Question

Multiple choice questions. No need to explain.

Question 11

Information is neutral if it

provides benefits which are at least equal to the costs of its preparation.

can be compared with similar information about an enterprise at other points in time.

would have no impact on a decision maker.

is free from bias toward a predetermined result.

Question 12

Keisler Corporation reports:

Cash provided by operating activities	$200,000
Cash used by investing activities	110,000
Cash provided by financing activities	140,000
Beginning cash balance	70,000

What is Keisler's ending cash balance?

$230,000.

$300,000.

$450,000.

$520,000.

Question 13

Kerr Co.'s accounts payable balance at December 31, 2010 was $1,500,000 before considering the following transactions:

•	Goods were in transit from a vendor to Kerr on December 31, 2010. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on December 29, 2010. The goods were received on January 4, 2011.
•	Goods shipped to Kerr, f.o.b. shipping point on December 20, 2010, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2011, Kerr filed a $50,000 claim against the common carrier.

In its December 31, 2010 balance sheet, Kerr should report accounts payable of

$1,620,000.

$1,570,000.

$1,550,000.

$1,500,000.

Question 14

Lane Co. has a machine that cost $200,000. It is to be leased for 20 years with rent received at the beginning of each year. Lane wants a return of 10%. Calculate the amount of the annual rent.

	Present Value of
Period	Ordinary Annuity

19	8.36492
20	8.51356
21	8.64869

$21,356

$23,909

$29,728

$23,492

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Question 15

Manning Company has the following items: write-down of inventories, $120,000; loss on disposal of Sports Division, $185,000; and loss due to strike, $113,000. Ignoring income taxes, what total amount should Manning Company report as extraordinary losses?

$ -0-.

$185,000.

$233,000.

$298,000.

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Question 16

Moorman Corporation reports the following information:

Correction of understatement of depreciation expense

in prior years, net of tax

$ 430,000

Dividends declared	320,000
Net income	1,000,000
Retained earnings, 1/1/10, as reported	2,000,000

Moorman should report retained earnings, 1/1/10, as adjusted at

$1,570,000.

$2,000,000.

$2,430,000.

$3,110,000.

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Question 17

Mune Company recorded journal entries for the declaration of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners' equity?

Decrease of $71,000.

Decrease of $39,000.

Decrease of $18,000.

Increase of $11,000.

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Question 18

Of the approaches to record cash discounts related to accounts receivable, which is more theoretically correct?

Net approach.

Gross approach.

Allowance approach.

All three approaches are theoretically correct.

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Question 19

On January 2, 2010, Wine Corporation wishes to issue $2,000,000 (par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The current yield rate on such bonds is 10%. Using the interest factors below, compute the amount that Wine will realize from the sale (issuance) of the bonds.

Present value of 1 at 8% for 10 periods	0.4632
Present value of 1 at 10% for 10 periods	0.3855
Present value of an ordinary annuity at 8% for 10 periods	6.7101
Present value of an ordinary annuity at 10% for 10 periods	6.1446

$2,000,000

$1,754,136

$2,000,012

$2,212,052

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Question 20

Pedigo Corporation reports the following information:

Net cash provided by operating activities	$255,000
Average current liabilities	150,000
Average long-term liabilities	100,000
Dividends paid	60,000
Capital expenditures	110,000
Payments of debt	35,000

Pedigo's cash debt coverage ratio is

1.02.

1.70.

2.55.

3.00.

Answer 1