Question 1
A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a
corporation is organized for the purpose of making a profit.
corporation is subject to more federal and state government regulations.
corporation s temporary accounts are closed at the end of the accounting period.
corporation is an accounting economic entity.
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Question 2
The following data is available for Blaine Corporation at December 31, 2012:
Common stock, par $10 (authorized 25,000 shares) $200,000
Treasury Stock (at cost $15 per share) 900
Based on the data, how many shares of common stock are outstanding?
19,940
24,940
25,000
20,000
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Question 3
On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event,
Collins Paid-in Capital in Excess of Par account increased $600,000.
Collins total stockholders equity was unaffected.
Collins Stock Dividends account increased $1,800,000.
All of the above.
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Question 4
Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock
is reduced to $20 per share.
remains the same.
is reduced to $2 per share.
is reduced to $5 per share.
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Question 5
A major disadvantage resulting from the use of bonds is that
taxes may increase.
earnings per share may be lowered.
interest must be paid on a periodic basis.
bondholders have voting rights.
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Question 6
Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
$16,000 loss
$5,600 loss
$16,000 gain
$5,600 gain
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Question 7
Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be
$479,600.
$476,000.
$475,600.
$480,000.
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Question 8
Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by
$6,000.
$60,000.
$66,000.
$80,000.
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Question 9
If an investor owns less than 20% of the common stock of another corporation as a long-term investment,
no dividends can be expected.
it is presumed that the investor has relatively little influence on the investee.
it is presumed that the investor has significant influence on the investee.
the equity method of accounting for the investment should be employed.
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Question 10
Reporting investments at fair value is
a conservative approach because only losses are recognized.
applicable to both debt and stock securities.
applicable to debt securities only.
applicable to stock securities only.
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Question 11
Available-for-sale securities are classified as
short-term investments only.
long-term investments only.
either short-term or long-term investments.
current assets only.
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Question 12
Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1. Declaration and payment of a cash dividend during the period.
2. Net income for the period.
1
2
Neither 1 nor 2.
Both 1 and 2.
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Question 13
Hark Inc. had cash sales of $400,000 and credit sales of $1,100,000. The accounts receivable balance increased $25,000 during the year. How much cash did Hark receive from its customers during the year?
$725,000
$1,500,000
$1,475,000
$1,075,000
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Question 14
The statement of cash flows is prepared from all of the following except
comparative balance sheets.
the current income statement.
selected transaction data.
the adjusted trial balance.
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Question 15
Corgan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $290,000, prepaid expenses increased $20,000, and accrued expenses payable increased $30,000. Cash payments for operating expenses were
$240,000.
$280,000.
$300,000.
$340,000.
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Question 16
Assume the following sales data for a company:
2014 $1,050,000
2013 950,000
2012 800,000
2011 550,000
If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013?
72.7%
100%
52.4%
90.9%
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Question 17
Darius, Inc. has the following income statement (in millions):
DARIUS, INC.
Income Statement
For the Year Ended December 31, 2012
Net Sales $300
Cost of Goods Sold 120
Gross Profit 180
Operating Expenses 44
Net Income $136
Using vertical analysis, what percentage is assigned to Net Income?
100%
75.6%
45.3%
None of the above.
Question 18
Parrish, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division s assets with a book value of $1,250,000 are sold for $850,000. Operating income from January 1 to June 30 for the division amounted to $125,000. Ignoring income taxes, what total amount should be reported on Parrish s income statement for the current year under the caption, Discontinued Operations?
$400,000 loss
$125,000
$275,000 loss
$525,000
Question 24
Each of these items must be considered in preparing a statement of cash flows for Kiner Co. for the year ended December 31, 2012. For each item, state how it should be shown in the statement of cash flows for 2012.
(a) Issued bonds for $200,000 cash. C
(b) Purchased equipment for $150,000 cash.
(c) Sold land costing $20,000 for $20,000 cash.
(d) Declared and paid a $50,000 cash dividend. –
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Question 25
Villa Company reported net income of $195,000 for 2012. Villa also reported depreciation expense of $45,000 and a loss of $5,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2012. Use the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest e.g. 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
VILLA COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
$
Adjustments to reconcile net income
to net cash provided by operating activities $
Net cash by operating activities $
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