1.
An unearned revenue can best be described as an amount
A) collected and currently matched with expenses.
B) collected and not currently matched with expenses.
C) not collected and currently matched with expenses.
D) not collected and not currently matched with expenses.
2.
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?
A)
Decrease of $71,000.
B)
Decrease of $39,000.
C)
Decrease of $18,000.
D)
Increase of $11,000.
3.
Tate Company purchased equipment on November 1, 2010 and gave a 3-month, 9% note with a face value of $20,000. The December 31, 2010 adjusting entry is
A) debit Interest Expense and credit Interest Payable, $1,800.
B) debit Interest Expense and credit Interest Payable, $450.
C) debit Interest Expense and credit Cash, $300.
D) debit Interest Expense and credit Interest Payable, $300.
4. A company receives interest on a $30,000, 8%, 5-year note receivable each April 1. At December 31, 2010, the following adjusting entry was made to accrue interest receivable:
Interest Receivable
1,800
Interest Revenue
1,800
What entry should be made on April 1, 2011 when the annual interest payment is received?
B) Cash 1,800
Interest Receivable 1,800
D) Cash 2,400
Interest Revenue 2,400
5.
On September 1, 2010, Lowe Co. issued a note payable to National Bank in the amount of
$600,000, bearing interest at 12%, and payable in three equal annual principal payments of
$200,000. The first payment for interest and principal was made on September 1, 2011. At December 31, 2011, Lowe should record accrued interest payable of
A)
$24,000.
B)
$22,000.
C)
$16,000.
D)
$14,667.
6.
In November and December 2010, Lane Co., a newly organized magazine publisher, received
$90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2011 issue. Lane included the entire $90,000 in its 2010 income tax return. What amount should Lane report in its 2010 income statement for subscriptions revenue?
A)
$0.
B)
$5,000.
C)
$30,000.
D)
$90,000.
7.
An important argument in support of historical cost information is:
A)
Relevance.
B)
Predictive quality for future cash flows.
C)
Materiality.
D)
Verifiability.
8.
Information in the income statement helps users to
A) evaluate the past performance of the enterprise.
B) provide a basis for predicting future performance.
C) help assess the risk or uncertainty of achieving future cash flows.
D) all of these.
9.
Which of the following best demonstrates the full disclosure principle?
A)
The multi-step income statement
B)
The auditors' report
C)
The company's tax return
D)
Disclosure notes to financial statements
10.
A material item which is unusual in nature or infrequent in occurrence, but not both should be shown in the income statement
Net of Tax Disclosed Separately in Continuing Operations
A)
No No
B)
Yes Yes
C)
No Yes
D)
Yes No
11. Ortiz Co. had the following account balances:
What would Ortiz report as total expenses in a single-step income statement?
A)
$127,000
B)
$134,000
C)
$123,000
D)
$ 63,000
12.
For Mortenson Company, the following information is available: Cost of goods sold $ 60,000
Dividend revenue 2,500
Income tax expense 6,000
Operating expenses 23,000
Sales 100,000
In Mortenson's single-step income statement, gross profit
