Multiple-choice questions:

a. The following relate to Owens data in 2010. What is the ending inventory?

Purchases ...........$580,000

Beginning inventory ....... 80,000

Purchase returns ........ 8,000

Sales ............. 900,000

Cost of goods sold ....... 520,000

1. $150,000

2. $132,000

3. $152,000

4. $170,000

5. $142,000

b. Changes in account balances of Gross Flowers during 2010 were as follows:

Increase

Assets ...........$400,000

Liabilities ......... 150,000

Capital stock ........ 120,000

Additional paid-in capital ... 110,000

b. Assuming there were no charges to retained earnings other than dividends of $20,000, the net income (loss) for 2010 was

1. $(20,000).

2. $(40,000).

3. $20,000.

4. $40,000.

5. $60,000.

c. Which of the following would be classified as an extraordinary item on the income statement?

1. Loss on disposal of a segment of business

2. Cumulative effect of a change in accounting principle

3. A sale of fixed assets

4. An error correction that relates to a prior year

5. A loss from a flood in a location that would not be expected to flood

d. Net income–noncontrolling interest comes from which of the following situations?

1. A company has been consolidated with our income statement, and our company owns less than 100% of the other company.

2. A company has been consolidated with our income statement, and our company owns 100% of the other company.

3. Our company owns less than 100% of another company, and the statements are not consolidated.

4. Our company owns 100% of another company, and the statements are not consolidated.

5. None of the above

e. Which of the following will not be disclosed in retained earnings?

1. Declaration of a stock dividend

2. Adjustment for an error of the current period

3. Adjustment for an error of a prior period

4. Net income

5. Net loss

f. Bell Company has 2 million shares of common stock with par of $10. Additional paid-in capital totals $15 million and retained earnings is $15 million. The directors declare a 5% stock dividend when the market value is $10. The reduction of retained earnings as a result of the declaration will be

1. $0.

2. $1 million.

3. $800,000.

4. $600,000.

5. None of the above.

g. The stockholders’ equity of Gaffney Company at November 30, 2010, is presented below.

Common stock, par value $5, authorized 200,000

shares, 100,000 shares issued and outstanding .......$500,000

Paid-in capital in excess of par .............. 100,000

Retained earnings .................. 300,000

$ 900,000

g. On December 1, 2010, the board of directors of Gaffney Company declared a 5% stock dividend, to be distributed on December 20. The market price of the common stock was $10 on December 1 and $12 on December 20. What is the amount of the change to retained earnings as a result of the declaration and distribution of this stock dividend?

1. $0

2. $40,000

3. $50,000

4. $60,000

5. None of the above

h. Schroeder Company had 200,000 shares of common stock outstanding with a $2 par value and retained earnings of $90,000. In 2008, earnings per share were $0.50. In 2009, the company split the stock 2 for 1. Which of the following would result from the stock split?

1. Retained earnings will decrease as a result of the stock split.

2. A total of 400,000 shares of common stock will be outstanding.

3. The par value would become $4 par.

4. Retained earnings will increase as a result of the stock split.

5. None of the above

i. Which of the following is not a category within accumulated other comprehensive income?

1. Foreign currency translation adjustments

2. Unrealized holding gains and losses on available-for-sale marketable securities

3. Changes to stockholders’ equity resulting from additional minimum pension liability

4. Unrealized gains and losses from derivative instruments

5. Extraordinary item