18. A small consulting firm had the following transactions over a two-month period, December 20X6 and January 20X7, and no other transactions. Client services were

performed and billed during December 20X6 for total fees of $102,000. Of this amount, $76,000 was collected in December 20X6 and the balance was collected in January 20X7. Expenses incurred to service these clients during December 20X6 were $70,000, of which $40,000 was paid in December 20X6 and the remaining $30,000 was paid in January 20X7. What was the net income for the month of December 20X6 under the approaches shown below?

           Accrual-based approach   Cash-based approach

a.                $32,000                          $36,000

b.                $62,000                            $6,000

c.                $32,000                            $6,000

d.           $62,000                          $36,000

19. Fashion Retailers, Inc.’s income statement for the year ended December 31, 20X8 included the following accounts:

Sales………………………………………………………….$60,000,000

Cost of goods sold……………………………………………$42,000,000

Selling expenses (total)……………………………………..…$5,000,000

General and administrative expenses………………………….$3,000,000

Income tax expense……………………………………………$2,500,000

What was the gross profit ratio for the year-ended December 31, 20X8?

a.    12.5%

b.    16.7%

c. 30%

d. 70%

  27. An engineering firm acquired a patent on January 1, 20X1 for $96,000. The patent had an original legal life of 20 years. On January 1, 20X1, when the patent was acquired by the engineering firm, it had a remaining legal life of 8 years. This patent is expected to be of value to the firm’s operations for the next 4 years, through December 31, 20X4. What is the annual patent amortization expense that will appear on the income statement for the year ended December 31, 20X3?

a.    $25,000.

b.    $12,000.

c. $4,800.

d. $24,000.

  28. An engineering firm acquired a patent on January 1, 20X1 for $96,000. The patent had an original legal life of 20 years. On January 1, 20X1, when the patent was acquired, it had a remaining legal life of 8 years. This patent is expected to be of value to the firm’s operations for the next 4 years, through December 31, 20X4. What will be the book or carrying value of the intangible asset Patents net of patent amortization on the firm’s statement of financial position as of December 31, 20X2?

a.    $0.

b.    $24.000.

c. $48,000.

d. $72,000.

29. Fashion Retailers, Inc. declared a dividend of $.60 a share on 100,000 shares of outstanding stock on December 17, 20X4 to shareholders of record on December 28, 20X4, payable on January 12, 20X5. Which answer choice below best describes the effect of the dividend on the accounts of Fashion Retailer’s Inc. on the declaration date?

a. The liability account “Dividends payable” will increase by $60,000 and the contra-equity account “Dividends” (which decreases the equity account “Retained earnings”) will increase by $60,000.

b. The liability account “Dividends payable” will decrease by $60,000 and the contra-equity account “Dividends” (which decreases the equity account “Retained earnings”) will increase by $60,000.  

c.    The asset account “Cash” will decrease by $60,000 and the contra-equity account “Dividends” (which increases the equity account “Retained earnings”) will increase by $60,000.     

d.    The asset account “Cash” will decrease by $60,000 and the contra-equity account “Dividends” (which decreases the equity account “Retained earnings”) will increase by $60,000.  

33. In the Statement of Cash Flows, the sale of long-term investments in stocks for $100,000 is reported as

a.    $100,000 cash used in investing activities.

b.    $100,000 cash used in financing activities.

c. $100,000 cash provided in financing activities.

d. $100,000 cash provided in investing activities.

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Status NEW Posted 11 Jul 2017 09:07 AM My Price 7.00

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