Quiz~en, Financial Accounting II e, Chapter 1 1/ a.

is an organization that changes basic inputs into products that are sold to individual customers. b. sells a finished product that was purchased in that same form. c. provides services rather than products to customers. d. All answers are correct. 2/The objective of financial accounting is: a. to provide relevant and timely information to employees and managers of the firm. b. to provide relevant and timely information to decision makers external to the organization. c. to identify possible users of accounting information. d. to show the largest amount of net income possible. 3.Which of the following best describes accounting? a. Can be thought of as the "language of business." b. Is of limited or little use to individuals outside of the business. c. Records economic data but does not communicate the data to users. d. Relies upon concepts and principles that are independent of specific user needs. 4/The accounting equation can be expressed in all of the following ways EXCEPT: a. Assets = Liabilities + Owner's Equity. b. Liabilities = Assets + Owner's Equity. c. Liabilities = Assets - Owner's Equity. d. Owner's equity = Assets - Liabilities. 5/ Which of the following is true regarding business transactions? a. All business transactions can be stated in terms of changes in the elements of the accounting equation. b. Business transactions do not have to be recorded in the books of the organization. c. Business transactions are only recorded in the books of an organization when the transaction is over $1,000. d. Business transactions are not recorded in the books of an organization. 6/ The financial statements, in the order in which they are prepared, are: a. Income Statement, Balance Sheet, Statement of Owner's Equity, and Statement of Cash Flows. b. Balance Sheet, Statement of Owner's Equity, Income Statement, and 6. Statement of Cash Flows. c. Statement of Cash Flows, Income Statement, Balance Sheet, and Statement of Owner's Equity. lof2 d.

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Quiz: Warren, Financial Accounting 11e, Chapter 1 Statement of Cash Flows. 7/ The Income Statement: a. reports the amount of an organization's assets, liabilities, and owner's equity at the end of a period. b. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. c. reports the revenues and expenses for a period of time based on the matching concept. d. reports the Changes in owner's equity for a period of time. 8/ The Statement of Owner's Equity: a. reports the amount of an organization's assets, liabilities, and owner's equity at the end of a period. b. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. c. reports the revenues and expenses for a period of time based on the matching concept. d. reports the changes in owner's equity for a period of time. 9/ The Balance Sheet: a. reports the amount of an organization's assets, liabilities, and owner's equity at the end of a period. b. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. c. reports the revenues and expenses for a period of time based on the matching concept. d. reports the changes in owner's equity for a period of time. 10/ The Statement of Cash Flows: a. reports the amount of an organization's assets, liabilities, and owner's equity at the end of a period. b. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. c. reports the revenues and expenses for a period of time based on the matching concept. d. reports the changes in owner's equity for a period of time. 12/2/2011 2:45 PM Chapter 2

a. A title, the left side (debit side), and the right side (credit side). b. The T account, the left side (debit side), and the right side (credit side). c. A title, the T account, and the right side (credit side). d. A title, the left side (debit side), and the T account.

2/ The five major types of accounts are: a. assets, liabilities, drawing, revenue, and expenses. b. assets, drawing, owner's equity, revenue, and expenses. c. assets, liabilities, owner's equity, revenue, and expenses. d. drawing, liabilities, owner's equity, revenue, and expenses. 3/ Every transaction affects at least two accounts. The purchase of land in exchange for cash is recorded with which of the following entries? a. Debit to Cash, and a credit to Land. b. Debit to Owner's Equity, and a credit to Cash. c. Debit to Land, and a credit to Cash. d. Debit to Land, and a credit to Accounts Payable. 4/ Decreases in owner's equity from using up assets or consuming services attributable to business activities are called: a. drawings. b. revenues. c. expenses. d. liabilities. A credit may represent a(n): a. increase in asset accounts. b. increase in liability accounts. c. decrease in the capital account. d. increase in expense accounts. 6/ The process of transferring the debits and credits from the journal to the ledger accounts is called: a. two-column journal. b. posting. c. analysis. d. double-entry accounting. 7/ If Moonwalker purchased an insurance policy for a building that is used in the business, and the policy was for 36 months and the cost was $7,200, the entry to record this purchase is: a. Cash Insurance Expense b. Insurane e Expense 7,200 c. Prepaid Insuranee 7,200 d. Cash 7,200 8/ Websawy paid the electric and gas bill for the month in the amount of $325. What is the entry to record this transaction? a. Debit to Cash for $325, credit to Utilities Expense for $325. b. Debit to Utilities Expense for $325, credit to Cash for $325. c. Debit to Accounts Receivable for $325, credit to Utilities Expense for $325. d. Debit to Utilities Expense for $325, debit to Accounts Receivable for $325. 9/ The is prepared to determine if debits are equal to credits and can ultimately be used to discover some errors. a. balance sheet b. trial balance

c. income statement d. statement of cash flows 10. Which of the following errors will cause the trial balance totals to be UNEQUAL? a. Failure to record a transaction or post a transaction. b. Recording the same erroneous amount for both the debit and the credit parts of a transaction. c. Posting a part of a transaction correctly as a debit or credit but to the wrong account. d. Posting the debit amount of the transaction correctly and posting the credit amount of the transaction incorrectly. 20f2 12/2/2011 2:49 PM Quiz: W~ Financial Accounting II e, Chapter 3 ~/ ~ _(Le-CJnAgilr~}__J~.m~t-ttoJ:-..,~~ ..~o:r-iL~_JW~ .MJ~ 1 the. 'vel ~ +..h~J are. ~cl jt> a. revenue recognition concept. r 4-.t -'-a b. accounting period concept. etJU: c. timing concept. d. adjusting concept. An adjusting entry for an accrued revenue: a. affects at least one income statement account and one balance sheet account. 2. b. affects two different balance sheet accounts. c. affects two different income statement accounts. d. affects at least one income statement account and one deferred revenue account. Expense items that have been incurred but NOT yet recorded in the accounts are: d. prepaid expenses. a. accrued expenses. 3. b. unearned revenues. c. accrued revenues. Revenue items that have been earned but NOT yet recorded in the accounts are: c. accrued revenues. a. accrued expenses. 4. b. unearned revenues. d. prepaid expenses. 5. The balance in Websavvy's supplies account on December 31 is $3,000. If the supplies used during the year were $750, what is the entry to adjust the supplies account at the end of the year? a. Debit Supplies $2,250, credit Supplies Expense $2,250. b. Debit Supplies Expense $750, credit Supplies $750. c. Debit Supplies $250, credit Supplies Expense $250. d. Debit Supplies Expense $750, credit Accounts Payable $750. The balance in the prepaid insurance account for a one-year policy for Websavvy is $1,800. The

balance was paid on May 1. What is the adjusting entry necessary at the end of the year, December 31? 6. a. Debit Prepaid Insurance $600, credit Insurance Expense $600. b. Debit Insurance Expense $600, credit Prepaid Insurance $600. c. Debit Prepaid Insurance $1,200, credit Insurance Expense $1,200. d. Debit Insurance Expense $1,200, credit Prepaid Insurance $1,200. Websavvv has one vear in unearned rent on the books in the amount of $3.000. The monev was lof2 12/212011 2:54 p~ Quiz: ~arren; Financial Accounting 11e, Chapter 3 J----J-----------,--received on December 1 in payment for a warehouse Websawy owns. The entry to adjust unearned rent at the end of the year should be: 7. a. none. b. debit Unearned Rent $250, credit Rent Revenue $250. c. debit Rent Revenue $250, credit Unearned Rent $250. d. debit Unearned Rent $2,750, credit Rent Revenue $2,750. 8. Websawy pays weekly wages in the amount of $1,750. If December 31 falls on a Tuesday, what would be the adjusting entry to record the accrual of wages at year-end? a. None. b. Debit Wages Expense $350, credit Wages Payable $350. c. Debit Wages Payable $350, credit Wages Expense $350. d. Debit Wages Expense $700, credit Wages Payable $700. 9. Which of the following statements is NOT true about adjusting entries? a. Adjusting entries are dated as of the last day of the period. b. Adjusting entries are normally supported by an explanation. c. Adjusting entries must be both journalized and posted . . d. Each adjusting entry will affect either the income statement or the balance sheet. 10. Which statement about an adjusted trial balance is true? a. An adjusted trial balance is completed after completing the income statement. b. The purpose of an adjusted trial balance is to ensure that all adjusting entries have been recorded. c. If the adjusted trial balance does not balance, then an error has been made. d. If an adjusting entry was omitted, the adjusted trial balance would not balance. 20f2 12/2/20112:54 PM Quiz: Warren, Financial Accounting 11e, Chapter 6 ~ ..;.5_ .. .w-~--.~ cr.u'c~~;kn--v<> k~VY\ i n4 ~ a. Net Sales - Selling Expenses - Administrative Expenses b. Gross Profit - Cost of Goods Sold + Selling Expenses

c. Net Sales - Cost of Goods Sold - Selling Expenses - Administrative Expenses d. Gross Profit + Cost of Goods Sold What is the formula to calculate gross profit? a. Sales + Cost of Merchandise Sold 2. b. Sales - Cost of Merchandise Sold c. Sales + Purchases d. Sales - Ending Inventory 3. If each purchase and sale of merchandise is recorded in the inventory and the cost of merchandise sold accounts, the method of accounting for merchandise inventory is the: a. perpetual method. b. periodic method. c. gross profit method. d. administrative method. 4. When purchases of merchandise are made on account and the perpetual method is used, the transaction would be recorded with the following entry: a. Debit Accounts Payable, credit Merchandise Inventory. b. Debit Merchandise Inventory, credit Accounts Payable. c. Debit Merchandise Inventory, credit Cash. d. Debit Purchases, credit Sales. The entry to record the cash sale of a webpage by Tellmore in the amount of $500 is: a. debit to Sales for $500, credit to Cash for $500. 5. b. debit to Cash for $500, credit to Sales for $500. c. debit to Sales Discounts for $500, credit to Sales for $500. d. debit to Cash for $500, credit to Sales Discounts for $500. 6. Given credit terms of 3/10, n/30 on a sale of $2,000, calculate the sales discount, assuming payment was made within the 10-day time period. a. $60 b. $90 c. $900 d. $600 Given credit terms of 2/25, n/30 on a sale of $1,500, in how many days must the invoice be paid to take advantage of the discount? lof2 12/2/20112:57 PM Quiz: Warren, Financial Accounting 11e, Chapter 6 7. a. 30 b. 5 c. 15 d. 25

8. If the sale includes the seller paying the transportation costs and assuming the responsibility for merchandise until it is received by the buyer, the transportation terms are said to be: a. FOB shipping point. b. FOB destination. c. sales discount. d. trade discount. 9. When a company sells merchandise and the terms are FOB shipping point and it pays the shipping costs, the seller would record the transportation costs with the following entry: a. Debit Cash, credit Accounts Receivable. b. Debit Accounts Receivable, credit Sales. c. Debit Accounts Receivable, credit Cash. d. Debit Merchandise Inventory, credit Accounts Payable. The entry to record inventory shrinkage under a perpetual inventory system would include a debit to: a. Inventory. 10. b. Inventory Shrinkage Expense. c. Cost of Merchandise Sold. d. Sales. 20f2 12/2/20112:57 PM Quiz: Warren, Financial Accounting II e, Chapter 7 \aud +i ~- ....L 1/.' I . A, +."'" J ~ ~ pA"hv-. A nte.l. ~_.\')/!-. .._IGv.-::\~_O( r- .f.?~~C-:\((U.,.M'l.~.ly .v.::r. <f.Y),..-J?!..lk.f 'J)J(UL~-J.'Y!.::J~_UhJ of the correct amount of$100,870. The effect of the error on the December 31 balance sheet and M income statement will be: <Q. -'\An)I~ IMtt a cl (f ~~~VV+ D<f ~ A/IJO) '6 <rO . a. ending inventory will be understated; gross profit will be overstated. b. ending inventory will be overstated; cost of merchandise sold will be overstated. c. ending inventory will be overstated; net income will be understated. d. ending inventory will be understated; cost of merchandise sold will be overstated. 2. Under the periodic inventory system, Village Fabrics purchases navy plaid fabric used in its fabricselling business in the following lots: June 5 - 4 yards at $2.50 per yard, June 12 - 7 yards at $3.00 per yard, June 17 - 8 yards at $3.50 per yard. What is the periodic average cost of the fabric per yard? a. $2.50 per yard b. $3.00 per yard c. $3.11 per yard

d. $3.05 per yard Under the perpetual inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $2.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $2.50 per yard on June 19; on June 27, 6 more yards had been sold. No inventory was on hand at the beginning of the month. What is 3. the cost of merchandise sold and cost of inventory under the FIFO method for June? a. $101.25; $67.50 b. $45.00; $30.00 c. $67.50; $101.25 d. $95.00; $73.75 Under the perpetual inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid, a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5, on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27, 6 more yards had been sold. What is the value of inventory as of June 30 under the FIFO 4. method? a. $71.25 b. $35.00 c. $75.00 d. $31.25 Under the perpetual inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27, 11 more yards had been sold. What is the value of inventory as of June 30 under the LIFO 5. method? a. $25.00 10f3 12/2/20112:59 PM Quiz:, Warren, Financial Accounting 11e, Chapter 7 b. $35.00

c. $30.00 d. $31.25 Under the periodic inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27, 6 more yards had been sold. What is the value of inventory as of June 30 under the LIFO 6. method? , a. $50.00 b. $31.25 c. $56.25 d. $60.00 Under the periodic inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27,6 more yards had been sold. What is the value of inventory as of June 30 under the FIFO 7. method? . a. $31.25 b. $30.00 c. $57.50 d. $60.00 Which statement about inventory costing methods is FALSE? a. If the cost of units does not change, all three methods will yield the same results. 8. b. When FIFO is used during a period of rising prices, the company's gross profit will be higher. c. During periods of rising prices, using LIFO offers an income tax savings. ,. d. All statements are true. Merchandise inventory is reported on the balance sheet in the section titled: a. current liabilities. 9. b. plant assets. c. current assets. d. owner's equity. 200 The formula to calculate inventory turnover is: ( a. Average inventory I Cost of merchandise sold.

10. r b. Cost of merchandise sold I Average inventory. c. Beginning inventory I Cost of merchandise sold. od. So"\; c:\ ~dN &o\.d/ ~V\cL<"o m~ 1212/2011 2:59 PM Quiz: Warren, Financial Accounting II e, Chapter 9 ~ .1/ ~ ~ V'fre~s cJj ~ &1L0M ~~AAt otJrv,r ~'hU-) ) oih;,r~;g~~~;i~~--~--, --- -0-- -f" -e-:h~oM~-:~:~ l'~, ::~:::ivables tt~J ~ ~~~. c. Plant assets d. Investments A note receivable due in 3 years is listed on the balance sheet under the caption: a. investments. 2. b. current assets. c. plant assets. d. owner's equity. Selling receivables is also known as: a. the allowance method. 3. b. pledging. c. factoring. d. discounting. 4: Under the direct write-off method: a. bad debt expense is recorded when the sale is made. b. bad debt expense is recorded at the end of the year. c. bad debt expense is recorded when the customer's account is deemed to be worthless. d. bad debt expense is not recorded. Instead, a loss account is used. 5. When a customer's account is identified as uncollectible using the allowance for doubtful accounts method, which of the following is the correct entry to record the write-off? a. Debit to Accounts Receivable (customer name), credit to Allowance for Doubtful Accounts. b. Debit to Allowance for Doubtful Accounts, credit to Accounts Receivable (customer name). c. Debit to Uncollectible Accounts Expense, credit to Accounts Receivable (customer name). d. Debit to Accounts Receivable (customer name), credit to Uncollectible Accounts Expense. 6. The allowance for doubtful accounts has a debit balance of $2,000 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 2% of net sales. If net sales are$500,000, the amount of the adjusting entry to record the provision for doubtful accounts is: a. $1,000. b. $13,000. c. $11,000. d. $10,000. lof2 12/2/2011 3:03 PI Quiz Warren, Financial Accounting 11e, Chapter 9 7: The allowance for doubtful accounts has a debit balance of $1,000 at the end of the year (before

adjustment), and uncollectible accounts expense is estimated at $10,000. If accounts receivable are $700,000, the amount of the adjusting entry to record the provision for doubtful accounts using the analysis of receivables method is: a. $10,000. b. $11,000. c. $9,000. d. $16,000. 8: Which statement is true? a. The direct-write off method uses an allowance account. b. Direct write-off is best suited for large companies and those with a large amount of receivables. c. The allowance method uses an estimate based on (1) a percent of sales or (2) an analysis of receivables. d. Adjusting entries are necessary under both the direct write-off and the allowance methods. 9: The maturity value of a $2,000 promissory note, 5% interest due in 90 days is: a. $2,030. b. $1,975. c. $2,025. d. $2,100. 10: Assume that Village Fabrics offers credit terms of 2/15, nl40 and has net sales of $50,000 and beginning and ending accounts receivable balances of $2,100 and $2,400. The accounts receivable turnover is: a.22.2. b.23.8. c.20.8. d.25.0. 20f2 12/2/2011 3:03 PM Quiz: Warren, Financial Accounting 11e, Chapter 10 1 a. operating c. capital d. disposed of 2: All the following items are included in the cost of acquiring a fixed asset EXCEPT: a. freight costs. b. installation costs. c. sales taxes. d. damage during unpacking and installation. 3. The formula to calculate units-of-production depreciation is: a. (Cost - Estimated residual value) / Expected useful life. b. (Cost - Estimated residual value) / Estimated production units.

c. (Cost - Accumulated depreciation at the beginning of year) x Double depreciation rate. d. (Cost - Estimated residual value) x (Rate based on the year/Sum of the years). 4. A machine with a cost of $200,000 has an estimated residual value of $20,000 and an estimated life of 10 years or 30,000 hours. What is the amount of depreciation for the first full year, using the declining balance method at double the straight-line rate? a. $40,000 b. $18,000 c. $32,500 d. $36,000 5. A machine with a cost of $200,000 has an estimated residual value of $20,000 and an estimated life of 10 years or 18,000 hours. Using the units-of-production method, what is the amount of depreciation for the second full year, during which the machine was used 4,000 hours? a. $20,000 b. $40,000 c. $45,000 d. $50,000 6. Equipment with a cost of $80,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? a. $20,000 b. $18,750 c. $20,625 d. $22,000 Quiz: Warren, Financial Accounting II e, Chapter 10 7: Equipment with a cost of $60,000 is sold for $5,000. Assuming accumulated depreciation of $55,000, how much of a gain or loss is recorded on the sale of the equipment for financial reporting purposes? a. $5,000 gain b. $5,000 loss c. $0 d. Need more information to calculate gain or loss. 8.The amount of depletion expense is determined by: a. multiplying the quantity extracted during the period by the depletion rate. b. dividing the quantity extracted during the period by the depletion rate. c. dividing the cost of the mineral deposit by its estimated size. d. dividing the cost of the mineral deposit by the number of years estimated it will take to extract all the natural resources. 9: Goodwill: a. is amortized like patents and trademarks.

b. is reported in the fixed assets section of the balance sheet. c. refers to an intangible asset of a business that is created from such favorable factors as location, product quality, reputation, and managerial skill. d. is created when a business is purchased at a price below fair value of its net assets. 10: Intangible assets are usually reported on the balance sheet in a separate section immediately following: a. fixed assets. b. investments. c. current assets. d. liquid assets. Quiz: Warren, Financial Accounting lIe, Chapter 13 1. a. The stockholders have unlimited liability. b. When stockholders sell their shares, the corporation is dissolved. c. A corporation cannot own property in its name. d. Cash dividends paid by a corporation are taxable to shareholders. 2. Which one of the following is NOT an advantage of forming a corporation? a. A corporation exists separately from its owners. b. The corporate form is suited for raising large amounts of money from amounts of capital shareholders. c. A corporation's creditors usually may not go beyond the assets of the corporation to satisfy their claims. d. Corporations must satisfy many requirements such as those required by the Sarbanes-Oxley Act of 2002. 3. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 20,000 shares were originally issued and 2,500 were subsequently reacquired. What is the number of shares outstanding? a.22,500 b.17,500 c.20,000 d.82,500 4: The entry to record the declaration of a common stock dividend would include a debit to: a. Cash. b. Accounts Receivable. c. Stock'"Dividends. d. Common Stock. For the corporation named Chutney, Inc., the net income, the amount of earnings retained in the business, and the amount of earnings distributed are: 2007 2008 2009 Net Income $25,000 $70,000 $82,000 Amount Retain ed $15,000 $20,000 $25,000 Amount Distributed $ 5,000 $50,000 $57,000

5: The corporation has stock outstanding as follows: 20,000 shares of 1% preferred stock of $50 par, and 50,000 shares of $20 par common stock. What would be the dividend distribution for common shareholders in 2007? a. $0.50 per share b. $0.75 per share c. $0.25 per share d. $0.00 per share Quiz: .Warren, Financial Accounting 11e, Chapter 13 6: A stock that a corporation has once issued and then reacquired is called: a. common stock. b. preferred stock. c. treasury stock. d. outstanding stock. 7: Changes in stockholders' equity is reported in the: a. income statement. b. balance sheet. c. statement of cash flows. d. statement of stockholders' equity. 8: To reduce the par or stated value of common stock, a corporation issues a proportionate number of additional shares. This is termed: a. stock repurchase. b. stock split. c. cash dividend. d. stock dividend. 9: Earnings Per Share (EPS) can be calculated as follows: a. Market price per share of common stock I Dividends per share of common stock. b. Dividends per share of common stock I Market price per share of common stock. c. Stockholders' equity I Market price per share of common stock. d. (Net income - Preferred dividends) I Number of common shares outstanding. 10. The entry to record the issue for cash of 1,000 shares of $5 par common stock at $25 per share would include: a. a debit to Cash for $25,000, a credit to Common Stock for $5,000, and a credit to Paid-In Capital in Excess of Par for $20,000. b. a debit to Cash for $25,000 and a credit to Common Stock for $25,000. c. a debit to Cash for $25,000 and a credit to Paid-In Capital in Excess of Par for $25,000. d. a debit to Cash for $5,000 and a credit to Common Stock for $5,000. Quiz: Warrell; Financial Accounting 11e, Chapter 14 1. a. calculate the current ratio under each option. -ttu.. bXJ Clt"eL 0d di rtv-h:r&

b. calculate the earnings per share under each option. c. remember that stock dividend payments must be paid on time. Otherwise, the shareholders could force the company into bankruptcy. d. All factors should be considered. 2: When the contract rate of interest on bonds is higher than the market rate of interest, the bonds sell at: a. their face value. b. their maturity value. a discount. d. a premium. 3. Bonds with a face value of $100,000 and a face rate of 9% (semiannual interest payment dates) were issued when the market interest rate was 10%. The carrying value at the current interest payment date is $97,000. The bond matures in 3 years. Semiannual bond discount amortization using the straight-line method will be: a. $400. b. $500. c. $600. d. $750. 4. On January 1, a corporation n issues for cash $100,000 of 6%, five-year bonds with interest of $3,000 payable semiannually. The market rate of interest at the time the bonds are issued is 5%. What is the entry to record the issuance of the bonds? a. Cash 98,203 Discount on Bonds Payable 1,797 Bonds Payable 100,000 b. Cash 103,769 Bonds Payable 100,000 Premium on Bonds Payable 3,769 c. Cash 100,000 Bonds Payable 100,000 d. Bonds Payable 100,000 Cash 100,000 5: Which of the following statements is true regarding amortizing bond discount? a. The straight-line method can always be used in place of the effective interest rate method. b. The effective interest rate method is required by generally accepted accounting principles. c. Bond discount must be amortized to interest expense over the life of the bond. d. The straight-line method can be used if the results differ significantly from the effective interest rate method.

Quiz: Warren, Financial Accounting l l e, Chapter 14 6. These types of bonds can be redeemed by the issuing corporation within the period of time and at the price stated in the bond indenture. a. Callable bonds b. Sinking fund c. Carrying amount d. Held-to maturity securities 7. Bonds Payable has a balance of $1,000,000, and Discount on Bonds Payable has a balance of $30,000. If the issuing corporation redeems the bonds at 99, what is the amount of gain or loss on redemption? a. $20,000 gain b. $20,000 loss c. $5,000 gain d. $5,000 loss 8: Bond or Notes Payable that mature within the next year are reported in what part of the financial statements? a. Other Income section of the income statement. b. Other Expense section of the income statement. c. Long-Term Liabilities section of the balance sheet. d. Current Liabilities section of the balance sheet. 9. The balance in Discount on Bonds Payable: a. should be reported on the balance sheet as an asset because it has a debit balance. b. would be subtracted from the related Bonds Payable on the balance sheet. c. would be added to the related Bonds Payable to determine the carrying amount of the bonds. d. should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the interest method. 10:The proceeds received for when a bond is issued will depend on: a. the face amount of the bonds, which is the amount due at the maturity date. b. the periodic interest to be paid on the bonds. c. the market rate of interest. d. All of these. Quiz: Warrell; Financial Accounting 11e, Chapter 16 1. a. the direct method and the net cash flow method. b. the indirect method and the net cash flow method. c. the direct method and the indirect method. d. the operation flow method and the direct method.

2: An example of a cash flow from investing activities is: a. receipt of cash from the sale of land. b. receipt of cash received from the issue of bonds. c. deduction of depreciation expense. d. cash received as a dividend. 3: An example of a cash flow from financing activities is: a. receipt of cash from the sale of land. b. receipt of cash received from the issue of bonds. c. deduction of depreciation expense. d. deduction for increase in accounts payable. 4: Which one of the following would be deducted from net income in determining net cash flows from operating activities by the indirect method? a. Depreciation expense. b. Decrease in inventories. c. Decrease in accounts receivable. d. Gain on sale of plant and equipment. 5. Which one of the following would be added to net income in determining net cash flows from operating activities by the indirect method? a. Depreciation expense. b. Increase in inventories. c. Increase in accounts receivable. d. Decrease in income taxes payable. 6. Which one of the following would be added to net income in determining net cash flows from operating activities by the indirect method? a. Increase in accounts receivable. b. Decrease in inventories. c. Decrease in accounts payable. d. Gain on sale of a long-term investment. 7: The formula to calculate free cash flow is: a. Cash flow from financing activities - Cash used to purchase fixed assets to maintain productive capacity used up in producing income during the period Cash usea tor alvlaenas. b. Cash flow from investing activities - Cash used to purchase fixed assets to maintain productive capacity used up in producing income during the period - Cash used for dividends. c. Cash flow from operating activities - Cash used to purchase fixed assets to maintain productive capacity used up in producing income during the period. d. Cash flow from operating activities + Cash used to purchase fixed assets to maintain productive capacity used up in producing income during the period.

8: The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $15,500 at the beginning and end of the year respectively. Accounts payable were $10,000 and $9,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash lows from operating activities, cash payments for merchandise total: a. $54,000. b. $50,000. c. $49,000. d. $53,000. 9. Sales for the year were $750,000. Trade receivables were $40,000 and $50,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the cash flow statement using the direct method is: a. $700,000. b. $710,000. c. $740,000. d. $760,000. 10. Income tax was $150,000 for the year. Income tax payable was $20,000 and $30,000 at the beginning and end of the year, respectively. Cash payment for income tax reported on the cash flow statement using the direct method is: a. $140,000. b. $150,000. c. $170,000. d. $180,000. Quiz: Warren, Financial Accounting 11e, Chapter 17 1. a. horizontal statements. b. percentage statements. c. common-size statements. d. vertical statements. 2: The ability of a business to earn a reasonable amount of income is referred to as the factor of: a. solvency. b. wealth. c. profitability. d. leverage. 3. A company with working capital of $500,000 and a current ratio of 4: 1 pays a $50,000 shortterm liability. The amount of working capital immediately after payment is: a. $450,000. b. $400,000. c. $350,000. d. $500,000.

4: Assume an organization has total current assets of $300,000, total current liabilities of $75,000, inventories of $150,000, prepaid expenses of $25,000, net sales of $800,000, and beginning accounts receivable of $100,000 and ending accounts receivable of $74,000. What is the current ratio for this organization? a. $225,000 b.3.0 c.4.0 d. 17.9 5: Assume an organization has total current assets of $200,000, total current liabilities of $75,000, inventories of $50,000, prepaid expenses of $25,000, net sales of $770,000, and beginning accounts receivable of $42,000 and ending accounts receivable of $44,000. What is the quick ratio for thisorganization? a. $125,000 b. 19.9 c. 1.7 d.17.9 6: Assume an organization has total current assets of $200,000, total current liabilities of $75,000, inventories of $50,000, prepaid expenses of $25,000, net sales of $770,000, and beginning accounts receivable of $42,000 and ending accounts receivable of $44,000. What is the accounts receivable turnover for this organization? a. $125,000 b.2.7 c. 19.9 d.17.9 Quiz: Warren, Financial Accounting II e, Chapter 17 7: Cost of goods sold/Averaqe inventory is the formula for which of these analytical measures? a. Current ratio. b. Inventory turnover. c. Number of days' sales in inventory. d. Rate earned on total assets. 8. Net income plus interest expense divided by average total assets is the formula for which of these analytical measures? a. Price-earnings ratio. b. Inventory turnover. c. Number of days' sales in inventory. d. Rate earned on total assets. 9: Market price per share of common stock divided by earnings per share of common stock is the formula for which of these analytical measures? a. Price-earnings ratio. b. Inventory turnover.

c. Number of days' sales in inventory. d. Rate earned on total assets. 10: Which section is NOT usually included in an annual report? a. Management discussion and analysis. b. Report on adequacy of internal control. c. Managerial reports. d. Report on fairness of financial statements.