1.The accountant for the Lintz Sales Company is preparing the income

statement for 2017 and the balance sheet at December 31, 2017. The January 1, 2017 merchandise inventory balance will appear
Question 1 options:
a) as an addition in the cost of goods sold section of the income statement and as a current asset on the balance sheet.
b) as a deduction in the cost of goods sold section of the income statement and as a current asset on the balance sheet.
c) only in the cost of goods sold section of the income statement.
d) only as an asset on the balance sheet.

2.When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as
Question 2 options:
a) an extraordinary item.
b) a bulk sale of plant assets included in income from continuing operations.
c) an amount after continuing operations.
d) a prior period adjustment.

3.Gross billings for merchandise sold by Lang Company to its customers last year amounted to $12,720,000; sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000. Net sales last year for Lang Company were
were
Question 3 options:
a) $12,035,000.
b) $12,175,000.
c) $12,350,000.
d) $12,720,000.

4.If a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
Question 4 options:
a) No effect on net income.
b) Overstate net income.
c) Not sufficient information to determine effect on net income.
d) Understate net income.

5.In 2017, Duchess Manufacturing signed a contract with a supplier to purchase raw materials in 2018 for $700,000. Before the December 31, 2017 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2017 will result in a credit that should be reported
Question 5 options:
a) as a valuation account to Inventory on the balance sheet.
b) as an appropriation of retained earnings.
c) on the income statement.
d) as a current liability.

6.If a corporation purchases land and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
on
Question 6 options:
a) the intention of management for the property when the building was acquired.
b) the contemplated future use of the parking lot.
c) the significance of the cost allocated to the building in relation to the combined cost of the land and building.
d) the length of time for which the building was held prior to its demolition.

7.If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will
will
Question 7 options:
a) vary with sales revenue.
b) vary with unit sales.
c) vary with production.
d) be constant.