Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Slide 36•1. The 2003 records of Thomasville Company showed beginning inventory, $50,000; cost of goods sold, $100,000; and ending inventory, $60,000. The purchases for 2003 equal •a. $100,000 •b. $90,000 •c. $110,000 •d. $120,000•2. Which of the following is an example of a typical institutional investor. •a. The officers of Callaway Golf who own shares of stock in the company •b. Employees who participate in a stock option plan and own shares of Callaway Golf •c. The mutual funds managed by Fidelity Management and Research •d. All of the above are institutional investors•3. On December 31, 2003, the end of the accounting period, Dunn Company has on hand 5,000 units of a resale item which cost $21 per unit when purchased on June 15, 2003. The selling price is $35 per unit. On December 30, 2003, the cost had dropped to $20 per unit. In view of the large quantity of units on hand, no purchases are anticipated in the next six to nine months. At what inventory amount should the 5,000 units be reported? •a. $175,000. •b. $110,000. •c. $105,000. •d. $100,000•4. The Securities and Exchange Commission's (SEC report that is required to be filed if any special event occurs that is material in amount is the •a. Form 10K •b. Form 8K •c. Form 10Q •d. Prospectus•5. On March 1, Chapine Company purchased a new stamping machine for $5,000. Chapine paid cash for the machine. Other costs associated with the machine were: transportation costs, $300; sales tax paid $200; and installation cost, $100. The cost recorded for the machine was •a. $5,200. •b. $5,600. •c. $5,500. •d. $5,000.•6. Johnstone Co. uses the periodic inventory system. The following information about their inventory of Model ZZ Mountain Bicycles is available:•Date•TransactionNumber of UnitsCost per Unit1/1Beginning Inventory50$8004/12Purchase80$8207/8Purchase75$8409/22Purchase90$850•During the year, 235 bicycles were sold at a price of $1,500 each. Round final answers to the nearest dollar. What was ending inventory and cost of goods sold on 12/31 under the FIFO cost flow assumption? Round final answers to the nearest dollar.•a. $51,000 and $194,100 •b. $48,200 and $196,900 •c. $49,851 and $195,249 •d. None of the above.•7. The primary qualities of accounting information that increase the usefulness to decision makers are •a. relevance and cost-benefit. •b. reliability and comparability. •c. materiality and relevance. •d. reliability and relevance.•8. Which of the following condition(s) must be met for an item to be disclosed as extraordinary on the income statement? •a. It must be unusual in nature. •b. Extraordinarily large in comparison to other items on the income statement. •c. Infrequent in occurrence. •d. Both A and C.9. Which of the following statements is true? a. Depreciation expense is added to net income in the operating activities section of the statement of cash flows because it had no cash effect on net income under the indirect method. b. Depreciation is a non-cash expense that reduces net income but involves no outflow of cash. c. The only cash effect for depreciation is the tax savings provided by its deduction to derive taxable income. d. All of the above are true.•10. Which of the following describes the conservatism constraint? •a. Avoid overstating assets and revenues and avoid understating expenses and liabilities. •b. The benefits of accounting for and reporting information should outweigh the costs. •c. Amounts that are large enough to influence a user's decisions. •d. Differences due to long-standing and accepted accounting and reporting in a particular industry.11.In 1998, Delta Air Lines had a fixed asset turnover of 1.63 compared to Southwest Airlines of 1.10. What is the most likely cause of Delta's higher ratio? (FATO = Sales / Average Net Fixed Assets)a. Delta is less efficient in generating net sales from its operational assets. b. Delta is more efficient at generating net income from employing its operational assets. c. Delta is able to generate greater sales from its operational assets. d. Delta is able to generate less net income from its operational assets.12.Under the FIFO cost flow assumption during a period of inflation, which of the following is false? a. Income tax expense will be higher than under LIFO. b. Gross margin will be higher than under LIFO. c. Ending inventory will be lower than under LIFO. d. Cost of goods sold will be lower than under LIFO.13.Waves Inc. issues 100,000 shares of its $.10 par stock for $20 per share. Which of the following would NOT be an effect of that sale?•a. Cash would increase by $2,000,000•b. Total stockholders’ equity would increase by $2,000,000•c. Common stock would increase by $10,000•d. Capital paid in excess of par (Paid in Capital) would increase by $2,000,000•14. Bethany Company plans to depreciate a new building using declining-balance depreciation with 200 percent acceleration rate. The building cost $400,000. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year? •a. $15,360. •b. $16,000. •c. $29,440. •d. $32,000.•15. If a company increases their inventory turnover ratio from last year to the current year, which of the following would cause that increase? (ITO= COGS/ Average Inventory)a. Reduction of inventory levels b. Speedier production processes c. Increasing sales at a faster rate than the growth in inventory while maintaining a constant gross profit percentage d. All of the above•16. When preparing the monthly bank reconciliation, the accountant for Tiffany Toys noted that a check received from a customer last month for $89 was marked NSF and returned along with the bank statement. In reconciling the bank balance with the company's cash account, the $89 should be a. deducted from the company's cash balance. b. added to the bank balance. c. deducted from the bank balance. d. added to the company's cash balance.17. Intangible assets include a.Natural resources,