Survey of Accounting 4th Edition

B-1 SOLUTIONS TO APPENDIX B 1-1 Event Number Account Debited Account Credited a. Cash Common Stock b. Cash Unearned Revenue c. Accounts Receivable Service Revenue d. Accounts Payable Cash e. Prepaid Rent Cash f. Operating

Chapter 01 - An Introduction to Accounting Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015

Chapter 01 - An Introduction to Accounting Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. McGraw-Hill Education. McGraw-Hill Education. 1-1 Demonstration Problem 1-1: Solution, part a. Equation Approach Effect of Events on the Accounting Equation

1-7 ANSWERS TO QUESTIONS - CHAPTER 1 1. Stakeholders are the parties that use accounting information. Stakeholders with a direct interest include owners, managers, creditors, suppliers, and employees. These individuals are directly affected by what happens to the business. Stakeholders with an indirect interest include financial

EXERCISE 1-12 a. Investors put assets into the company with the expectation of sharing profits. Creditors lend assets to the company with the expectation of repayment of the principal plus interest on the loan. b. Clinton Company Accounting Equation Event Assets = Liabilities + Stockholders Equity Acquired

1-7 XERCISE 1-21 g.(cont.) Wilson Company Statement of Cash Flows For the Year Ended December 31, 2014 Cash Flows From Operating Activities: Cash Receipts from Customers $500 Cash Payments for Expenses (300)

1-1 PROBLEM 1-32 b. (cont.) Susans Consulting Balance Sheet As of December 31, 2015 Assets Cash $115,000 Land 40,000 Total Assets $155,000

Chapter 10 - An Introduction to Management Accounting 10-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015

10-1 If an effective JIT system is implemented, Ms. Connor would not have to keep any inventory, and thus, would avoid the loss due to excessive inventory. Ms. Connor would be able to meet all customer demand because the supplier could deliver whatever quantity of product that Ms.

10-1 Problem 10-24 Event Assets = Equity Rev. - Exp. = N. Inc. Cash Flow No. Cash + Raw M. + WIP + Finished Goods + Office Furn. + Manuf. Equip. = Com. Stk. + Ret. Ear.

Chapter 10 - Management Accounting: A Value-added Discipline Answers to questions 1. Financial accounting deals with regulated, historical, financial information that pertains to the whole company and is designed primarily to meet the information needs of outsiders. Managerial accounting is concerned with unregulated financial, economic as

12. What amount of sales in dollars must Boxware achieve each month in order to break even? a. $95,000 b. $190,000 c. $285,000 d. $380,000 13. How many units per month must Boxware sell in order to make a $110,000 profit? a. 500 b. 1,000 c. 1,500 d.

Chapter 11 - Cost Behavior, Operating Leverage, and Profitability Analysis 11-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. McGraw-Hill Education. McGraw-Hill Education. Contribution Margin Ratio

Chapter 11 Cost Behavior, Operating Leverage, and Profitability Analysis Answer to questions 1. A fixed cost is a cost that in total remains constant as volume of activity changes but on a per unit basis varies inversely with changes in volume of activity. A variable cost is

Exercise 11-16 a. Contribution margin Operating leverage = Net income $6,000 Operating leverage = = 1.5 $4,000

11-1 Break-even dollars = 11,250 units x $75 selling price = $843,750 Contribution Margin Income Statement Sales ($75 x 11,250 units) $843,750 Variable costs ($39 x 11,250) (438,750) Contribution margin $405,000 Fixed costs (405,000) Net income $ 0

Chapter 12 - Cost Accumulation, Tracing, and Allocation 12-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015

Chapter 12 - Cost Accumulation, Tracing, and Allocation 12-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015

Answers to questions 1. A cost object is something whose cost one is trying to determine the cost. Cost objects that accountants would need to know the cost of would include products, activities, services, and departments. that accountants would need to know the cost of would include products, activities,

Chapter 12 Cost Accumulation, Tracing, and Allocation 12-1 Exercise 12-12 The allocation rate is computed below: Cost Base Computation Allocation Rate Rental cost No. units $360,000 40,000 = $9 per unit Allocation Rate

Chapter 12 Cost Accumulation, Tracing, and Allocation 12-1 ATC 12-1 ATC 12-1 ATC 12-1 a. 1. Product 2. Fixed 3. Indirect

Chapter 13 - Relevant Information for Special Decisions 13-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. McGraw-Hill Education. McGraw-Hill Education. Teaching Notes for Chapter 13 In this chapter, students learn to identify information that

Chapter 13 Relevant Information for Special Decisions Problem 13-28 a. Decision Division B Sales $ 600,000 Unit-level manufacturing costs (400,000) Rent on manufacturing facility (150,000) Unit-level selling and admin. expenses (28,000) Division-level fixed selling and admin. expenses (40,000) Contribution to profit

Answers to Questions 1. Information that is relevant for decision making differs between the alternatives and is future oriented. 2. A variable cost may or may not be relevant. The fact that a cost is variable has no bearing on its relevance. For instance, the cost of direct

Exercise 13-16 The facility-level costs will continue even if the segment is eliminated. Accordingly, these costs are not avoidable. The original cost, book value and depreciation for the building represent measures of sunk costs and are not avoidable. The market value of the building is an opportunity cost

Chapter 14 - Planning for Profit and Cost Control 14-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 14-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 14-1

Demonstration Problem 14-1 Solution j. k. Cash Budget, Pro Forma Cash Flow Data Cash Budget Desired Ending Cash Balance 12,000 Interest on Line of Credit 1% per month Pro Forma Jan Feb Mar Stmt. Data CASH RECEIPTS Beginning Cash

Chapter 14 Planning for Profit and Cost Control 14-1 Answers to Questions 1. Budgets are useful for large companies with complex activities as well as small companies. Budgets act as a vehicle for communication by formalizing managements plans in a document that communicates company objectives. The benefits associated

a. Schedule of Cash Payments for S&A Expenses July August September Salary expense $24,000 $24,000 $24,000 Prior month's sales commissions, 100% 0 2,000 2,000 Supplies expense 360 390 420 Prior month's utilities, 100% 0 1,100 1,100 Rent 6,600 6,600 6,600

ATC 14-1 a. Budgeted Financial Statements Income Statement Amounts Computations Sales Revenue $300,000 12 x $25,000 Cost of Goods Sold (264,000) 12 x $22,000 Depreciation Expense (3,000) ($18,000 $6,000) 4 Other Expense (4,000) $22,000 $18,000 Operating Income 29,000 Interest Expense (850) $17,000

Chapter 15 - Performance Evaluation 15-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All

Chapter 15 - Performance Evaluation 15-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All

Chapter 15 Performance Evaluation 15-1 Answers to questions 1. People, not budgets, control costs. Ms. Kelly needs to use the budget system to build a responsibility accounting program. The managers must be motivated to control costs. They should be trained to use the budgets as

Chapter 15 Performance Evaluation 15-1 Sales revenue $45.00 $1,350,000 $1,305,000 $1,395,000 Variable manufacturing costs Materials $9.00 (270,000) (261,000) (279,000) Labor $4.50 (135,000) (130,500) (139,500) Overhead $6.30 (189,000) (182,700) (195,300) Variable

Chapter 16 - Planning for Capital Investments 16-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill

Chapter 16 Planning for Capital Investments 16-1 Answers to Questions 1. A capital investment is an investment in a long-term operational asset. Stocks and bonds are not operational assets but rather intangible legal agreements of ownership in another company or loans to another company. They are bought

Chapter 16 Planning for Capital Investments 16-1 must sit idle, then Alternative 2 may be the better option if Speedy Delivery actually has that much money. The information provided is insufficient to determine which the better alternative is. Problem 16-17 a. Cash Inflows Table Value*

Chapter 16 Planning for Capital Investments 16-1 a (1) Cash Inflow Table Value* Present Value Year 1 $ 360,000 0.892857 $ 321,429 Year 2 502,500 0.797194 400,590 Year 3 865,000 0.711780 615,690 Year 3 5,175,000 0.711780 3,683,462 Present value of inflows 5,021,171 Present value

Demonstration Problem 2-2 Solution, part A. Horizontal Financial Statements Model for 2014 A spreadsheet is embedded to reflect the solution to this question. This spreadsheet covers both 2014 and 2015. The workpaper for students use in answering this question would basically be the solution with the amounts deleted for

ANSWERS TO QUESTIONS - CHAPTER 2 1. Accrual accounting attempts to record the effects of accounting events in the period when such events occur, regardless of when cash is received or paid. The goal is to match expenses with the revenues that they produce. when such events occur, regardless

2-1 EXERCISE 2-6 a. & c. Event Revenue Expense Statement of Cash Flows 1. NA NA $50,000 FA 2. $67,000 NA NA 3. NA NA (5,000) FA 4. NA NA 45,000 OA 5. NA $49,000 (49,000) OA 6. 10,000 NA 10,000 OA 7. NA 2,000 NA

2-1 EXERCISE 2-16 a. Ed Arnold Personal Financial Planning Horizontal Statements Model for 2014 Assets = Liabilities + Stk. Equity Income Statement Statement Event Cash = Unearned Revenue + Retained Earnings Rev.

2-1 SOLUTIONS TO PROBLEMS - CHAPTER 2 PROBLEM 2-32 James Cleaning Company Effect of Events on the Financial Statements Balance Sheet Income Statement Stmt. of Assets = Liabilities + Stock. Equity Rev. Exp. = Net Inc. Cash

2-1 PROBLEM 2-38. (cont.) Alabama Service Company Accounting Equation for 2015 Assets = Liabilities + Stk. Equity Event Type of Event Cash Accts. Rec. Supp. Prepd. Rent Int. Rec. Land = Accts. Pay. Salaries Payable Unearn. Revenue + Com.

General Comments for Chapter 3 Accounting for Merchandising Businesses Chapter 3 introduces accounting for inventory transactions using the perpetual method. In todays high-technology environment, the perpetual system has become the predominant method of accounting for inventories. Because the periodic method is still used by some companies, it is included

Chapter 03 - Accounting for Merchandising Businesses 3-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. McGraw-Hill Education. McGraw-Hill Education. Quiz Questions for Chapter 3 1. Under the perpetual inventory method, a. assets increase when

3-1 ANSWERS TO QUESTIONS - CHAPTER 3 1. Merchandise inventory is finished goods that are held for sale to customers. Costs that are included in merchandise inventory include the cost of the product, transportation-in costs, packaging costs, transit insurance, etc. included in merchandise inventory include the cost of

3-1 EXERCISE 3-3 (cont.) b. Justin Swords Merchandising Income Statement For the Year Ended December 31, 2014 Net Sales $82,000 Cost of Goods Sold (48,000) Gross Margin

3-1 EXERCISE 3-12 a. Annual rate = Discount rate x (365 days Discount term*) Annual rate = 2% x (365 20) Annual rate = 36.5% Annual rate = 2% x (365 20) Annual rate = 36.5% Annual rate = 2% x (365 20)

3-1 PROBLEM 3-23 (cont.) b. & c. Yangs Imports Financial Statements For the Month Ended September 30, 2014 Income Statement Net Sales $19,000 Cost of Goods Sold (10,000)

3-1 3-1 3-1 PROBLEM 3-28 (Appendix) a. Balance Sheet Income Statement Statement of Event No. Cash Accts. Rec. Mdse. Inv. Land = Accts. Pay + C. Stock Ret. Earn. Rev. Exp. = Net Inc. Cash

Chapter 04 - Internal Controls, Accounting for Cash, and Ethics 4-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

ANSWERS TO QUESTIONS - CHAPTER 4 1. The accounting scandals of WorldCom and Enron are partially responsible for the passage of the Sarbanes-Oxley Act. SOX requires public companies to evaluate their internal control system. 1. The accounting scandals of WorldCom and Enron are partially responsible for the passage of

4-1 1 EXERCISE 4-15 The three common features of ethical misconduct are: 1. The availability of an opportunity 2. The existence of some sort of pressure 3. The capacity for rationalization. 2. The existence of some sort of pressure 3. The capacity for rationalization. 2. The

Chapter 05 - Accounting for Receivables and Inventory Cost Flow 5-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

5-1 ANSWERS TO QUESTIONS - CHAPTER 5 1. Accounts receivable are the expected future receipts that arise when a company permits its customers to buy now and pay later. The amounts are usually small with a short term to maturity. Notes Receivable have longer terms to maturity and

5-1 Cash + Acct. Rec. Allow. Ret. Ear. 2015 Bal. 32,000 13,000 450 44,550 1. NA (320) (320) NA

5-1 EXERCISE 5-11 Balance Sheet Income Statement Statement of Date Assets = Equity Rev. Exp. = Net Inc. Cash Flows Cash + Note Rec. + Int. Rec. = Ret. Ear.

5-1 Net Income $34,790 LIFO Sales (3,500 @ $50) $175,000

5-1 PROBLEM 5-25 b. (cont.) Frankel Inc. Balance Sheet As of the End of the Year 2014 Assets Cash $ 40,000 Accounts Receivable $32,000 Less, Allowance for Doubtful Accounts

5-1 PROBLEM 5-30 b. (cont.) Iupe Supply Company Balance Sheet As of the End of the Year 2014 Assets Cash $51,350 Accounts Receivable $3,700 Less, Allowance for Doubtful Accounts

5-1 1 ACT 5-2 a. Robin Co. Goods Available for Sale Beginning Inventory 100 @ $50 = $ 5,000 70 @ 55 = 3,850 First Purchase 100 @ 54 = 5,400 Second Purchase 250 @ 58

Chapter 06 - Accounting for Long-Term Operational Assets 6-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015

Chapter 06 - Accounting for Long-Term Operational Assets 6-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

6-1 ANSWERS TO QUESTIONS - CHAPTER 6 1. Long-term operational assets are those assets that are used by a business to generate revenue. In contrast, investments are simply held for the production of interest and dividends and/or for price appreciation. revenue. In contrast, investments are simply held for

6-1 2016: ($47,000 $30,080) x (2 x .20) = 6,768 2017: ($47,000 $36,848) x (2 x .20) = 4,061 3,152* 2018: ($47,000 $40,000) x (2 x .20) = -0- Total Accumulated Depreciation$40,000 2017: ($47,000 $36,848) x (2 x .20) = 4,061 3,152* 2018: ($47,000 $40,000) x

6-1 PROBLEM 6-25 Zhao Company Financial Statements For the Year Ended December 31 Income Statements 2014 2015 2016 2017 2018 Revenue $9,500 $10,000 $10,500 $8,500 $ -0-

6-1 6-1 6-1 PROBLEM 6-30 a. Computations: Coal Mine - Depletion Cost $900,000 = $3.00 per ton Estimated Tons 300,000 2014 Tons extracted 68,000 Depletion per ton $3 2014 Depletion Expense

General Comments for Chapter 7 Accounting for Liabilities Chapter 7 introduces the accounting for both current and long-term liabilities and the preparation of a classified balance sheet. Throughout the chapter, the focus is on how liabilities and interest expense affect the financial statements, rather than on specific procedural

Chapter 07 - Accounting for Liabilities 7-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education.

7-1 ANSWERS TO QUESTIONS CHAPTER 7 1. Cash payments to creditors is an asset use transaction. This type of transaction will reduce both assets and liabilities. 2. Current liabilities are liabilities that are payable within one year or one operating cycle, whichever is longer. A long-term debt

7-1 (3) Cash Flows From Financing Activities: Inflow from Issue of Note $50,000 Outflow to Repay Note (8,959) Net Cash Flow from Financing Activities $41,041 d. Principal 1/1/15: $41,041 (see schedule in book) Interest Expense: $41,041

$21,928 $20,000 = $1,928 Beginning Discount Amortization = Ending Discount $30,723 $1,928 = $28,795 Bond Carrying Value as of December 31, 2014 Bond Payable (Face Value) $250,000 Discount on Bonds Payable 28,795 Carrying Value $221,205 EXERCISE 7-24 a. Date

7-1 April $210,000 x 6% x 1/12 $1,050 May $380,000 x 7% x 1/12 2,217 June $250,000 x 7% x 1/12 1,458* *rounded b. The amount of cash paid for interest is the same as interest expense. Interest is paid on

Chapter 08 - Proprietorships, Partnerships, and Corporations 8-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright

ANSWERS TO QUESTIONS - CHAPTER 8 1. The three major forms of business organizations are the sole proprietorship, the partnership, and the corporation. The sole proprietorship is a business owned by one individual. The partnership is a business that is owned by two or more persons with

Stockholders Equity Common Stock, $10 par value, 10,000 shares issued and outstanding $100,000 Paid-In Capital in Excess of Par 60,000 Total Paid-In Capital 160,000 Retained Earnings

8-1 PROBLEM 8-22 a. NC = Net Change in Cash Concord Corp. Statements Model For 2014 Balance Sheet Income Statement Statement of Event Assets = Stockholders Equity Rev. Exp. = Net Inc. Cash Flows Pfd. Stk.

11-8 Investments 72,000 48,000 120,000 Net Income* 9,600 14,400 24,000 Withdrawals (3,500) (1,500) (5,000) Ending Capital Balances $78,100 $60,900 $139,000 *Moore: $24,000 x 40% = $9,600 Pounds: $24,000 x 60% = $14,400 PROBLEM 8-18 b. (cont.)

Chapter 09 - Financial Statement Analysis 9-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education.

9-9 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or

9-1 Answers to Questions 1. Ratios and trends are useful tools for analyzing financial statements because they give the analyst a basis for comparing companies of different sizes and characteristics. Absolute numbers themselves often have little meaning. However, if they are used to generate percentages and

Chapter 13 Financial Statement Analysis 9-1 The remaining figures can only be found by using the debt to assets ratio of 40% times total assets to determine total liabilities (0.40 x $675,000 = $270,000.) From this the remaining figures fall into place. Problem 9-21 a. Earnings

How should liabilities (except for deferred income taxes) be reported by a company using fresh start accounting? A.at the undiscounted sum of future cash payments. B.at book value prior to the reorganization. C.as partially secured liabilities. D.at the present value of future cash payments. E.as unsecured liabilities. Answer: D Answer: D Answer: D Capital investment decisions involve all of

The goals of the SEC include all except which one of the following? A.prohibiting the dissemination of materially misstated information. B.controlling the number of companies whose stock is listed on major stock exchanges. C.regulating the operation of securities markets. D.ensuring that full and fair information is disclosed to all investors before the securities of

Which of the following costs should be recorded as an expense? A.Administrative employee salaries B.Depreciation of manufacturing equipment C.Insurance for the factory building D.All of these are expenses. Answer: A Answer: A Answer: A The following balance sheet information was provided by Western Company: Assuming 2014 net credit sales totaled $270,000, what was the company's average days to collect receivables?

Ashley projects that she can get $100,000 cash per year for 5 years on a real estate investment project. If Ashley wants to earn a rate of return of 12%, what is the maximum that she should pay for the investment? (rounded to the nearest dollar) A.$56,743 B.$446,429 C.$360,478 D.$560,000 Answer: C Answer: C Answer: C Which of

The cost of capital is sometimes referred to as the hurdle or discount rate. Answer: TRUE Answer: TRUE Answer: TRUE A payment to an employee in settlement of salaries payable decreases an asset and decreases a liability. Answer: TRUE The event decreases assets (cash) and decreases liabilities (salaries payable). Answer: TRUE The event decreases assets (cash)

Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the

The SEC's operating costs are supported through A.tax revenues of the federal government. B.registration fees charged to issuers offering securities to the public. C.fees paid by stock exchanges. D.fees paid by stock brokers. E.fees paid by accounting firms that practice before the SEC. Answer: B Answer: B Answer: B The return on investment measure is also referred to as: A.Net

What is the effect on the balance sheet of making cash sales of inventory to customers on profit? A.Assets and equity increase. B.Assets and equity decrease. C.Assets decrease and equity increases. D.Assets increase and equity decreases. Answer: A Answer: A Answer: A Cash inflows generated by capital investments include all of the following except: A.incremental revenues. B.cost savings. C.reduction in the

A company that incurred $1,000 in production costs reported cost of goods sold of $800 and selling costs of $100. Its ending finished goods inventory was $300. Answer: FALSE Answer: FALSE Answer: FALSE The assumption regarding ordinary annuities is that cash flows occur at the end of each period. Answer: TRUE Answer: TRUE Answer: TRUE Unlike direct material and

Grayson Company is considering purchase of equipment that costs $49,000 and is expected to offer annual cash inflows of $13,000. Grayson's minimum required rate of return is 10%. How many years must the cash flows last, for the investment to be acceptable? (Do not round your PV factors and intermediate

On January 1, 2013, Baird Company had beginning balances as lows: Assets = $2,250 Liabilities = $620 Common Stock = $800 During 2013, Baird paid dividends to its stockholders of $900. Given that ending retained earnings was $600, what was Baird's net income for the 2013 accounting period? A.$770 B.$830 C.$1,250 D.$500 Answer: A On January 1: Assets =

Long-term creditors are usually most interested in evaluating: A.Liquidity. B.Managerial effectiveness. C.Solvency. D.Profitability. Answer: C Answer: C Answer: C In countries of Latin America: A.accounting practice is designed to provide adequate information to investors and creditors. B.accounting standards emphasize accounting for high inflation situations. C.banks are the primary source of financing for companies. D.accounting focuses are based recent market economy reforms. E.accounting information

Which of the following events would not require an end-of-year adjusting entry? A.Purchasing supplies for cash B.Providing services on account C.Purchasing a 12-month insurance policy on July 1 D.All of these would require an end-of-year adjustment Answer: B Providing services on account does not require an end-of-year adjusting entry. Accounts receivable is increased when services

Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the

Mackie Company provided $25,500 of services on account, and collected $18,000 from customers during the year. The company also incurred $17,000 of expenses on account, and paid $15,400 against its payables. As a result of these events. A.total assets would increase B.total liabilities would increase C.total equity would increase D.all of these are correct Answer: D

Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and $30,000 respectively. The partners share profits and losses 20%, 40%, and 40% respectively. Anne retires and is paid $80,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital of

Peter, Roberts, and Dana have the following capital balances; $80,000, $100,000 and $60,000, respectively. The partners share profits and losses 20%, 40%, and 40% respectively. Roberts retires and is paid $160,000 based on an independent appraisal of the business. If the goodwill method is used, what is the capital balance of

Select the incorrect statement regarding the analysis of absolute amounts of various accounts reported on the financial statements. A.Financial statement users with expertise in particular industries can look at absolute amounts and assess a company's performance in a certain area. B.To correctly evaluate an absolute amount, the analyst must consider its relative

Norris Company experienced the following transactions during 2013, its first year in operation. 1) Issued $6,000 of common stock to stockholders. 2) Provided $2,300 of services on account. 3) Paid $1,600 cash for operating expenses. 4) Collected $1,900 of cash from accounts receivable. 5) Paid a $100 cash dividend to stockholders. The total amount of assets

Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. The projected incremental income from the investment is as follows: The unadjusted rate of return on the initial investment would be approximately: A.8.0%. B.6.0%. C.16.7%. D.48.0%. Answer: A Answer: A Answer: A Benton Corporation acquired real estate that contained land, building and equipment.

The capital account balances for Donald & Hanes LLP on January 1, 2013, were as follows: Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit May to the partnership with a 35% interest in partnership capital and net income. May invested

Indicate whether each of the following statements is true or false. 1> Some forms of financial statement analysis involve identifying changes in the same item for the same company over a period of time. 2> Some forms of financial statement analysis involve comparing operations of different companies in the same industry. 3> Vertical

A business's temporary accounts include revenues, expenses, and retained earnings. Answer: FALSE This is false. A business's temporary accounts include revenues, expenses, and dividends, not retained earnings. Answer: FALSE This is false. A business's temporary accounts include revenues, expenses, and dividends, not retained earnings. Answer: FALSE This is false. A business's temporary accounts

A partnership began its first year of operations with the following capital balances: Young, Capital: $143,000 Eaton, Capital: $104,000 Thurman, Capital: $143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: Young was to be awarded an annual salary of $26,000 with $13,000 salary assigned to Thurman. Each partner was

Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the

Indicate whether each of the following statements is true or false. 1) Deposits in transit appear on the bank statement as credit memos 2) Service fees charged by a bank appear on bank statements as debit memos 3) Credit memos in a bank statement describe transactions that act to increase the bank's liabilities 4)

The following balance sheet information is provided for Apex Company for 2014: What is the company's working capital? A.$20,300 B.$4,900 C.$22,900 D.$24,500 Answer: D Answer: D Answer: D Which one of the following is not a prescribed event for the filing of Form 8-K? A.bankruptcy or receivership. B.changes in control of the registrant. C.resignation of a middle manager. D.changes in the registrant's independent

Foreign companies whose stock is listed on a U.S. stock exchange and using foreign GAAP other than IFRS must file their annual report with the SEC on: A.Form 8-A. B.Form 10-A. C.Form 16-K. D.Form 20-F. E.Form 20-K. Answer: D Answer: D Answer: D Which of the following type of organization is classified as a partnership, or similar to a partnership,

Ruiz Company provided services for $15,000 cash during the 2013 accounting period. Ruiz incurred $12,000 expenses on account during 2013, and by the end of the year, $3,000 of that amount had been paid with cash. Assuming that these are the only accounting events that affected Ruiz during 2013. A.The amount

Current financial reporting standards assume that users of accounting information: A.Have an expert's understanding of economic and financial events and conditions. B.Have a reasonably informed knowledge of business. C.Have widely differing levels of knowledge about business, and that financial reporting must meet these differing needs. D.Have only minimal knowledge of business. Answer: B Answer: B Answer: B The

Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet? A.Inventory valuation. B.Capitalizing development costs. C.Classifying deferred taxes as current or noncurrent. D.Acquisition

Which of the following transactions would cause net income for the period to decrease? A.Paid $2,500 cash for raw material cost B.Purchased $8,000 of merchandise inventory C.Recorded $5,000 of depreciation on production equipment D.Paid $2,000 for production supplies Answer: D Answer: D Answer: D On January 1, 2013, Lamb and Mona LLP admitted

Mary needs to have $20,000 one year from today. The formula to compute the amount of money that must be invested today is future value/(1 - interest rate). Answer: FALSE Answer: FALSE Answer: FALSE Equity represents the future obligations of a business entity. Answer: FALSE This is false. Liabilities represent the future obligations of a

Matt needs to compute the present value of $5,000 to be received four years from now. He should multiple $5,000 by the appropriate present value interest factor obtained from the present value of $1 table. Answer: TRUE Answer: TRUE Answer: TRUE After closing, only balance sheet accounts have non-zero balances. Answer: TRUE All temporary accounts

As of December 31, 2013, Gant Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, 2014, Gant sold inventory on account for $6,000. Which of the

Yi Company began operations on January 1, 2013. During 2013, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $38,000 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment costing $12,000 7) paid $3,000