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1) the investing activities section of the statement of cash flows includes activities that affect the long-term asset section of the balance sheet. 2) the balance sheet shows whether or not a business is earning profits. Answer: false 3) grace […]

1) a contra account’s normal balance (debit or credit) is the opposite of the normal balance of the related account. 2) the net cash flow from operating activities is calculated in the same way, whether the company uses the direct […]

1) gross pay is the total amount of compensation earned by an employee, after the deductions are made. 2) the amount of net cash flow from operating activities will be different in the direct and indirect methods when preparing the […]

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. 2) all asset accounts and equity accounts increase with a debit. Answer: […]

1) benchmarking is often done by comparing a company against either a key competitor or against the industry average. 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 […]

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

1) most public companies use the indirect method to prepare their statement of cash flows because the fasb prefers this method. 2) a 3-for-1 stock split of a $3 par value share will result in three shares of $1 par […]

1) the statement of retained earnings informs users about how much of the earnings were kept and reinvested in the company. 2) ifrs are comparatively more specific and more rule based than u.s. gaap. Answer: false 3) when a business […]

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. 2) treasury stock is recorded […]

1) establishing controls for efficiency of the payroll process is one of the two key controls for payroll. 2) allen moving pictures company uses the indirect method to prepare its statement of cash flows. the treasury stock account had a […]

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

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 […]

1) permanent accounts are not closed at the end of the accounting period. 2) an equity security represents a credit relationship with another company or governmental entity. Answer: false 3) in the journal entry for the dividends received for available-for-sale […]

1) the direct method of preparing the statement of cash flows provides a clearer way of analyzing cash flow information than the indirect method. 2) the post-closing trial balance shows the net income for the period just ended. Answer: false […]

1) the two major types of receivables are interest receivable and taxes receivable. 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 […]

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

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

1) benefits are extra compensationitems that are not paid directly to an employee. 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. […]

1) the cash balance in a company’s general ledger and the bank’s balance on the bank statement will always be the same. 2) in the case of unearned revenue, the cash is received first, and the revenue is earned later. […]

1) simple interest means that interest is calculated on the principal and on all previously earned interest. 2) if an investor wants to know how much cash a company can free up for new opportunities, such as expanding into a […]

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

1) operating activities on a statement of cash flows include activities that create revenue or expense in the entity’s business. 2) steve is an employee of panache inc. panache pays a portion of his health insurance premium, and also contributes […]

1) for an accounting equation to balance, a transaction must affect both sides of the equation. 2) a company, reporting a discontinued operation or an extraordinary item, must report earnings per share also for each of these line items. Answer: […]

1) under the sarbanes-oxley act, accounting firms are allowed to audit a public company and provide certain consulting services for the same client. 2) when a seller grants a sales allowance, the customer does not return any goods to the […]