Accounting final review | Economics homework help

The following data are for Guava Company’s retiree health care plan for the current calendar year.

Number of employees covered                                5

Years employed as of January 1                 4 (each)

Attribution period                                           20 years

EPBO, January 1                                                $60,000

EPBO, December 31                                        $63,000

Interest rate                                                      6%

Funding and plan assets                                None


1. What is the interest cost to be included in the current year’s postretirement benefit expense?

A. $3,600

B. $720

C. $768

D. $4,000


2. What is the service cost to be included in the current year’s postretiremnt benefit expense?

A. $3000

B. $3180

C. $3200

D. $4000


3. What is the correct entry to record postretirement benefit expense for the current year?

A. Postretirement benefit expense                         $3,900

     APBO                                                                               $3.900

B. Postretirement benefit expense                         $3,900

    Cash                                                                                  $3900

C. Postretirement benefit expense                         $4,000

   APBO                                                                                 $4,000

D. Postretirement benefit expense                         $7,600

     APBO                                                                               $7,600


4. Prior service cost is included among OCI items in the statement f comprehensive income and thus subsequently becomes part of AOCI where it is amortized over the average remaining service period using.



C. Both U.S. GAAP and IFRS

D. Neither U.S GAAP nor IFRS


5. Prior service cost is expensed immediately using:

A. U.S. GAAP.                                                     




C. Both U.S. GAAP and IFRS.


D. Neither U.S. GAAP nor IFRS.                                                  



6. Recording the expense for postretirement benefits will not:


A. Increase the APBO.


B. Increase the postretirement benefit assets.


C. Decrease the prior service cost.


 D. Increase the net loss-AOCI.





Oregon Co.’s employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and they have completed 35 years of service. The benefits provide 15 years reimbursement for health care services of $20,000 annually, beginning one year from the date of retirement.


Ralph Young was hired at the beginning of 1977 by Oregon after turning age 22 and is expected to retire at the end of 2015 (age 60). The discount rate is 4%. The plan is unfunded. The PV of an ordinary annuity of $1 where n = 15 and i = 4% is 11.11839. The PV of $1 where n = 2 and i = 4% is 0.92456


7. What is the present value of Ralph’s net benefits as of his expected retirement date, rounded to the nearest dollar?

A. $166,580.

B. $222,368.

 C. $300,000.

D. None of the above is correct.


8. Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed:

A. The EPBO would be $12,000.

B. The EPBO would be $8,400.

C. The APBO would be $8,400.

D. The APBO would be $12,000.






The following partial information is taken from the comparative balance sheet of Levi Corporation.

Shareholders’ equity                                                     12/31/2013                                         12/31/2012

Common stock, $5 per value,

20 million shares authorized, 15

Million shares issued and 9 million                            $75 million                                           $45 million

Shares outstanding at 12/31/2013,

And  __ million shares issued and __

Shares outstanding at 12/31/2012.


Additional paid-in capital on common stock.        520 million                                           392 million


Retained earnings                                                           197 million                                           157 million


Treasury common stock, at cost, 6 million

Shares at 12/31/2013 and 4 million shares at        (72 million)                                          (50 million)



Total shareholders’ equity                                           720 million                                           544 million


9. How many of Levi’s common shares were outstanding on 12/31/2012?

A. 14 million.

B. 9 million.

C. 5 million.

D. None of the above is correct.

10. What was the average price (rounded to the nearest dollar) of the additional shares issued by Levi in 2013?

A. $5 per share.

B. $26 per share.

C. $39 per share.

D. Cannot be determined from the given information.


11. What was the average price of the additional treasury shares purchased by Levi during 2013?

A. $11 per share.

B. $12 per share.

C. $12.50 per share.

D. None of the above is correct.


12. What was the amount of net income earned by Levi during 2013?

A. $0.

B. $40 million.

C. $62 million.

D. Cannot be determined from the given information.


13. Roberto Corporation was organized on January 1, 2013. The firm was authorized to issue 100,000 shares of

$5 par common stock. During 2013, Roberto had the following transactions relating to shareholders’ equity:

Issued 10,000 shares of common stock at $7 per share.

Issued 20,000 shares of common stock at $8 per share.

Reported a net income of $100,000.

Paid dividends of $50,000.

Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).

What is total shareholders’ equity at the end of 2013?

A. $270,000.

B. $300,000.

C. $250,000.

D. $200,000.


14. A statement of comprehensive income does not include:

A. Net income.

B. Losses resulting from the return on pension assets exceeding expectations.

C. Losses from changes in estimates regarding the PBO.

D. Prior service cost.


As of December 31, 2013, Warner Corporation reported the following:

Dividends payable                                                           20,000

Treasury stock                                                                   600,000

Paid-in capital – share repurchase                            20,000

Other paid-in capital accounts                                    4,000,000

Retained earnings                                                           3,000,000

During 2014, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were $1,500,000; and stock dividends declared were $500,000.


15. What was shareholders’ equity as of December 31, 2013?

A. $7,020,000.

B. $6,440,000.

C. $6,420,000.

D. $6,400,000.


16. When more than one security is sold for a single price and the total selling price is not equal to the sum of the market prices, the cash received is allocated between the securities based on:

A. Relative book values.

B. Par values.

C. Relative market values.

D. The earnings per share.


17. The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

 A. The right to vote on policy issues.

B. The right to share in profits when dividends are declared (in proportion to the percentage of shares owned by the shareholder).

C. The right to dividends equal to a stated rate time par value (if dividends are paid).

 D. The right to share in the distribution of any assets remaining at liquidation after other claims are satisfied.


18 When stock traded on an active exchange is issued for a machine:

A. No entry is recorded until restrictions are lifted.

B. An asset is recorded for the fair value of the stock.

C. An asset is recorded for the appraised value of the machine.

D. Paid-in capital is increased by the appraised value of the machine.


On January 1, 2013, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2015, and expire on January 1, 2019. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant.


19. If unexpected turnover in 2014 caused the company to estimate that 10% of the options would be forfeited, what amount should M recognize as compensation expense for 2014?

A. $30,000.

B. $60,000.

C. $120,000.

D. $150,000.


20. On January 1, 2013, Oliver Foods issued stock options for 40,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Oliver Foods’ stock price increases by 5% in four years. Oliver Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years?

A. $10,000.

B. $45,000.

C. $50,000.

D. No effect.


21. Under its executive stock option plan, Z Corporation granted options on January 1, 2013, that permit executives to purchase 15 million of the company’s $1 par common shares within the next eight years, but not before December 31, 2015 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options expired in 2019 without being exercised. By what amount will Z’s shareholder’s equity be increased?

A. $60 million.

B. $270 million.

C. $315 million.

D. $330 million.


22. Which of the following is not a potential common stock?

A. Convertible preferred stock.

B. Convertible bonds.

 C. Stock rights.

 D. Participating preferred stock.


23. On December 31, 2012, Albacore Company had 300,000 shares of common stock issued and outstanding. Albacore issued a 10% stock dividend on June 30, 2013. On September 30, 2013, 12,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2013?

 A. 303,000.

 B. 342,000.

C. 312,000.

D. 327,000.


24. If restricted stock is forfeited because an employee leaves the company, the appropriate accounting procedure is to:

 A. Reverse related entries previously made.

B. Do nothing.

 C. Prepare correcting entries.

 D. Record an income item.


25. Which of the following results in increasing basic earnings per share?

A. Paying more than carrying value to retire outstanding bonds.

B. Issuing cumulative preferred stock.

C. Purchasing treasury stock.

D. All of these increase basic earnings per share.


26. When recognizing compensation under a stock option plan, unanticipated forfeitures are treated as:

A. A change in accounting principle.

B. A loss.

 C. An income item.

D. A change in estimate.


27. Nonconvertible bonds affect the calculation of:

 A. Basic earnings per share.

B. Diluted earnings per share.

C. Both A and B.

D. None of these is correct.

28. ABC declared and paid cash dividends to its common shareholders in January of the current year. The dividend:

A. Will be added to the numerator of the earnings per share fraction for the current year.

B. Will be added to the denominator of the earnings per share fraction for the current year.

C. Will be subtracted from the numerator of the earnings per share fraction for the current year. D. Has no effect on the earnings per share for the coming year.


29. When calculating diluted earnings per share, stock options:

A. Are included if they are antidilutive.

B. Should be ignored.

C. Are included if they are dilutive.

D. Increase the numerator while not affecting the denominator.


30. Which of the following changes would not be accounted for using the prospective approach? A. A change to LIFO from average costing for inventories.

B. A change from the individual application of the LCM rule to aggregate approach.

C. A change from straight-line to double-declining balance depreciation.

D. A change from double-declining balance to straight-line depreciation.


31. Accounting changes occur for which of the following reasons?

A. Management is being fair and consistent in financial reporting.

B. Management compensation is affected.

 C. Debt agreements are impacted.

 D. All of the above.


32. Which of the following is an example of a change in accounting principle?

 A. A change in inventory costing methods.

B. A change in the estimated useful life of a depreciable asset.

 C. A change in the actuarial life expectancies of employees under a pension plan.

D. Consolidating a new subsidiary.


33. Dulce Corporation had 200,000 shares of common stock outstanding during the current year. There were also fully vested options for 10,000 shares of common stock were granted with an exercise price of $20. The market price of the common stock averaged $25 for the year. Net income was $4 million. What is diluted EPS (rounded)?

 A. $20.00.

 B. $19.80.

C. $19.23.

D. $18.18.


34. Which of the accounting changes listed below is more associated with financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards?

A. Change in reporting entity.

B. Change to the LIFO method from the FIFO method.

C. Change in accounting estimate.

D. Change in depreciation methods.


35. On January 2, 2013, Tobias Company began using straight-line depreciation for a certain class of assets. In the past, the company had used double-declining-balance depreciation for these assets. As of January 2, 2013, the amount of the change in accumulated depreciation is $40,000. The appropriate tax rate is 40%. The separately reported change in 2013 earnings is:

A. An increase of $40,000.

B. A decrease of $40,000.

C. An increase of $24,000.

D. None of the above is correct.


36. For 2012, P Co. estimated its two-year equipment warranty costs based on $23 per unit sold in 2012. Experience during 2013 indicated that the estimate should have been based on $25 per unit. The effect of this $2 difference from the estimate is reported:

A. In 2013 income from continuing operations.

B. As an accounting change, net of tax, below 2013 income from continuing operations.

 C. As an accounting change requiring 2012 financial statements to be restated.

D. As a correction of an error requiring 2012 financial statements to be restated.


37. A change in the residual value of equipment is accounted for:

 A. As a prior period adjustment.

B. Prospectively.

C. Retrospectively.

 D. None of the above is correct.


38. If a change is made from straight-line to SYD depreciation, one should record the effects by a journal entry including:

A. A credit to deferred tax liability.

B. A credit to accumulated depreciation.

C. A debit to depreciation expense.

 D. No journal entry is required.


39. Which of the following would not be accounted for using the prospective approach?

 A. A change to LIFO from FIFO for inventory costing.

B. A change in price indexes used under the LIFO method of inventory costing.

C. A change in estimate.

D. A change from the cash basis to accrual accounting.


40. Which of the following is a change in estimate?

A. A change from the full costing method in the extractive industries.

 B. A change from percentage-of-completion to the completed contract method.

C. Consolidating a subsidiary for the first time.

D. A change in the termination rate of employees under a pension plan.


Order a unique copy of this paper
(550 words)

Approximate price: $22

Place Order
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages