Practice Final
1. Jackson Company borrowed $80,000 on July 1, 2013. The company will make no payments until
July 1, 2016, and at that time, Jackson will owe $95,000. What is Jackson's interest expense for
2015?
a. $2,500
b. $10,000
c. $5,000
d. $12,500
2. Which of the following is true of accrual accounting?
a. It is not allowed by either GAAP or IFRS in the preparation of financial statements.
b. It is required to be used on the statement of cash flows.
c. It does not require that end-of-the-period adjustments be made.
d. It requires that interest expense be shown as a liability before it is paid.
3. Panthers, Inc. began 2014 with $46,000 in total assets and $12,000 in common stock. The
company started the business in 2013 and in that year, it earned $6,000 in net income and paid
no dividends. How much did Panthers have in total assets at the end of 2014 if it earned $10,000
in net income and paid $2,000 in dividends. Panthers had total liabilities at December 31, 2014
of $33,000.
a. $59,000
b. $49,000
c. $52,000
d. $55,000
4. Which of the following best describes the term "leverage"?
a. The company's ability to pay its bills as they come due.
b. The extent to which the company uses debt as opposed to equity.
c. A comparison of the company's current assets to its current liabilities.
d. A comparison of net income to a number on the balance sheet
5. Ridgewood Company had the following ending balances on its annual financial statements:
How much did Ridgewood pay for insurance during 2014?
a. $10,700
b. $12,100
c. $12,300
d. $10,900
6. Kangri Company made $145,000 in sales during the year, but only collected $124,000 in cash.
What is the beginning balance in accounts receivable if the ending balance was $27,000?
a. $48,000
b. $6,000
c. $21,000
d. $18,000
, 7. Which of the following is true of depreciation?
a. Recorded depreciation reduces the balance in current assets.
b. As accumulated depreciation increases, the net carrying value of fixed assets decreases.
c. Depreciation is recorded on land, buildings, and equipment.
d. Accumulated depreciation is a liability account.
8. Which one of the following is one of the Big Four accounting firms?
a. JP Morgan
b. BNP Paribus
c. KPMG
d. Barclays
9. Assume the following transactions were taken from the statement of cash flows
Which of the following statements is true?
a. The balance in the land account at December 31, 2013 was $25,000.
b. The balance in the land account at December 31, 2013 was $20,000.
c. The balance in the land account at December 31, 2013 was $17,000.
d. The balance in the land account at December 31, 2014 was $10,000.
10. Parker Co. began 2014 with $65,000 in assets, $12,000 in common stock, and $8,000 in retained
earnings. During 2014 Parker did not issue any stock or pay any dividends, and the company had
$14,000 in net income. How much in total assets does Parker have at December 31, 2014 if total
liabilities at that time are $31,000?
a. $53,000
b. $45,000
c. $57,000
d. $65,000
11. Bing Corp. produced widgets which it sold for $8 apiece. The variable cost for each widget was
25% of the sales price and the total fixed cost was $22,000. Approximately how many units does
Bing need to sell to earn $1 net income per widget?
a. 4,400
b. 11,000
c. 7,333
d. 3,667
12. Rybak, Inc. had sales of $630,000 during 2013. In addition Rybak received $20,000 in cash during
2013 that it will earn in January, 2014. During 2013, Rybak purchased $300,000 of inventory, and
sold $330,000 of inventory. What was Rybak's gross profit for 2013?
a. $300,000
b. $350,000
c. $320,000
1. Jackson Company borrowed $80,000 on July 1, 2013. The company will make no payments until
July 1, 2016, and at that time, Jackson will owe $95,000. What is Jackson's interest expense for
2015?
a. $2,500
b. $10,000
c. $5,000
d. $12,500
2. Which of the following is true of accrual accounting?
a. It is not allowed by either GAAP or IFRS in the preparation of financial statements.
b. It is required to be used on the statement of cash flows.
c. It does not require that end-of-the-period adjustments be made.
d. It requires that interest expense be shown as a liability before it is paid.
3. Panthers, Inc. began 2014 with $46,000 in total assets and $12,000 in common stock. The
company started the business in 2013 and in that year, it earned $6,000 in net income and paid
no dividends. How much did Panthers have in total assets at the end of 2014 if it earned $10,000
in net income and paid $2,000 in dividends. Panthers had total liabilities at December 31, 2014
of $33,000.
a. $59,000
b. $49,000
c. $52,000
d. $55,000
4. Which of the following best describes the term "leverage"?
a. The company's ability to pay its bills as they come due.
b. The extent to which the company uses debt as opposed to equity.
c. A comparison of the company's current assets to its current liabilities.
d. A comparison of net income to a number on the balance sheet
5. Ridgewood Company had the following ending balances on its annual financial statements:
How much did Ridgewood pay for insurance during 2014?
a. $10,700
b. $12,100
c. $12,300
d. $10,900
6. Kangri Company made $145,000 in sales during the year, but only collected $124,000 in cash.
What is the beginning balance in accounts receivable if the ending balance was $27,000?
a. $48,000
b. $6,000
c. $21,000
d. $18,000
, 7. Which of the following is true of depreciation?
a. Recorded depreciation reduces the balance in current assets.
b. As accumulated depreciation increases, the net carrying value of fixed assets decreases.
c. Depreciation is recorded on land, buildings, and equipment.
d. Accumulated depreciation is a liability account.
8. Which one of the following is one of the Big Four accounting firms?
a. JP Morgan
b. BNP Paribus
c. KPMG
d. Barclays
9. Assume the following transactions were taken from the statement of cash flows
Which of the following statements is true?
a. The balance in the land account at December 31, 2013 was $25,000.
b. The balance in the land account at December 31, 2013 was $20,000.
c. The balance in the land account at December 31, 2013 was $17,000.
d. The balance in the land account at December 31, 2014 was $10,000.
10. Parker Co. began 2014 with $65,000 in assets, $12,000 in common stock, and $8,000 in retained
earnings. During 2014 Parker did not issue any stock or pay any dividends, and the company had
$14,000 in net income. How much in total assets does Parker have at December 31, 2014 if total
liabilities at that time are $31,000?
a. $53,000
b. $45,000
c. $57,000
d. $65,000
11. Bing Corp. produced widgets which it sold for $8 apiece. The variable cost for each widget was
25% of the sales price and the total fixed cost was $22,000. Approximately how many units does
Bing need to sell to earn $1 net income per widget?
a. 4,400
b. 11,000
c. 7,333
d. 3,667
12. Rybak, Inc. had sales of $630,000 during 2013. In addition Rybak received $20,000 in cash during
2013 that it will earn in January, 2014. During 2013, Rybak purchased $300,000 of inventory, and
sold $330,000 of inventory. What was Rybak's gross profit for 2013?
a. $300,000
b. $350,000
c. $320,000
