Financial ACCT2 2nd Edition

Chapter 1--Financial Accounting Key 1. Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements? A. Economic entity B. Continuity C. Time period D. Monetary unit A. Economic entity B. Continuity C. Time period D. Monetary

60. Davis Construction Inc. Davis Construction began operation on January 1, 2012, with an initial investment of $100,000 from each of its three stockholders. During the year ending 2012 Davis Construction had net income of $125,000 and paid dividends of $50,000. Refer to the information provided for Davis

Chapter 10--Stockholders' Equity Key 1. The number of shares sold to stockholders are ____________________ shares. issued issued issued 2. An arbitrary monetary amount that determines an entitys legal capital is the ____________________. par value par value par value 3. The number of shares issued less the number

76. Bravo Bistro, Inc. The stockholders' equity section of the December 31, 2011, balance sheet for Bravo Bistro appeared as follows: Comm on stock, $3 par, 2,000 shares issued and outstan ding $ 6,000 Additio nal paid-in capital 1,000 Retaine d earning s 5,400 Total stockholders' equity $12,400

Chapter 11--Statement of Cash Flows Key 1. Which of the following statements is not true? A. The information in the statement of cash flows helps investors, creditors, and others to assess a company's ability to produce future cash inflows. B. The information in the statement of cash flows helps

64. Free cash flow is cash from operations, less cash for : A. dividends and cash for fixed assets needed to maintain productivity. B. dividends and cash to redeem bonds payable. C. fixed assets needed to maintain productivity. D. dividends, cash for fixed assets needed to maintain productivity, and cash

Chapter 12--Financial Statement Analysis Key 1. A banker is analyzing a company which operates in the automotive industry. Which of the following will likely be the banker's most important consideration in determining whether the company should receive a loan? A. The automotive plants capacity. B. Inflation has been consistently

71. The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as: A. solvency and leverage. B. solvency and profitability. C. solvency and liquidity. D. solvency and equity. A. solvency and leverage. B. solvency and profitability.

Chapter 2--Corporate Financial Statements Key 1. Which of the following is not a form of a business entity? A. Sole proprietorship B. Partnership C. Entrepreneurship D. Corporation A. Sole proprietorship B. Partnership C. Entrepreneurship D. Corporation A. Sole proprietorship B. Partnership C. Entrepreneurship D. Corporation 2. In which

69. Barron Corporation The accountant for Barron Corporation prepared the following list of account balances from the company's records for the year ended December 31, 2012. Sales revenue $1,650,000 Cash $300,000 Accounts receivable 140,000 Selling expenses 440,000 Equipment 420,000 Common stock 170,000 Accounts payable 120,000 Interest income 30,000 Salaries

Chapter 3--Recording Accounting Transactions Key 1. Which of the following is an internal event? A. Caddie salaries are paid by a country club. B. Dividends are distributed to a company's stockholders. C. Potatoes used in a fast-food restaurant are purchased. D. Products are transferred from the assembly area to

Stockholders' Assets = Liabilities + Equity Example: Common stock is issued to investors in the company I NE I A) Services are sold for cash. I NE I B) Equipment is purchased on credit. I I NE C) Payment is made for equipment purchased on credit. D

Chapter 4--Accrual Accounting and Adjusting Entries Key 1. Under accrual accounting, revenue is recognized: A. when cash is received, and expenses, when cash is paid. B. when cash is received, and expenses, when they are incurred. C. when it is earned, and expenses, when the costs are incurred. D.

71. The supplies account has a balance of $1,000 on January 1. During January, the company purchased $25,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $3,000. Which one of the following is a correct

Chapter 5--Internal Control and Cash Key 1. According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and maintaining a system of internal control over the company's financial reporting? A. Management of the company B. The company's auditors C. The company's internal auditors D. The audit

From this information, the most likely explanation is that Roeper is A. using cash from operations and selling long-term assets to pay back debt. B. using cash from operations and borrowing to purchase long-term assets. C. using its profits to expand growth. D. using cash from investors to provide

Chapter 6--Receivables Key 1. On January 2, Well Corporation sold merchandise with a gross price of $140,000 to Priority Corporation with terms of 2/10, n/30. How much sales discounts would be recorded if payment was received on January 8? A. $ 2,800 B. $ 0 C. $ 137,200 D.

55. The days-in-receivables ratio: A. is an estimate of the length of time the receivables have been outstanding. B. measures the cash discount period for credit sales. C. is net credit sales divided by average receivables. D. is not meaningful and therefore is not used. A. is an estimate of

Chapter 7--Inventory Key 1. The cost of goods sold is equal to: A. purchases less beginning inventory plus ending inventory. B. the inventory account as reported on the balance sheet. C. the cost of goods available for sale less ending inventory. D. the amount of inventory on hand at

Refer to the selected data provided for Maxs Tire Center. Which of the following would result from a horizontal analysis of Max's income statement? A. Cost of sales increased by 9.09% during 2012. B. Cost of sales increased by 11% during 2012. C. Cost of sales is

81. Geoffry Hesse Exports The following data are available for one of the products sold by Geoffry Hesse Exports, which uses a perpetual inventory system. July 1 Beginning inventory, 1,000 units at $2 each $2,000 5 Purchased 2,000 units at $2.75 each 5,500 10 Sold 2,500 units

Chapter 8--Fixed Assets and Intangible Assets Key 1. Which of the following accounts would not be reported in the property, plant, and equipment section of a balance sheet? A. Accumulated depreciation--buildings B. Buildings C. Depreciation Expense--buildings D. Land A. Accumulated depreciation--buildings B. Buildings C. Depreciation Expense--buildings D. Land A.

A) (($91,000 + 5,000 + 5,000) Cost - 9,000) / 8 years = $11,500 B) ($101,000 - 9,000) / 100,000 (Hours of operation) = $0.92 per hour Depreciation for 2011: 15,000 (Hours of operation) $0.92 = $13,800 Depreciation for 2012: 20,000 (Hours of operation) $0.92 = $18,400 Accumulated

Chapter 9--Liabilities Key 1. Current liabilities are: A. due, but not receivable for more than one year. B. due, but not payable for more than one year. C. due and receivable within one year. D. due and payable within one year. A. due, but not receivable for more than

63. Tyson Construction Inc. Use the information provided for Tyson Construction Inc. to answer the following question(s) using the effective interest method. On January 2, 2012, Tyson Construction Inc. issued $1,000,000, 10-year bonds for $1,135,915. The bonds pay interest on June 30 and December 31. The stated rate is