Loose Leaf for Financial Accounting 5th Edition

1 Answer: TRUE Explanation: Simple interest = ($500 8%) + ($500 8%) = $80. Difficulty: 3 Hard Topic: Simple Versus Compound Interest Learning Objective: C-01 Contrast simple and compound interest. Bloom's: Analyze AACSB: Analytical Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 1 Answer: TRUE Explanation: Simple interest = ($500 8%) +

20 Answer: A Difficulty: 2 Medium Topic: Present Value of an Annuity Learning Objective: C-03 Calculate the future value and present value of an annuity. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation 20 Answer: A Difficulty: 2 Medium Topic: Present Value of an Annuity Learning Objective:

Answer: TRUE Difficulty: 2 Medium Topic: Differences in Accounting Practices Learning Objective: E-01 Explain the reasons for differences in accounting practices across countries. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation Answer: TRUE Difficulty: 2 Medium Topic: Differences in Accounting Practices Learning Objective: E-01 Explain the reasons for

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1 Answer: FALSE Explanation: Financial accounting primarily serves to provide information to external parties. Difficulty: 2 Medium Topic: Defining Accounting Learning Objective: 01-01 Describe the two primary functions of financial accounting. Bloom's: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking 1 Answer: FALSE Explanation: Financial accounting primarily serves to provide

21 Answer: C Explanation: (1) Purchase supplies, (2) Provide services to customers, and (3) Pay utility bill. Difficulty: 3 Hard Topic: Measuring Business Activities Learning Objective: 01-02 Understand the business activities that financial accounting measures. Bloom's: Apply AACSB: Knowledge Application AICPA: FN Measurement 21 Answer: C Explanation: (1) Purchase supplies,

81 Answer: Huffman Corporation Income Statement For the year ended December 31 Service revenue $9,400 Expenses: Salaries $2,300 Advertising 1,200 Total expenses 3,500 Net income $5,900 Difficulty: 3 Hard Topic: Financial Statements - Income Statement Learning Objective: 01-03 Determine how financial accounting information is communicated through financial statements. Bloom's: Analyze

61 Answer: D Explanation: ($1.40/$40.00) = .035. Difficulty: 3 Hard Topic: Analysis - Dividend Yield Learning Objective: 10-08 Evaluate company performance using information on stockholders' equity. Bloom's: Analyze AACSB: Analytical Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 61 Answer: D Explanation: ($1.40/$40.00) = .035. Difficulty: 3 Hard Topic: Analysis - Dividend Yield

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81 Answer: Cash (5,000 shares $15) 75,000 Common Stock (5,000 shares $1) 5,000 Additional Paid-in Capital (difference) 70,000 (Issue common stock above par) Difficulty: 3 Hard Topic: Accounting for Common Stock Learning Objective: 10-02 Record the issuance of common stock. Bloom's: Analyze AACSB: Analytical Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 81

41 Answer: C Difficulty: 1 Easy Topic: Cash Dividends Learning Objective: 10-05 Describe retained earnings and record cash dividends. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 41 Answer: C Difficulty: 1 Easy Topic: Cash Dividends Learning Objective: 10-05 Describe retained earnings and record cash dividends. Bloom's: Remember AACSB:

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41 Answer: C Explanation: $(1,900) = $(5,400) + $3,500 Difficulty: 3 Hard Topic: Investing Activities Learning Objective: 11-04 Prepare the investing activities section of the statement of cash flows. Bloom's: Analyze AACSB: Analytical Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation 41 Answer: C Explanation: $(1,900) = $(5,400) + $3,500 Difficulty: 3 Hard

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21 Answer: C Difficulty: 2 Medium Topic: Classification of Transactions Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation 21 Answer: C Difficulty: 2 Medium Topic: Classification of Transactions Learning Objective: 11-01 Classify cash transactions as operating, investing,

61 Answer: B Difficulty: 1 Easy Topic: Earnings Persistence and One-Time Income Items Learning Objective: 12-05 Distinguish persistent earnings from one-time items. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation 61 Answer: B Difficulty: 1 Easy Topic: Earnings Persistence and One-Time Income Items Learning Objective: 12-05 Distinguish

41 Answer: A Difficulty: 2 Medium Topic: Effects of Debits and Credits on Account Balances Learning Objective: 02-03 Assess whether the impact of external transactions results in a debit or credit to an account balance. Bloom's: Understand AACSB: Reflective Thinking AICPA: FN Measurement 41 Answer: A Difficulty: 2 Medium Topic:

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1 Answer: TRUE Difficulty: 1 Easy Topic: External Transactions Learning Objective: 02-01 Identify the basic steps in measuring external transactions. Bloom's: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking 1 Answer: TRUE Difficulty: 1 Easy Topic: External Transactions Learning Objective: 02-01 Identify the basic steps in measuring external transactions. Bloom's:

21 Answer: C Difficulty: 2 Medium Topic: Effects of Transactions on the Accounting Equation Learning Objective: 02-02 Analyze the impact of external transactions on the accounting equation. Bloom's: Understand AACSB: Reflective Thinking AICPA: FN Measurement 21 Answer: C Difficulty: 2 Medium Topic: Effects of Transactions on the Accounting Equation Learning

1 Answer: TRUE Difficulty: 2 Medium Topic: Accrual-Basis Accounting Learning Objective: 03-01 Understand when revenues and expenses are recorded. Bloom's: Understand AACSB: Reflective Thinking AICPA: FN Reporting 1 Answer: TRUE Difficulty: 2 Medium Topic: Accrual-Basis Accounting Learning Objective: 03-01 Understand when revenues and expenses are recorded. Bloom's: Understand AACSB: Reflective

41 Answer: A Difficulty: 2 Medium Topic: Adjusting Entries - Accrued Expenses Learning Objective: 03-03 Demonstrate the purposes and recording of adjusting entries. Bloom's: Understand AACSB: Reflective Thinking AICPA: FN Measurement 41 Answer: A Difficulty: 2 Medium Topic: Adjusting Entries - Accrued Expenses Learning Objective: 03-03 Demonstrate the purposes and

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121 Answer: Follette's Accessories Income Statement For the year ended December 31, 2021 Service revenue $63,000a Expenses: Salaries 24,800b Supplies 6,800c Maintenance 5,000d Insurance 4,700e Advertising 4,000f Total expenses 45,300 Net income $17,700 a $60,000 (cash from customers) + $3,000 (increase in accounts receivable) = $63,000. b $25,000 (cash paid

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81 Answer: C Explanation: Beginning Retained Earnings ($0) + Net Income(Loss) [$(150,000) + $100,000 + $250,000] Ending Retained Earnings ($120,000) = Dividends ($80,000). Difficulty: 3 Hard Topic: Closing Entries Learning Objective: 03-06 Demonstrate the purposes and recording of closing entries. Bloom's: Analyze AACSB: Analytical Thinking AICPA: FN Measurement 81 Answer:

61 Answer: B Difficulty: 1 Easy Topic: Financial Statements - Statement of Stockholders' Equity Learning Objective: 03-05 Prepare financial statements using the adjusted trial balance. Bloom's: Remember AACSB: Reflective Thinking AICPA: FN Reporting 61 Answer: B Difficulty: 1 Easy Topic: Financial Statements - Statement of Stockholders' Equity Learning Objective: 03-05

21 Answer: A Difficulty: 3 Hard Topic: Accrual-Basis Compared with Cash-Basis Accounting Learning Objective: 03-02 Distinguish between accrual-basis and cash-basis accounting. Bloom's: Analyze AACSB: Analytical Thinking AICPA: FN Measurement 21 Answer: A Difficulty: 3 Hard Topic: Accrual-Basis Compared with Cash-Basis Accounting Learning Objective: 03-02 Distinguish between accrual-basis and cash-basis accounting.

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81 Answer: August 3 Debit Credit Petty Cash 300 Cash 300 August 31 Debit Credit Delivery Expense 100 Repairs and Maintenance Expense 70 Postage Expense 40 Miscellaneous Expense 50 Cash 260 August 31 Debit Credit Equipment 1,400 Advertising Expense 750 Supplies 360 Accounts Payable 2,510 Difficulty: 3 Hard Topic: Employee

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21 Answer: A Difficulty: 1 Easy Topic: Framework for Internal Control Learning Objective: 04-02 Identify the components, responsibilities, and limitations of internal control. Bloom's: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking 21 Answer: A Difficulty: 1 Easy Topic: Framework for Internal Control Learning Objective: 04-02 Identify the components, responsibilities,

41 Answer: D Difficulty: 2 Medium Topic: Bank Reconciliation Learning Objective: 04-05 Reconcile a bank statement. Bloom's: Understand AACSB: Analytical Thinking AICPA: BB Critical Thinking 41 Answer: D Difficulty: 2 Medium Topic: Bank Reconciliation Learning Objective: 04-05 Reconcile a bank statement. Bloom's: Understand AACSB: Analytical Thinking AICPA: BB Critical Thinking

1 Answer: TRUE Difficulty: 1 Easy Topic: Accounting Scandals and Response by Congress Learning Objective: 04-01 Discuss the impact of accounting scandals and the passage of the Sarbanes-Oxley Act. Bloom's: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking 1 Answer: TRUE Difficulty: 1 Easy Topic: Accounting Scandals and Response by

21 Answer: D Explanation: Trade discount = $4,000 20% = $800. Sales revenue = ($4,000 $800) + $1,500 = $4,700. Sales discount = $4,700 2% = $94. Net revenues = $4,700 $94 = $4,606. Difficulty: 3 Hard Topic: Net Revenues - Trade Discounts; Net Revenues - Sales Discounts Learning

41 Answer: B Difficulty: 3 Hard Topic: Allowance Method - Writing Off Accounts Receivable Learning Objective: 05-04 Write off accounts receivable as uncollectible. Bloom's: Apply AACSB: Knowledge Application AICPA/Accessibility: FN Reporting/Keyboard Navigation 41 Answer: B Difficulty: 3 Hard Topic: Allowance Method - Writing Off Accounts Receivable Learning Objective: 05-04

61 Answer: D Difficulty: 3 Hard Topic: Accounting for Notes Receivable Learning Objective: 05-07 Account for notes receivable and interest revenue. Bloom's: Apply AACSB: Knowledge Application AICPA/Accessibility: FN Reporting/Keyboard Navigation 61 Answer: D Difficulty: 3 Hard Topic: Accounting for Notes Receivable Learning Objective: 05-07 Account for notes receivable and

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114 Answer: Requirement 1 Age Group Amount Receivable Estimated Percent Uncollectible Estimated Amount Uncollectible Not yet due $40,000 5% $2,000 0-90 days past due 19,000 10% 1,900 91-180 days past due 9,000 20% 1,800 More than 180 days past due 6,000 40% 2,400 Total $74,000 $8,100 Requirement 2 December

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1 Answer: TRUE Difficulty: 1 Easy Topic: Credit Sales and Accounts Receivable Learning Objective: 05-01 Recognize accounts receivable at the time of credit sales. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 1 Answer: TRUE Difficulty: 1 Easy Topic: Credit Sales and Accounts Receivable Learning Objective: 05-01 Recognize

21 Answer: B Difficulty: 2 Medium Topic: Multiple-Step Income Statement Learning Objective: 06-02 Understand how cost of goods sold is reported in a multiple-step income statement. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation 21 Answer: B Difficulty: 2 Medium Topic: Multiple-Step Income Statement Learning Objective: 06-02 Understand

41 Answer: B Explanation: Cost of goods sold = (600 $7.35) + (800 $7.30) + (600 $7.25) + (300 $7.20) = $16,760. Difficulty: 3 Hard Topic: Inventory Cost Methods-LIFO Learning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods. Bloom's: Analyze AACSB:

1 Answer: TRUE Difficulty: 1 Easy Topic: Types of Inventory Learning Objective: 06-01 Understand that inventory flows from manufacturing companies to merchandising companies and is reported as an asset on the balance sheet. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation 1 Answer: TRUE Difficulty: 1 Easy

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61 Answer: B Difficulty: 3 Hard Topic: Recording Transactions Using a Perpetual Inventory System Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system. Bloom's: Apply AACSB: Knowledge Application AICPA/Accessibility: FN Measurement/Keyboard Navigation 61 Answer: B Difficulty: 3 Hard Topic: Recording Transactions Using a Perpetual Inventory System Learning

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112 Answer: Requirement 1 $120,000 = 3 years Requirement 2 Cost of the equipment $220,000 Less: Accumulated Depreciation (120,000) Book value at the end of year 3 $100,000 Requirement 3 The loss on sale is calculated as: Sale amount $80,000 Less: Cost of the equipment 220,000 Less: Accumulated Depreciation

1 Answer: FALSE Explanation: Cash received from the sale of salvaged materials decreases the total cost of land. Difficulty: 2 Medium Topic: Acquisition - Property, Plant, and Equipment Learning Objective: 07-01 Identify the major types of property, plant, and equipment. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation

61 Answer: C Explanation: ($48,000 $8,000) / 8 years = depreciation of $5,000 per year. After two years, the book value would be [$48,000 ($5,000 2 years)] = $38,000. The truck was sold for $43,000, so the company should record a $5,000 gain. Difficulty: 3 Hard Topic: Depreciation -

101 Answer: Step 1: Test for Impairment The long-term asset is impaired since future cash flows ($16 million) are less than book value ($18.5 million). Step 2: If Impaired, Record Loss The impairment loss is $6.5 million calculated as the amount by which book value ($18.5 million) exceeds fair

41 Answer: A Explanation: Depreciation rate = 2 / 5 = 0.40. Depreciation expense = $60,000 0.40 = $24,000. Difficulty: 3 Hard Topic: Depreciation - Declining-Balance Method Learning Objective: 07-04 Calculate depreciation of property, plant, and equipment. Bloom's: Analyze AACSB: Analytical Thinking AICPA/Accessibility: FN Measurement/Keyboard Navigation 41 Answer: A

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41 Answer: B Difficulty: 2 Medium Topic: Contingent Liabilities - Litigation Learning Objective: 08-05 Apply the appropriate accounting treatment for contingencies. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation 41 Answer: B Difficulty: 2 Medium Topic: Contingent Liabilities - Litigation Learning Objective: 08-05 Apply the appropriate accounting treatment for

21 Answer: C Difficulty: 2 Medium Topic: Leases Learning Objective: 09-03 Understand how leases are recorded. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation 21 Answer: C Difficulty: 2 Medium Topic: Leases Learning Objective: 09-03 Understand how leases are recorded. Bloom's: Understand AACSB: Reflective Thinking AICPA/Accessibility: FN Reporting/Keyboard Navigation

1 Answer: FALSE Explanation: Equity financing refers to obtaining investment from stockholders. Difficulty: 1 Easy Topic: Financing Alternatives Learning Objective: 09-01 Explain financing alternatives. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation 1 Answer: FALSE Explanation: Equity financing refers to obtaining investment from stockholders. Difficulty: 1 Easy Topic:

41 Answer: C Difficulty: 1 Easy Topic: Recording Bonds Payable - Discount Learning Objective: 09-05 Record the issuance of bonds and related interest. Bloom's: Remember AACSB: Reflective Thinking AICPA/Accessibility: BB Critical Thinking/Keyboard Navigation 41 Answer: C Difficulty: 1 Easy Topic: Recording Bonds Payable - Discount Learning Objective: 09-05 Record the