learn4life

Which one of the following would be classified as anextraordinary item?

Thrifty Co. reported net income of $741,000 for its fiscal yearended January 31, 2017. At the beginning of that fiscal year,72,000 shares of common stock were outstanding. On October 31,2016, an additional 39,000 shares were issued. No other changes incommon shares outstanding occurred during the year. Also during theyear, the company paid the annual dividend on the 39,000 shares of5%, $50 par value preferred stock that were outstanding the entireyear.

Required:

a. Calculate basic earnings per share of commonstock for the year ended January 31, 2017. (Round youranswer to 2 decimal places.)

b. If Thrifty Co.'s preferred stock wereconvertible into common stock, diluted earnings per share can alsobe calculated.

Thrifty Co. reported net income of $795,000 for its fiscal yearended January 31, 2017. At the beginning of that fiscal year,71,000 shares of common stock were outstanding. On October 31,2016, an additional 36,000 shares were issued. No other changes incommon shares outstanding occurred during the year. Also during theyear, the company paid the annual dividend on the 30,000 shares of5%, $60 par value preferred stock that were outstanding the entireyear.

Required:

a. Calculate basic earnings per share of commonstock for the year ended January 31, 2017. (Round youranswer to 2 decimal places.)

b. If Thrifty Co.'s preferred stock wereconvertible into common stock, diluted earnings per share can alsobe calculated.

Which of the following best describes internal audit workpapers for consulting engagements?

a. Workpapers are not required for consulting engagements.

b. Workpaper requirements for consulting engagement are similar to assurance engagement but typically have less documentation.

c. Consulting engagements typically required more documentation than assurance engagements.

d. Workpapers for consulting engagements do not require a review by internal audit management.

A tax haven often is:

a. A country with high internal income taxes.

b. A country with no or low internal income taxes.

c. A country without income tax treaties.

d. A country that prohibits “treaty shopping.”

U.S. income tax treaties typically:

A company has earnings per share of $9.80. Its dividend per share is $.60, its market price per share is $124.46, and its book value per share is $100. Its price-earnings ratio equals: a. 16.33. b. 12.70. c. 10.20. d. 8.70. e. 9.80.

1. Materiality underlies the application of generally acceptedauditing standards, particularly the: a. general and field workstandards. b. general and reporting standards. c. field work andreporting standards. d. reporting standards. e. generalstandards.

2. Which of the following is not a weakness of analyticalprocedures? a. Fraudulent financial reporting often reports numbersthat appear to be reasonable. b. The auditor may have no basis forpresuming that the data used is accurate. c. Analytical proceduresare usually very cost effective. d. Improper specification ofrelationships between the variables used may undermine theireffectiveness. e. Any audit procedure runs some risk of failing todetect material misstatements.

3. The auditor makes preliminary judgments about materialitylevels in planning the audit. This materiality assessment isreferred to as: a. planning materiality. b. preliminarymateriality. c. initial materiality. d. beginning materiality. e.benchmark materiality.

4. When setting the level of materiality on a particularengagement, the auditor is required to consider: a. the uniquecircumstances pertaining to the entity. b. the information needs ofthe users. c. neither the unique circumstances pertaining to theentity nor the information needs of the users. d. the informationneeds of the client. e. both the unique circumstances pertaining tothe entity and the information needs of the users.

5. In a normal audit, the relationship between the level ofmateriality used to plan the engagement and the level ofmateriality used to evaluate evidence is: a. they must beidentical. b. the former may be either higher or lower than thelatter. c. the former is normally higher than the latter. d. theformer is normally lower than the latter. e. they can never be thesame.

6. In planning the audit, the auditor should assess materialityat two levels: a. the preliminary level and the final level. b. thecompany level and the divisional level. c. the account balancelevel and the detailed item level. d. the financial statement leveland the account balance level. e. the account balance level and thetransaction level.

7. Materiality at the account balance level is stated inplanning an audit because: a. some users make decisions based uponindividual account balances. b. the auditor verifies accountbalances in reaching an overall conclusion on the fairness of thefinancial statements. c. the opinion on the fairness of thefinancial statements extends to the individual account balances. d.official pronouncements have specified different levels ofmateriality for various financial statement items. e. the opinionon the fairness of the financial statements extends to theindividual transactions.

8. In making a preliminary judgments about materiality, theauditor initially determines the aggregate (overall) level ofmateriality for each statement. For planning purposes, the auditorshould use the: a. levels separately. b. level he or she judges tobe the more reliable. c. average of these levels. d. largestaggregate level. e. smallest aggregate level.

9. Quantitative guidelines for setting materiality levels arecurrently provided by: a. neither GAAP nor GAAS. b. GAAP. c. GAAS.d. both GAAP and GAAS. e. the AICPA.

10. Professional standards recognize that a misstatement that isquantitatively immaterial may be qualitatively material. In regardto these items, professional standards require the auditor to: a.plan the audit to search for them. b. design explicit procedures todetect them. c. be on the alert for them. d. report them to theaudit committee. e. report them directly to client management.

1. Materiality underlies the application of generally acceptedauditing standards, particularly the: a. general and field workstandards. b. general and reporting standards. c. field work andreporting standards. d. reporting standards. e. generalstandards.

2. Which of the following is not a weakness of analyticalprocedures? a. Fraudulent financial reporting often reports numbersthat appear to be reasonable. b. The auditor may have no basis forpresuming that the data used is accurate. c. Analytical proceduresare usually very cost effective. d. Improper specification ofrelationships between the variables used may undermine theireffectiveness. e. Any audit procedure runs some risk of failing todetect material misstatements.

3. The auditor makes preliminary judgments about materialitylevels in planning the audit. This materiality assessment isreferred to as: a. planning materiality. b. preliminarymateriality. c. initial materiality. d. beginning materiality. e.benchmark materiality.

4. When setting the level of materiality on a particularengagement, the auditor is required to consider: a. the uniquecircumstances pertaining to the entity. b. the information needs ofthe users. c. neither the unique circumstances pertaining to theentity nor the information needs of the users. d. the informationneeds of the client. e. both the unique circumstances pertaining tothe entity and the information needs of the users.

5. In a normal audit, the relationship between the level ofmateriality used to plan the engagement and the level ofmateriality used to evaluate evidence is: a. they must beidentical. b. the former may be either higher or lower than thelatter. c. the former is normally higher than the latter. d. theformer is normally lower than the latter. e. they can never be thesame.

6. In planning the audit, the auditor should assess materialityat two levels: a. the preliminary level and the final level. b. thecompany level and the divisional level. c. the account balancelevel and the detailed item level. d. the financial statement leveland the account balance level. e. the account balance level and thetransaction level.

7. Materiality at the account balance level is stated inplanning an audit because: a. some users make decisions based uponindividual account balances. b. the auditor verifies accountbalances in reaching an overall conclusion on the fairness of thefinancial statements. c. the opinion on the fairness of thefinancial statements extends to the individual account balances. d.official pronouncements have specified different levels ofmateriality for various financial statement items. e. the opinionon the fairness of the financial statements extends to theindividual transactions.

8. In making a preliminary judgments about materiality, theauditor initially determines the aggregate (overall) level ofmateriality for each statement. For planning purposes, the auditorshould use the: a. levels separately. b. level he or she judges tobe the more reliable. c. average of these levels. d. largestaggregate level. e. smallest aggregate level.

9. Quantitative guidelines for setting materiality levels arecurrently provided by: a. neither GAAP nor GAAS. b. GAAP. c. GAAS.d. both GAAP and GAAS. e. the AICPA.

10. Professional standards recognize that a misstatement that isquantitatively immaterial may be qualitatively material. In regardto these items, professional standards require the auditor to: a.plan the audit to search for them. b. design explicit procedures todetect them. c. be on the alert for them. d. report them to theaudit committee. e. report them directly to client management.

1. Materiality underlies the application of generally acceptedauditing standards, particularly the: a. general and field workstandards. b. general and reporting standards. c. field work andreporting standards. d. reporting standards. e. generalstandards.

2. Which of the following is not a weakness of analyticalprocedures? a. Fraudulent financial reporting often reports numbersthat appear to be reasonable. b. The auditor may have no basis forpresuming that the data used is accurate. c. Analytical proceduresare usually very cost effective. d. Improper specification ofrelationships between the variables used may undermine theireffectiveness. e. Any audit procedure runs some risk of failing todetect material misstatements.

3. The auditor makes preliminary judgments about materialitylevels in planning the audit. This materiality assessment isreferred to as: a. planning materiality. b. preliminarymateriality. c. initial materiality. d. beginning materiality. e.benchmark materiality.

4. When setting the level of materiality on a particularengagement, the auditor is required to consider: a. the uniquecircumstances pertaining to the entity. b. the information needs ofthe users. c. neither the unique circumstances pertaining to theentity nor the information needs of the users. d. the informationneeds of the client. e. both the unique circumstances pertaining tothe entity and the information needs of the users.

5. In a normal audit, the relationship between the level ofmateriality used to plan the engagement and the level ofmateriality used to evaluate evidence is: a. they must beidentical. b. the former may be either higher or lower than thelatter. c. the former is normally higher than the latter. d. theformer is normally lower than the latter. e. they can never be thesame.

6. In planning the audit, the auditor should assess materialityat two levels: a. the preliminary level and the final level. b. thecompany level and the divisional level. c. the account balancelevel and the detailed item level. d. the financial statement leveland the account balance level. e. the account balance level and thetransaction level.

7. Materiality at the account balance level is stated inplanning an audit because: a. some users make decisions based uponindividual account balances. b. the auditor verifies accountbalances in reaching an overall conclusion on the fairness of thefinancial statements. c. the opinion on the fairness of thefinancial statements extends to the individual account balances. d.official pronouncements have specified different levels ofmateriality for various financial statement items. e. the opinionon the fairness of the financial statements extends to theindividual transactions.

8. In making a preliminary judgments about materiality, theauditor initially determines the aggregate (overall) level ofmateriality for each statement. For planning purposes, the auditorshould use the: a. levels separately. b. level he or she judges tobe the more reliable. c. average of these levels. d. largestaggregate level. e. smallest aggregate level.

9. Quantitative guidelines for setting materiality levels arecurrently provided by: a. neither GAAP nor GAAS. b. GAAP. c. GAAS.d. both GAAP and GAAS. e. the AICPA.

10. Professional standards recognize that a misstatement that isquantitatively immaterial may be qualitatively material. In regardto these items, professional standards require the auditor to: a.plan the audit to search for them. b. design explicit procedures todetect them. c. be on the alert for them. d. report them to theaudit committee. e. report them directly to client management.

Which of the following is true of decentralization?

a. It is usually achieved by creating units called divisions.

b. Decentralization allows only the CEO of a company to make all important decisions.

c. Decentralization allows higher management to make better decisions by using local information.

d. Under decentralization, lower-level managers are responsible only for implementing decisions.

e. It protects segments of a company from competitive pressures.

Which of the following formulas calculates the return on investment (ROI)?

a. After-tax Operating Income / Total Capital Employed

b. Residual Income / Sales

c. Total Capital Employed / Operating Income

d. Operating Income / Minimum Expected Return

e. Operating Income / Average Operating Assets

Fetzer Company declared a $0.95 per share cash dividend. The company has 400,000 shares authorized, 370,000 shares issued, and 20,000 shares in treasury stock. The number of shares to which the dividend applies is:

a. 30,000.

b. 400,000.

c. 350,000.

d. 370,000.

e. 380,000.

when reading a bank statement,which reference indicates an increase in the cash balance?

1. Debit Memorandum

2. Credit Memorandum

3. NSF check

4. Service Charge

Questions 1, 2 & 3 will use the following information:Using the following information, prepare a bank reconciliation for Salem Co. for May 31, 2010.(a) The bank statement balance is $2,597.(b) The cash account balance is $2,680.(c) Outstanding checks amounted to $703.(d) Deposits in transit are $732.(e) The bank service charge is $25.(f) Interest added to the checking account by the bank is $7.(g) A check drawn for $59 was incorrectly charged by the bank as $95.Questions 4 & 5 will use the following information: The bank statement for Marley Co. indicates a balance of $10,000.50 on June 30, 2010.The cash account in the depositor's records had a balance of $4,677.10. Prepare a bank reconciliation on the basis of the following reconciling items: (a) Cash sales of $342 had been erroneously recorded as $324.(b) Deposits in transit not recorded by bank, $700.(c) Bank debit memorandum for service charges, $30.(d) Bank credit memorandum for note collected by bank, $2,050, including $50 interest.(e) Bank debit memorandum for $207.40 NSF (not sufficient funds) check from Alice Martin, a customer.(f) Checks outstanding, $4,192.80.

The bank statement for Allen Co. indicates a balance of $8,000.00 on June 30, 2005. After the journals for June had been posted, the cash account had a balance of $3,675.00. Prepare a bank reconciliation on the basis of the following reconciling items:

(a) Cash sales of $342 had been erroneously recorded in the cash receipts journal as $324.

(b) Deposits in transit not recorded by bank, $500.00

(c) Bank debit memorandum for service charges, $25.00

(d) Bank credit memorandum for note collected by bank, $2850, including $50 interest

(e) Bank debit memorandum for $218.00 NSF (not sufficient funds) check from alice Bell, a customer

(f) Checks outstanding, $2,200.00

The bank statement for allen co.indicates a balance of $8,000 on june 30. After the journals forJune had been posted, the crash account had a balance of $3,675.perpare a bank reconciliation on the basis of the followingreconciling items:

A. Cash sales of $342 had been erroneously recorded in the crashreceipts journal as $324

B. Deposits in transit not recoreded by bank, $500.

C. Bank debit memorandom for service charges ,$25.

D. Bank credit memorandom for note collected by bank, $2,850including $50 intrest

E. Bank debit memorandom for $218 NSF (not sufficient funds)check from bell, a customer.

F. Checks outstanding, $2,200.

The type of account and normal balance of unearned consulting fee is

1. Asset, debit

2. Asset, credit

3. Liability, debit

4. Liability, credit.

The classification and normal balance of the accounts payable account is

a. Liability, debit

b. Liability, credit

c. Asset, debit

d. Asset, credit

Which of the following describes the normal balance and classification of the Dividends account?

A. Credit, expense

B. Debit, stockholders’ equity

C. Debit, expense

D. Credit, stockholders’ equity

Which of the following items is handled as a deferral? AccruedExpenses Accrued Revenues Prepaid Expenses Depreciation

Which of the following describes the normal balance andclassification of the Dividends account?

When a taxpayer files for EITC based on earned income from Schedule C, their Tax Professional must:

a. Attach documentation of their income and expenses to the tax return

b. Prepare the return in a way which is disadvantageous to the taxpayer

c. Document all questions they asked the taxpayer, and all of the taxpayer's responses

d. Document the questions and the client's answers pertaining to the income that is advantageous for EITC

Which of the following is an example of an expense for this company?

This company recording trade accounts receivable at net realizable value and recording property, plant, and equipment at cost (as indicated in Note 1) are demonstrative of the measurement principle. True/False

As indicated in Calloway Golf 10-K Annual Report

The following contains information from the records of Bourne Engineers and Architects.

Calculate the current ratio.​ (Round your answer to two decimal​ places.)

A.0.59

B.1.90

C.2.25

D.1.51

1. Most Managers believe that the ideal cost- allocation base isthe __________ of the indirect costs, since there is a cause andeffect relationship between the cost allocation base and theindirect costs.

A. Cost analysis B. Cost drive C.Costing system D. Cost base E. Cost period.

2. Casio Company

1) An increase in inventory will result in _____ net operating income when using absorption costing as opposed to variable costing.

2)

A manufacturing company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:

The distribution of resource consumption across the three activity cost pools is given below:

How much cost, in total, would be allocated in the first-stage allocation to the Order Processing cost pool?

The following unit cost would be seen in a (an) _______ costing system.

Jerry contributed $8,000 for a 25 % interest in a bookstore. He also contributed a cash register . With a fair market value of $3000., adjusted basis of $2,500.

A. $8000.

B. $9,000

C. $9,375

D. $10,500

Jerry contributed $8,000 for a 25% interest in a bookstore. healso contributed a cash register, with a fair market value of$3,000, adjusted basis of$2,500, and a loan amount of $1,500. whatis Jerry's beginning partnership basis in the bookstore? 1) 8,0002)9,000 3)9,375 4)10,500

On January 1 of the current year, Anna and Jason form an equalpartnership. Anna contributes $50,000 cash and a parcel of land(adjusted basis of $100,000; fair market value of $150,000) inexchange for her interest in the partnership. Jason contributesproperty (adjusted basis of $180,000; fair market value of$200,000) in exchange for his partnership interest. Which of thefollowing statements is true concerning the income tax results ofthis partnership formation?

A. Jason recognizes a $20,000 gain on his property transfer.

B. Jason has a $200,000 tax basis for his partnershipinterest.

C. Anna has a $150,000 tax basis for her partnershipinterest.

D. The partnership has a $150,000 adjusted basis in the landcontributed by Anna.

E. None of the statements is true.

On January 1 of the current year, Sarah and Bart form an equalpartnership. Sarah makes a cash contribution of $60,000 and aproperty contribution (adjusted basis of $160,000; fair marketvalue of $140,000) in exchange for her interest in the partnership.Bart contributes property (adjusted basis of $120,000; fair marketvalue of $200,000) in exchange for his partnership interest. Whichof the following statements is true concerning the income taxresults of this partnership formation? a. Sarah has a $200,000 taxbasis for her partnership interest. b. The partnership has a$140,000 adjusted basis in the property contributed by Sarah c.Bart recognizes an $80,000 tax gain on his property transfer. d.Bart has a $120,000 tax basis for his partnership interest. e. Noneof the statements is true.

If an asset is determined to be impaired, it should be:

Multiple Choice

a. Written up to its historical cost.

b. Depreciated only using the straight-line method.

c .Reclassified as a liability.

d. Written down to its fair market value.

1. A gain is recognized on the disposal of plant assetswhen:

A) The sales price is greater than theresidual value but less than the book value.

C) The sales price is greater than the bookvalue and greater than the residual value.

D) The sales price is greater than the bookvalue and less than the residual value.

4. Silverado Company purchased equipmenthaving an invoice price of $21,100. The terms of sale were 4/10,n/30, and Silverado paid within the discount period. In addition,Silverado paid a $155 delivery charge, $225 installation charge,and $947 sales tax. The amount recorded as the cost of thisequipment is:

A) $21,583.

B) $20,636

D) $21,480

6. On March 2, 2009, Farlow Industriespurchased a fleet of automobiles at a cost of $660,000. The carsare to be depreciated by the straight-line method over six yearswith no salvage value. Farlow uses the half-year convention tocompute depreciation for fractional periods. The book value of thefleet of automobiles at December 31, 2010, will be:

A) $495,000.

B) $440,000.

D) $400,000

7. Which of the following would not beamortized?:

A) Oil well

B) Copyright

D) Patent

8. Del Rey Imports sold a depreciable plantasset for cash of $25,000. The accumulated depreciation amounted to$60,000, and a loss of $5,000 was recognized on the sale. Underthese circumstances, the original cost of the asset must havebeen:

B) $65,000

C) $80,000

D) $90,000

9. Total stockholders' equity of ConcordCompany is $3,000,000. The fair market value of Concord's netidentifiable assets (assets less liabilities) is $4,000,000.Wheeler Corporation makes an offer to purchase Concord's entirebusiness for $4,800,000. In this situation:

A) Concord Company should report goodwillof $800,000 in its balance sheet.

B) Concord Company should report goodwillof $1,800,000 in its balance sheet.

D) Wheeler Corporation is willing to pay$800,000 for goodwill generated by Concord, and Wheeler will reportthis goodwill in its balance sheet if the purchase isfinalized.

12. If an asset is determined to beimpaired, it should be:

A. depreciated only using the straight-linemethod

C. reclassified as a liability

D. written down to its fair marketvalue

1) Based on the following assumptions and financial information, select all the true statements.

(1) Selling price per unit, variable cost per unit, and total fixed costs do not change during the four years.

(2) There is no beginning inventory at Year 1.

2)

Sales above the break-even point will result in net profit equal to _______.

Routsong Company had the following sales and production data for the past four years:

Selling price per unit, direct material per unit, direct labor per unit, variable overhead cost per unit, and fixed overhead cost are the same in each year. Ignoring the selling and administrative costs, which of the following statements is not correct?

A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.

B. Because of the changes in production levels, under variable costing the unit product cost will change each year.

C. The total net operating income for all four years combined would be the same under variable and absorption costing.

D. Under absorption costing, net operating income in Year 1 would be less than the net operating income in Year 2.

Fixed selling expenses are period costs

a)under neither absorption nor variable costing.

b)under absorption costing, but not under variable costing.

c)under variable costing, but not under absorption costing.

d)under both absorption and variable costing.