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978-0136115274 Chapter 1 Lecture Notes
CHAPTER 1 BUSINESS: WHAT’S IT ALL ABOUT? CHAPTER OVERVIEW The chapter begins with a discussion of the purpose of a business, including a discussion of both for-profit organizations and not-for-profit organizations. Next, the nature of business operations is discussed. The […]
978-0136115274 Chapter 1 Quiz Chapter 1
CHAPTER 1 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. The primary purpose of a business is to: a. Pay taxes to the IRS b. Sell a product c. Sell goods and/or services to make a profit […]
978-0136115274 Chapter 10 Lecture Notes
CHAPTER 10 USING FINANCIAL STATEMENT ANALYSIS TO EVALUATE FIRM PERFORMANCE CHAPTER OVERVIEW The chapter begins with a closer look at the income statement. Specifically, the discussion centers on separately reported items on the income statement, including discontinued operations and extraordinary […]
978-0136115274 Chapter 10 Quiz Chapter 10
CHAPTER 10 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Items separated from the regular earnings of a company include: a. Discontinued operations b. Extraordinary items c. Loss on sale of equipment d. Two of the above […]
978-0136115274 Chapter 11 Lecture Notes
CHAPTER 11 QUALITY OF EARNINGS, CORPORATE GOVERNANCE, AND IFRS CHAPTER OVERVIEW Students start this final chapter by analyzing why earnings are important. The definition of quality of earnings, as well as a discussion of measurement techniques, is included. Common ways […]
978-0136115274 Chapter 11 Quiz Chapter 11
CHAPTER 11 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. A term accountants use to describe how well a particular earnings number communicates the firm’s true performance is: a. Earnings per share b. Net income c. Earnings […]
978-0136115274 Chapter 2 Lecture Notes
CHAPTER 2 QUALITIES OF ACCOUNTING INFORMATION CHAPTER OVERVIEW The chapter begins with a discussion of the qualities of accounting information. First, the point is made that accounting information is used to make decisions. Next, the qualitative characteristics of accounting information […]
978-0136115274 Chapter 2 Quiz Chapter 2
CHAPTER 2 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Generally accepted accounting principles (GAAP) are established by: a. Internal Revenue Service (IRS) b. U.S. Congress c. Financial Accounting Standards Board (FASB) d. GAAP Commission _____ 2. […]
978-0136115274 Chapter 3 Lecture Notes
CHAPTER 3 ACCRUALS AND DEFERRALS: TIMING IS EVERYTHING IN ACCOUNTING CHAPTER OVERVIEW The chapter begins with a discussion of how income (also called net income, net profit, or net earnings) is measured over a particular period of time (month, quarter, […]
978-0136115274 Chapter 3 Quiz Chapter 3
CHAPTER 3 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. An accrual is a transaction in which: a. The recognition occurs before the exchange of cash b. The exchange of cash occurs before the recognition c. The […]
978-0136115274 Chapter 4 Lecture Notes
CHAPTER 4 PAYMENT FOR GOODS AND SERVICES: CASH AND ACCOUNTS RECEIVABLE CHAPTER OVERVIEW The chapter begins with a discussion of cash collections that focuses on control over cash, emphasizing the bank reconciliation as a critical control function. A complete bank […]
978-0136115274 Chapter 4 Quiz Chapter 4
CHAPTER 4 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Segregation of duties means that the person who has physical custody of an asset is not the same person who has _______ responsibilities for that asset. a. […]
978-0136115274 Chapter 5 Lecture Notes
CHAPTER 5 THE PURCHASE AND SALE OF INVENTORY CHAPTER OVERVIEW The chapter begins with an overview of the purchase and sale of inventory cycle. This leads to a discussion of merchandise inventory, how inventory is purchased (including purchase discounts, purchase […]
978-0136115274 Chapter 5 Quiz Chapter 5
CHAPTER 5 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Merchandise inventory is classified as a: a. Long-term asset b. Current liability c. Current asset d. Revenue _____ 2. Discount terms of 1/10, n/45 mean: a. 10% […]
978-0136115274 Chapter 6 Lecture Notes
CHAPTER 6 ACQUISITION AND USE OF LONG-TERM ASSETS CHAPTER OVERVIEW The chapter begins with an introduction of long-term assets (fixed assets). An overview of the acquisition of long-term assets is presented, including a discussion of tangible and intangible assets. This […]
978-0136115274 Chapter 6 Quiz Chapter 6
CHAPTER 6 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Long-term assets are assets that will be: a. Used up in one accounting period b. Used for more than one accounting period c. Converted into cash within […]
978-0136115274 Chapter 7 Lecture Notes
CHAPTER 7 ACCOUNTING FOR LIABILITIES CHAPTER OVERVIEW The chapter begins with a discussion of types of liabilities: definitely determinable and estimated. Accounting for payroll, warranties, long-term notes payable, and mortgages are presented. The next part of the chapter introduces bonds. […]
978-0136115274 Chapter 7 Quiz Chapter 7
CHAPTER 7 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Long-term notes payable is an example of a(n): a. Liability b. Asset c. Equity d. Expense _____ 2. Interest on a $1,000, six-month loan, at 8% would […]
978-0136115274 Chapter 8 Lecture Notes
CHAPTER 8 ACCOUNTING FOR SHAREHOLDERS’ EQUITY CHAPTER OVERVIEW The chapter begins with a discussion of contributed capital, including common stock, par value, additional paid-in capital, and dividends. The next part of the chapter covers treasury stock. Possible reasons for purchasing […]
978-0136115274 Chapter 8 Quiz Chapter 8
CHAPTER 8 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Shareholders’ equity is made up of: a. Contributed capital and preferred stock b. Assets and liabilities c. Contributed capital and retained earnings d. Common stock and capital […]
978-0136115274 Chapter 9 Lecture Notes
CHAPTER 9 PREPARING AND ANALYZING THE STATEMENT OF CASH FLOWS CHAPTER OVERVIEW The chapter begins with a presentation of the importance of the statement of cash flows, focusing on the necessity of management and external users to monitor the cash […]
978-0136115274 Chapter 9 Quiz Chapter 9
CHAPTER 9 NAME ___________________________________ TEN-MINUTE QUIZ SECTION _____________ DATE____________ _____________________________________________________________________________ _ _____ 1. Two methods of preparing the statement of cash flows are the: a. Direct and operating methods b. Indirect and investing methods c. Direct and indirect methods d. […]
Finance Appendix B 1 Which of the following accounts is increased with a debit entry
1) An ERP includes ________. A) accounting information for financial statements B) human resources information C) information about production and distribution of products D) all of these 2) A general journal provides a ________. A) list of accounts and their […]
Finance Appendix B 2 Which of the following will cause the adjusted trial balance to
14) Which of the following will cause the adjusted trial balance to be out of balance? A) An adjusting entry to record the cost of supplies used was recorded as a $200 debit to Supplies expense and a $200 debit […]
Finance Appendix B 3 The Utilities expense account is closed by debiting its balance
Answer: A. Date Transaction Debit Credit 12/31/11 Depreciation expense 12,000 Accumulated depreciation 12,000 To record depreciation for the year ____________________________________________________________ 12/31/11 Interest expense 3,300 Interest payable 3,300 To record interest expense for the year _____________________________________________________________ 12/31/11 Salary expense 10,000 Salary […]
Finance Chapter 1 1 How Much Tax Will baroques Shareholder Pay These
1) The ownership structure of a business includes the following forms ________. A) individual, group, and corporate B) sole proprietorship, partnership, and corporation C) service, manufacturing, and financial D) debtors, creditors, and owners 2) Which of the following is true […]
Finance Chapter 1 2 The March Balance in Retained Earnings Was A
3) The stock exchange is ________. A) where all companies must register to exchange goods and services B) regulated by the Securities and Exchange Commission (SEC) C) regulated by the Internal Revenue Service (IRS) D) regulated by the Public Company […]
Finance Chapter 1 3 Using Lox Stock & Bagel Company’s financial statement above
39) Assume 2011 is the company’s first year of business. There were no dividends declared in 2011 and $100 of dividends declared in 2012. For the year ended For the year ended December 31, 2011 December 31, 2012 Revenues $ […]
Finance Chapter 1 4 Analytic Skills Tina Worried About The
92) Classify the following accounts according to the appropriate balance sheet category. a. Assets b. Liabilities c. Shareholders’ equity _____ 1. Common stock _____ 2. Retained earnings _____ 3. Notes payable _____ 4. Cash _____ 5. Inventory _____ 6. Land […]
Finance Chapter 1 5 Broke Misrepresenting The Company’s Financial Position The
14) Team Instructions: Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put […]
Finance Chapter 10 1 Death Valley Destroyed Desert Dave’s Watering Hole
1) The financial statements used to analyze companies include all of these statements EXCEPT the ________. A) balance sheet B) income statement C) statement of cash flows D) statement of shareholders’ rights 2) Discontinued operations need to be treated separately […]
Finance Chapter 10 2 Each line item on the financial statement is expressed as a
36) Refer to the Ace Electronics annual report above. Using vertical analysis, 2012 Net income would be represented as ________. A) 28% B) 26% C) 18% D) 15% The following information is provided from EZ Electronics’ annual report for the […]
Finance Chapter 10 3 This Ratio Shows The Percent age return Investment Share
54) Refer to the Acme annual report above. Calculate return on equity for 2012. A) 39.3% B) 49.0% C) 32.7% D) The answer cannot be determined from the information given. The following selected information is from Acme’s annual report for […]
Finance Chapter 10 4 Company consolidated Statements Operations years Ended
Answer: 1. $48,737 / $16,877 = 2.89 2. $49,010 / $22,442 = 2.18 3. no 4. $16,605 / $16,877 = 98.4% 5. $14,404 / $22,442 = 64.2% 6. no 7. $6,031 / [($491 + 421) / 2] = 13.23 8. […]
Finance Chapter 10 5 The market price per share of stock divided by the earnings
113) Match each of the following items with the appropriate definition. Each item is used only once. a. profitability ratios b. debt-to-equity ratio c. return on equity ratio d. solvency ratios e. dividend yield ratio f. market indicator ratios g. […]
Finance Chapter 11 1 Arts Kens candy Increases The Allowance This Accounting
1) Earnings per share equals ________. A) retained earnings divided by dividends B) net income divided by the weighted average shares of outstanding common stock C) earnings divided by preferred shares outstanding D) net income divided by average total assets […]
Finance Chapter 11 2 Does Your Company Seem to Operate Particularly Risky
23) Recognizing revenue that belongs in future accounting periods is the type of manipulation where management maximizes its earnings to meet analysts’ expectations. 24) The big bath theory is the type of manipulation where management maximizes a current loss to […]
Finance Chapter 11 3 Harvard PHDC Company’s External Auditors Are Independent
C) the external auditors D) the PCAOB 13) Who is responsible for hiring, paying, and overseeing the work done by a company’s external auditors? A) management B) the audit committee of the board of directors C) the company’s internal auditors […]
Finance Chapter 2 1 The Financial Accounting Standards Board sets international
1) Net income equals ________. A) the gross profit on a sale B) operating income minus cost of goods sold C) the increase in cash for the period D) revenue minus expenses 2) Gross profit equals ________. A) sales minus […]
Finance Chapter 2 2 Cash Balance statement Flows sheet Cash Paid For Insurance
15) The four basic financial statements are the ________. A) income statement, balance sheet, statement of changes in shareholders’ equity, and cash budget B) income statement, balance sheet, cash budget, and statement of cash flows C) income statement, balance sheet, […]
Finance Chapter 2 3 A deferral is a transaction in which the exchange
23) Clean Sweep contracted to clean an office building in July for $1,500. The work was contracted in July. The building was completely cleaned in August and Clean Sweep received a payment of $500. The remaining payment of $1,000 was […]
Finance Chapter 2 4 The Company Follows Us GAAP Preparing Financial
16) Team Instructions: Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put […]
Finance Chapter 3 1 Salaries Expense for The Same Amount b Increase Salaries
1) The revenue recognition principle requires that revenue be recognized in the accounting records ________. A) when cash is received B) when it is earned C) at the end of the accounting period D) in the period the income taxes […]
Finance Chapter 3 2 Cash And Increase Supplies 1000b Decrease Cash
7) Hen House, Inc. collects all subscription revenue in advance. At December 31, 2011, the company owed $50,000 to customers for unearned revenue. During 2012, the company received $150,000 in advance from its customers and delivered $190,000 of magazines to […]
Finance Chapter 3 3 How much depreciation expense should the company report for
75) Enoch, Inc. began operations on July 1, 2011. On August 1, it received $12,000 in advance for services to be performed evenly over the next 12 months. How much of this revenue should the company report on its income […]
Finance Chapter 3 4 effect of these six adjustments on the accounting equation
policy that covers all of its drilling equipment around the world. The company recorded the purchase as prepaid insurance. Complete the chart below: Cash Paid Insurance Expense Prepaid Insurance Year ended Dec. 31, 2009 $ $ $ Year ended Dec. […]
Finance Chapter 3 5 Interest Payable The Amount Accrued retained Earnings
Answer: Part A: Assets Liabilities Shareholders’ equity CC Retained earnings 1 (1,000) Prepaid insurance (1,000) Insurance expense 2 +3,200 Unearned revenue (3,200) Rental income 3 +1,250 Salaries payable (1,250) Salaries expense 4 +300 Inventory + 300 Accounts payable 5 + […]
Finance Chapter 3 6 Fill The Missing Information The Financial Statements part
13) Airing & Spelling, Inc. began operations on January 1, 2011. The following amounts were obtained from its information system on December 31, 2011. These amounts are before any year-end adjustments have been made: 1. Accounts receivable $10,000 12. Interest […]
Finance Chapter 3 7 This Control Primarily Designed Prevent A Errors
16) Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. […]
Finance Chapter 5 1 The Buyer Will Receive Percent Discount Pays
1) The operating cycle for a merchandising firm is ________. A) obtain cash from stockholders, invest cash in equipment, earn more cash B) borrow cash from lenders, earn cash from customers, repay lenders C) start with cash, buy inventory, sell […]
Finance Chapter 5 2 Idaho Company made the following purchases during the month
77) Idaho Company made the following purchases during the month of October. October 6 Purchased $15,000 of merchandise, terms 2/10, n/30, FOB destination, freight cost $100 October 14 Purchased $12,000 of merchandise, terms 2/15, n/60, FOB shipping point, freight cost […]
Finance Chapter 5 3 Cost Goods Sold 72 A Gross Profit
28) Mighty Ducks, Inc.’s inventory activity in October 2011 was as follows: Inventory, October 1 11 units @ $8 each Purchase, October 12 22 units @ $11 each Sale, October 25 23 units @ $24 each Which of the following […]
Finance Chapter 5 4 The company uses a LIFO perpetual inventory system
61) Match the statements below with the appropriate cost flow method. Some methods may be used more than once and others may not be used at all. F = FIFO L = LIFO W = Weighted average method S = […]
Finance Chapter 5 5 The company has 4.5 times as much inventory as it has
14) At December 31, Payless, Inc. reported inventory on the balance sheet at its cost of $200,000. However, the market value of the inventory at that date was $190,000. Put an X in the appropriate box to show the effect […]
Finance Chapter 5 6 increases in cost of the goods and decreases in price may explain
Part D: Part E: Part F: 1. 38.75%; 2. Increases in cost of the goods and decreases in price may explain a decrease in the gross profit ratio; 3. 2.5 times; 4. No; 5. 0.8 to 1.0; 6. a) lower, […]
Finance Chapter 6 1 The Company uses The Double declining Balance Method Depreciation
1) Depreciation is ________. A) the loss in market value of an asset B) the allocation of a long-term asset’s cost to an expense account over the asset’s life C) an increase in an asset’s value over time or usage […]
Finance Chapter 6 2 The market value of the building was appraised at
48) On January 1, 2011, the Peninsula Paper Company purchased manufacturing equipment for $600,000. The equipment has a 4-year estimated useful life and a salvage value of $22,500. The company expects to use the equipment for 275,000 hours. Actual hours […]
Finance Chapter 6 3 The asset had an historical cost of $30,000and accumulated
13) On January 1 2010, Max, Inc. paid $80,000 for a truck with an estimated useful life of 10 years and a $20,000 salvage value. During 2013, Max, Inc.’s truck was not running very well. Part A: Put an X […]
Finance Chapter 6 4 Errors The 3500 Tune up Costs Should Expensed
23) On January 1, 2011, Tiler Company purchased equipment that cost $30,000. The equipment has an estimated useful life of 6 years and an estimated salvage value of $3,000. Required: 1. Using the straight-line method, complete the chart below: Year […]
Finance Chapter 6 5 Calculate The Return Assets ROA For Both
38) On January 1, 2011, XYZ Company bought a new, $2,000,000 mainframe computer. Because of rapid changes in technology and XYZ’s plans for growth, the computer has only a five-year useful life and no salvage value. The chief financial officer […]
Finance Chapter 6 6 Complete And Reliable Accounting Records Are Also
19) Team instructions: Divide the class into teams of three or four people. Give the students time in class to answer the following questions. Students need access to both the Team Shirts, financial statements and the transactions to be able […]
Finance Chapter 7 1 How are liabilities classified on the balance sheet
1) How are liabilities classified on the balance sheet? A) paid and unpaid B) current and long-term C) current and unfunded D) definitely determinable and estimated 2) Current liabilities are liabilities that ________. A) must be satisfied within two years […]
Finance Chapter 7 2 Interest The Loan December Each Year The
Answer: Part A: Shareholders’ equity Assets Liabilities CC Retained earnings 1 100,000 AR (60,000) Inventory 100,000 Sales (60,000) COGS 2 6,000 Estimated warranty liability (6,000) Warranty expense 3 (4,000) Cash (4,000) Estimated warranty liability Part B: Amount Financial Statement 1. […]
Finance Chapter 7 3 Select the column that represents the financial statement where
43) On May 1, 2009, DS Company borrowed $50,000 at 7% to buy a machine. The loan will be repaid in equal annual payments at the end of each of the next 5 years, beginning May 1, 2010. Part A: […]
Finance Chapter 7 4 The answer cannot be determined without knowing the price
question(s): COMPANY Price Coupon % MATURITY Current Yield Fitch Ratings IBM 109.62 5.050 22-Oct-2012 4.067 A Ford MTR 58.00 7.700 15-May-2097 13.276 CCC 60) Refer to the information above. Will IBM’s annual interest expense be higher or lower than the […]
Finance Chapter 7 5 bond is a written agreement that specifies a company’s responsibility
5) On OCTOBER 31, 2011, Bondable, Inc. issued $20,000 of 10-year, 6% bonds at 100. The bonds pay interest ANNUALLY on October 31. On its income statement for the year ended DECEMBER 31, 2011, the year the bonds were issued, […]
Finance Chapter 7 6 Calculate The Debt to equity Ratio For June
22) Gary’s Gadgets prepared the following preliminary balance sheet a few days before its December 31 yearend: Gary’s Gadgets Preliminary Balance Sheet December 27, 2011 Cash $ 6,000 Accounts payable $ 2,500 Accounts receivable 3,000 Inventory 2,000 Common stock 1,000 […]
Finance Chapter 7 7 Semiannual Payments Over the Next Years The Bank
22) On January 1, 2011, Nadir Company issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. These bonds sold at a _____ because the market rate of […]
Finance Chapter 8 1 There Are Two Parts Shareholders Equity Contributed
1) Which stock offers shareholders preference in receiving dividends? A) common stock B) preferred stock C) treasury stock D) callable stock 2) Preferred stock offers shareholders the right to ________. A) receive dividends after the common shareholders receive any dividends […]
Finance Chapter 8 2 Stock of a corporation that has been issued and has been repurchased
36) On December 15, 2011, the board of directors of Ryes, Inc. declared a cash dividend of $2 per share on the 100,000 common shares outstanding, payable January 8, 2012. No dividends were declared in 2012. For each item, write […]
Finance Chapter 8 3 Incs Financial Statements Included The Following Section share holders
11) Dale Murphy Company had beginning retained earnings of $60,000. During the year the company had net income of $20,000, and paid dividends of $7,500. The Company repurchased 1,000 shares of its stock for $45 during the period. What is […]
Finance Chapter 8 4 The Company Had Net Income During the Year
11) Team Shirts had net income of $23,000. The balance sheet showed beginning and ending balances in shareholders’ equity of $100,000 and $110,000, respectively. There were no preferred shares and 20,000 common shares outstanding. Calculate the return on equity. A) […]
Finance Chapter 8 5 Treasury Stock This Type Account Because Its
42) Team Instructions: Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put […]
Finance Chapter 9 1 Match Each The Following Line Items With
1) The statement of cash flows ________. A) reports all of the cash a company has received and all of the cash a company has disbursed during an accounting period B) reports all of the income, expenses, and profit or […]
Finance Chapter 9 2 How is the statement of cash flows prepared when using
12) The following information is from ABC, Inc.’s December 31, 2011 annual report: Income statement Balance sheet 12/31/11 12/31/10 Sales revenue $800,000 Unearned revenue $8,000 $10,000 Interest expense $30,000 Interest payable $1,000 $3,000 Note: ABC, Inc. does not sell to […]
Finance Chapter 9 3 Financing Activities Involve Raising Money From Outside
10) Team Shirts, Inc. had net cash from operating activities of $50,000. It paid $40,000 to buy a new computer system by signing a $30,000 note and paying the balance. Net cash from (or used for) financing activities for the […]
Finance Chapter 9 4 purchase of equipment by issuing a long-term note payable
69) Match each of the following line items with the type of ACTIVITY OR ACTIVITIES found on the statement of cash flows. Each can be used more than once. a. cash inflow from operating activities b. cash outflow for operating […]
Finance Chapter 9 5 Receivables Increase Deferred Revenue decrease no Because Has Positive
37) How does the statement of cash flows aid analysts in the evaluation of a company’s financial situation? 38) Explain what investors look for in a statement of cash flows. Answer: The operating activities section of the statement of cash […]