Question

1. Data from the financial statements of Dils Brothers Co. and J. Cox, Inc. are presented below (in millions):

	Dils Brothers Co.	J. Cox, Inc.
Total liabilities, 2016	$70,914	$47,422
Total liabilities, 2015	72,208	60,092
Total assets, 2016	100,372	73,744
Total assets, 2015	94,114	70,416
Revenue, 2016	306,932	163,040
Net income, 2016	280	1,572

To the nearest hundredth, what is the 2016 debt-to-total assets ratio for Dils Brothers Co.?

Select one:

A. 44.16

B. 3.78

C. 0.26

D. 0.71

2.

An economic event that requires accounting recognition defines:

Select one:

A. The cost principle

B. An asset

C. An accounting transaction

D. An income statement

3.

Which of the following statements is true regarding generally accepted accounting principles (GAAP)?

Select one:

A. U.S. GAAP is the same as GAAP in other countries.

B. GAAP is subject to change as conditions warrant.

C. Under GAAP, if two companies engage in the same transactions, they must choose the same accounting methods.

D. GAAP is a set of laws.

4.

Wonderland Company purchased equipment with a cost of $190,000, with an estimated residual value of $10,000, and an estimated life of 15 years. After 5 full years of recording depreciation by the straight-line method, it was determined that due to obsolescence, the equipment’s useful life should be reduced by 5 years and the residual value changed to zero.  

The depreciation expense for Year 6 is:

Select one:

A. $22,000

B. $26,000

C. $11,000

D. $20,000

5.

Data on the physical inventory for Ace Company as of December 31, 2016 are given below:

Inventory Items	Quantity on hand	Unit Cost	Unit Market Value
Appliances:
Refrigerators	12	$2,000	$1,800
Dishwashers	18	$1,200	$1,100
Ovens	15	$1,000	$1,200
Electronics:
Stereos	20	$1,400	$1,500
Televisions	25	$1,800	$1,704

Assuming Ace Company applies the LCM method on the inventory by major category of items, the inventory balance reported on the Balance Sheet as of December 31, 2016 will be:

Select one:

A. $132,000

B. $133,600

C. $133,200

D. $132,400

6.

M. Fields, Inc. wishes to accumulate $1,200,000 to be used to pay off a balloon note at the end of 4 years.  

How much will M. Fields invest today to accumulate the desired amount if the investment earns an annual rate of 12% compounded quarterly? (Select the closest amount.)

Select one:

A. $747,804

B. $130,496

C. $508,416

D. $704,000

7.

Blue Moon Company purchased a machine on January 1, 2016 for $120,000, with a 5-year life, and a $12,000 residual life.  

Compute the book value of the machine on December 31, 2018 if the company uses the double-declining balance method of depreciation.

Select one:

A. $25,920

B. $21,600

C. $48,000

D. $20,000

Answer 1

1.Debts to total asset ratio= total liabilities/total assests

It is for dils brother co. for 2016=70914/100372=0.71

Answer: D

2 . Answer :C

3.Answer:A

4. Depreciation by straight line method=cost price-residual valu

                                                                                Estimated life

                =190000-10000/15= 12000

     Depreciation for first 5 years=12000x5=60000

    Remaining value after 5 years=190000-60000=130000

    New estimated useful life 5 years with no residual value

    Depreciation for remaining period will be+cost/estimated life

                =130000/5=$26000

                Thus answer: B

5.Answer:A

    Working:

APPLIANCES                                                     COST                     MARKET PRICE

REFRIGERATOR                                                 24000                                    21600

DISHWASHERS                                                 21600                                    19800

OVENS                                                                  15000                                    18008

                                                                                -------                                    -------

                                                                                60600                                    59400

                                                                                --------                                   -------

ELECTRONICS

Stereos                                    28000                   30000

Televisions                              45000                   72600

                                                ---------                  --------

                                                73000                   72600

                                                ---------                  ---------

                   ANSWER: 59400+72600=132000

7.depreciation(slm)= cost/estimated life=120000/5=25000

          Depreciation rate=24000/120000x100=20%

In double declining method residual value is not considered

Now rate as per declining method will be double of slm I,e,,40%

Answer will be A(25920)