Question

expert neo or expert sissy
Use the following information for questions 12–13.

The following items are taken from the financial statements of Cerner Company for the year ending December 31, 2008:
Accounts payable     $ 18,000
Accounts receivable     11,000
Accumulated depreciation – equipment     28,000
Advertising expense     21,000
Cash     15,000
Retained Earnings (1/1/08)     80,000
Common Stock     22,000
Dividends     14,000
Depreciation expense     12,000
Insurance expense     3,000
Note payable, due 6/30/09     70,000
Prepaid insurance (12-month policy)     6,000
Rent expense     17,000
Salaries expense     32,000
Service revenue     133,000
Supplies     4,000
Supplies expense     6,000
Equipment     210,000
12.     What is the company’s net income for the year ending December 31, 2008?
a.     $133,000
b.     $42,000
c.     $28,000
d.     $12,000

13.     What is the total that would be reported for stockholders' equity at December 31, 2008?
a.     $102,000
b.     $130,000
c.     $144,000
d.     $158,000

14.          The formula for horizontal analysis of changes since the base period is the current year amount
a.     divided by the base year amount.
b.     minus the base year amount divided by the base year amount.
c.     minus the base year amount divided by the current year amount.
d.     plus the base year amount divided by the base year amount.

15.            Zendejas Company purchased a ruler for $2.00. The ruler is expected to last for ten years. Tony, the accountant, expensed the cost of the ruler in the year of the purchase. Which constraint has Tony taken into account when making his accounting decision?
a.    Conservatism
b.     Faithful Representation
c.     Neutrality
d.     Materiality


16.      Demaet Cruise Lines purchased a five-year insurance policy for its ships on April 1, 2008 for $100,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2008 is
a.     Prepaid Insurance          15,000
          Insurance Expense               15,000
b.     Insurance Expense          15,000
          Prepaid Insurance               15,000
c.     Insurance Expense          20,000
          Prepaid Insurance               20,000
d.     Insurance Expense          5,000
          Prepaid Insurance               5,000

17.          If a check correctly written and paid by the bank for $428 is incorrectly recorded on the company's books for $482, the appropriate treatment on the bank reconciliation would be to
a.     add $54 to the bank's balance.
b.     add $54 to the book's balance.
c.     deduct $54 from the bank's balance.
d.     deduct $428 from the book's balance.

18.         Luthor Corporation had net income of $160,000 and paid dividends to common stockholders of       $40,000 in 2008. The weighted average number of shares outstanding in 2008 was 50,000 shares. Luthor Corporation's common stock is selling for $50 per share on the New York Stock Exchange.
     Luthor Corporation's price-earnings ratio is
a.     3.2 times.
b.     15.6 times.
c.     10 times.
d.     5 times.

19.          A trial balance will not balance if
a.     a journal entry is posted twice.
b.     a wrong amount is used in journalizing.
c.     incorrect account titles are used in journalizing.
d.     a journal entry is only partially posted.


20     .     The going concern assumption assumes that the business
a.     will be liquidated in the near future.
b.     will be purchased by another business.
c.     is in a growth industry.
d.     will continue in operation long enough to carry out its existing objectives and commitments.

21.          At September 1, 2008, Foli Co. reported retained earnings of $136,000. During the month, Foli generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the amount of retained earnings at September 30, 2008?
a.     $136,000
b.     $8,000
c.     $137,000
d.     $142,000

22.          The accounting equation for Goodboys Enterprises is as follows:
     Assets          Liabilities     Stockholders' Equity
$120,000     =     $60,000     +     $60,000
If Goodboys purchases office equipment on account for $12,000, the accounting equation will change to
               Assets     Liabilities     Stockholders' Equity
a.     $120,000 = $60,000   +     $60,000
b.     $132,000 = $60,000   +     $72,000
c.     $132,000 = $66,000   +     $66,000
d.     $132,000 = $72,000   +     $60,000

23.          Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
a.     inadequate internal control.
b.     duplication of effort.
c.     external verification.
d.     segregation of duties.


Use the following information for questions 24:

Moon Beam, Inc. has the following income statement (in millions):
     MOON BEAM, INC.
     Income Statement
     For the Year Ended December 31, 2008
Net Sales     $180
Cost of Goods Sold        120
Gross Profit      60
Operating Expenses         33
Net Income     $ 27

     24.     Using vertical analysis, what percentage is assigned to Cost of Goods Sold?
a.     67%
b.     33%
c.     100%
d.     None of the above

     25.      Each of the following is an example of an unexpired cost except
a.     merchandise inventory.
b.     plant assets.
c.     prepaid expenses.
d.     repairs.

26.          The net income (or loss) for the period
a.     is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet.
b.     cannot be found on the worksheet.
c.     is found by computing the difference between the income statement columns of the worksheet.
d.     is found by computing the difference between the trial balance totals and the adjusted trial balance totals.

27.          The accounting process is correctly sequenced as
a.     identification, communication, recording.
b.     recording, communication, identification.
c.     identification, recording, communication.
d.     communication, recording, identification.

28.          Sue Smiley has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Sue make?
a.     Debit Cash and credit Unearned Revenue
b.     Debit Accounts Receivable and credit Unearned Revenue
c.     Debit Accounts Receivable and credit Service Revenue
d.     Debit Unearned Revenue and credit Service Revenue

29.          Generally accepted accounting principles are
a.     income tax regulations of the Internal Revenue Service.
b.     standards that indicate how to report economic events.
c.     theories that are based on physical laws of the universe.
d.     principles that have been proven correct by academic researchers.

30.          James Company purchases $600 of equipment from Mundelein Inc. for cash. The effect on the components of the basic accounting equation of James Company is
a.     an increase in assets and liabilities.
b.     a decrease in assets and liabilities.
c.     no change in total assets.
d.     an increase in assets and a decrease in liabilities.

Problem # 1.
The adjusted trial balance of Pool Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:
     1.     an income statement.
     2.     a retained earnings statement.
     3.     a balance sheet.

POOL FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2008
———————————————————————————————————————————
        Debit           Credit     
Cash          $ 5,400
Accounts Receivable          2,200
Office Supplies          1,800
Office Equipment          15,000
Accumulated Depreciation—Office Equipment               $ 4,000
Accounts Payable               3,300
Unearned Revenue               6,000
Common Stock                10,000
Retained Earnings (Jan. 1)               4,400
Dividends          2,500
Service Revenue               4,200
Office Supplies Expense          600
Depreciation Expense          2,500
Rent Expense              1,900          
     $31,900     $31,900