Horngren's Financial & Managerial Accounting: The Financial Chapters 4th Edition

1) the investing activities section of the statement of cash flows includes activities that affect the long-term asset section of the balance sheet. Answer: true Answer: true Answer: true 2) the balance sheet shows whether or not a business is earning profits. Answer: false Answer: false Answer: false 3) grace paper company has a debt ratio of 25%,

1) a contra account's normal balance (debit or credit) is the opposite of the normal balance of the related account. Answer: true Answer: true Answer: true 2) the net cash flow from operating activities is calculated in the same way, whether the company uses the direct or the indirect method of preparing the statement

1) gross pay is the total amount of compensation earned by an employee, after the deductions are made. Answer: false Answer: false Answer: false 2) the amount of net cash flow from operating activities will be different in the direct and indirect methods when preparing the statement of cash flows. Answer: false Answer: false Answer: false 3) transnational

1) a company purchased machinery by issuing a long-term note payable. this is an example of a non-cash investing and financing activity for the statement of cash flows. Answer: true Answer: true Answer: true 2) all asset accounts and equity accounts increase with a debit. Answer: false Answer: false Answer: false 3) when a business pledges its accounts

1) benchmarking is often done by comparing a company against either a key competitor or against the industry average. Answer: true Answer: true Answer: true 2) the unrealized holding gains and losses on available-for-sale investments are recorded as an adjustment to the unrealized holding gainavailable-for-sale account or unrealized holding lossavailable-for-sale account. Answer: true Answer: true Answer: true 3) the

1) if the historical cost of inventory is less than its current replacement cost, the business must write down the inventory cost. Answer: false Answer: false Answer: false 2) a corporation is a separate legal entity and is organized independently of its owners. Answer: true Answer: true Answer: true 3) the three sections of the statement of cash

1) most public companies use the indirect method to prepare their statement of cash flows because the fasb prefers this method. Answer: false Answer: false Answer: false 2) a 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value. Answer: true Answer: true Answer: true 3) days' sales in receivables

1) the statement of retained earnings informs users about how much of the earnings were kept and reinvested in the company. Answer: true Answer: true Answer: true 2) ifrs are comparatively more specific and more rule based than u.s. gaap. Answer: false Answer: false Answer: false 3) when a business makes a cash payment, the cash account is

1) when a company uses the first-in, first-out (fifo) method, the cost of goods sold correlates to the most recently purchased goods, and the value of ending inventory correlates to the oldest goods in stock. Answer: false Answer: false Answer: false 2) treasury stock is recorded at cost without reference to par value. Answer: true Answer:

1) establishing controls for efficiency of the payroll process is one of the two key controls for payroll. Answer: true Answer: true Answer: true 2) allen moving pictures company uses the indirect method to prepare its statement of cash flows. the treasury stock account had a debit balance of $9,000 at the beginning of

1) plant assets are long-lived, tangible assets used in the operation of a business. Answer: true Answer: true Answer: true 2) reversing entries are dated on the first day of the new accounting period. Answer: true Answer: true Answer: true 3) generally accepted accounting principles (gaap) require the use of accrual accounting. Answer: true Answer: true Answer: true 4) although the direct

1) qtopia electric company uses the direct method to prepare its statement of cash flows. it has reported cost of goods sold of $85,000 on its income statement for the year 2015. if the balance in accounts payable, for inventory suppliers only, has gone down by $8,000 during the year, then

1) permanent accounts are not closed at the end of the accounting period. Answer: true Answer: true Answer: true 2) an equity security represents a credit relationship with another company or governmental entity. Answer: false Answer: false Answer: false 3) in the journal entry for the dividends received for available-for-sale investments, the dividend revenue account will be debited. Answer:

1) the direct method of preparing the statement of cash flows provides a clearer way of analyzing cash flow information than the indirect method. Answer: true Answer: true Answer: true 2) the post-closing trial balance shows the net income for the period just ended. Answer: false Answer: false Answer: false 3) a point-of-sale terminal provides control over cash

1) the two major types of receivables are interest receivable and taxes receivable. Answer: false Answer: false Answer: false 2) qtopia electric company uses the direct method to prepare its statement of cash flows. it has reported operating expenses of $63,000 on its income statement for the year 2014. if the balance in accrued liabilities has

1) the public company accounting oversight board oversees the work of auditors of public companies. Answer: true Answer: true Answer: true 2) held-to-maturity investments are categorized as long-term assets on the balance sheet, irrespective of the maturity date. Answer: false Answer: false Answer: false 3) the asset turnover ratio is calculated by dividing cost of goods sold by

1) on a multi-step income statement, both merchandisers and service companies report operating expenses in two categoriesselling expenses and administrative expenses. Answer: true Answer: true Answer: true 2) the office supplies expense account is a temporary account. Answer: true Answer: true Answer: true 3) an asset account is increased by a debit. Answer: true Answer: true Answer: true 4) investment income may

1) benefits are extra compensationitems that are not paid directly to an employee. Answer: true Answer: true Answer: true 2) if a merchandiser uses the periodic inventory system, it is necessary to conduct a physical count of inventory to determine the quantity of inventory on hand. Answer: true Answer: true Answer: true 3) the times-interest-earned ratio is also

1) the cash balance in a company's general ledger and the bank's balance on the bank statement will always be the same. Answer: false Answer: false Answer: false 2) in the case of unearned revenue, the cash is received first, and the revenue is earned later. Answer: true Answer: true Answer: true 3) the dividends account is increased

1) simple interest means that interest is calculated on the principal and on all previously earned interest. Answer: false Answer: false Answer: false 2) if an investor wants to know how much cash a company can free up for new opportunities, such as expanding into a new sales region, they would most likely wish to

1) on the maturity date, the bondholder is paid the face amount of the bond plus the last interest payment. Answer: true Answer: true Answer: true 2) burglar alarms, fire alarms, and security cameras improve internal control. Answer: true Answer: true Answer: true 3) cash in the bank is more liquid than a petty cash fund. Answer: false Answer: false Answer:

1) operating activities on a statement of cash flows include activities that create revenue or expense in the entity's business. Answer: true Answer: true Answer: true 2) steve is an employee of panache inc. panache pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. the company's

1) for an accounting equation to balance, a transaction must affect both sides of the equation. Answer: false Answer: false Answer: false 2) a company, reporting a discontinued operation or an extraordinary item, must report earnings per share also for each of these line items. Answer: true Answer: true Answer: true 3) the long-term investments account is debited

1) under the sarbanes-oxley act, accounting firms are allowed to audit a public company and provide certain consulting services for the same client. Answer: false Answer: false Answer: false 2) when a seller grants a sales allowance, the customer does not return any goods to the seller. Answer: true Answer: true Answer: true 3) source documents provide the evidence