excess of Par-Common Stock $8,000.
D. debit Cash $20,000; credit Common Stock $20,000.
17. Of the following, which is not classified as an investing activity on the statement of cash flows?
A. Purchasing land
B. Sale of equipment for cash
C. Selling goods and services
D. Collecting the principal on loans
18. Tucker, Inc.'s net sales decreased from $90,000 in year one to $45,000 in year two, and its cost of goods sold decreased from $30,000 in year one to $20,000 in year two. The vertical analysis based on sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is
A. 225% and 300%.
B. 33.3% and 44.4%.
C. 44.4% and 33.3%.
D. 300% and 225%.
19. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a true statement?
A. Loss on sale equals $35,000 and Cash inflow equals $35,000.
B. Loss on sale equals $21,000 and Cash inflow equals $35,000.
C. Loss on sale equals $35,000 and Cash inflow equals $21,000.
D. Loss on sale equals $56,000 and Cash inflow equals $56,000.
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