Question

Multiple choice questions. No need to explain.

Question 21

Sandstrom Corporation has an extraordinary loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%. At what amount should Sandstrom report each item?

Extraordinary loss

Unusual gain

$(50,000) $35,000

(50,000) 21,000

(30,000) 35,000

(30,000) 21,000

Question 22

The approach most companies use to provide information related to the components of other comprehensive income is a

second separate income statement.

combined income statement of comprehensive income.

separate column in the statement of changes in stockholders' equity.

footnote disclosure.

Question 23

The following information applied to Howe, Inc. for 2010:

Merchandise purchased for resale	$300,000
Freight-in	8,000
Freight-out	5,000
Purchase returns	2,000

What is ending inventory?

$300,000.

$303,000.

$306,000.

$311,000.

Question 24

The following information was derived from the 2010 accounting records of Perez Co.:

Perez's Goods

Perez 's Central Warehouse

Held by Consigness

Beginning inventory	$130,000		$ 14,000
Purchases	575,000		70,000

Freight-in

10,000

Transportation to consignees

5,000

Freight-out

30,000

8,000

Ending inventory

145,000

20,000

What is the cost of sales for 2010?

$570,000.

$600,000.

$634,000.

$639,000.

Question 25

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

consistently primary.

consistently secondary.

sometimes primary and sometimes secondary.

non-existent.

Question 26

The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its

invoice price.

invoice price plus the purchase discount lost.

invoice price less the purchase discount taken.

invoice price less the purchase discount allowable whether taken or not.

Question 27

Trade discounts are

not recorded in the accounts; rather they are a means of computing a price.

used to avoid frequent changes in catalogues.

used to quote different prices for different quantities purchased.

all of the above.

Question 28

Under the cash basis of accounting, revenues are recorded

when they are earned and realized.

when they are earned and realizable.

when they are earned.

when they are realized.

Question 29

Under which section of the balance sheet is "cash restricted for plant expansion" reported?

Current assets.

Non-current assets.

Current liabilities.

Stockholders' equity.

Answer 1

21). The Answer is B.

Extraordinary Loss = ($50000)

Unusual Gain = $35000 * (100%-40%) = $21000

22). The Answer is C.

C. Separate column in the statement of changes in Stockholder's Equity.

23). The answer is C.

Ending Inventory = Purchase + Freight in - Purchase Returns

= $300000 + $8000 - $2000

= $306000

24). The Answer is D.

Cost of Sale = Beginning Inventory + Purchases + Freight in + Transportation charges - Ending Inventory

= ($130000+$14000) + ($575000+$70000) + $10000 + $5000 - ($145000+$20000)

= $144000 + $645000 + $10000 + $5000 - $165000

= $639000

25). The Answer is C.

c. Sometimes primary and sometimes secondary.

26). The Answer is D.

D. Invoice Price less the purchase discount allowable whether taken or not.

27). The Answer is D.

D. All of the Above.

Trade Discounts are ;-

not recorded in the accounts; rather they are a means of computing a price.

used to avoid frequent changes in catalogues.

used to quote different prices for different quantities purchased.

28). The Answer is D.

D. when they are realized.

29). The Answer is B.

B. Non-Current Assets