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a. A liability resulting from the signing of a promissory note.
b. A measure of how long it takes to collect receivables.
c. A written promise to repay a definite sum of money on demand or at a fixed or
determinable date in the future.
d. The length of time a note is outstanding, that is, the period of time between the date it
is issued and the date it matures.
e. The party that will receive the money from a promissory note at some future date.
f. The process of selling a promissory note.
g. The date the promissory note is due.
h. The amount of cash the maker is to pay the payee on the maturity date of the note.
i. The difference between the principal amount of the note and its maturity value.
j. An asset resulting from the acceptance of a promissory note from another company.
k. Securities issued by corporations and governmental bodies as a form of borrowing.
l. Securities issued by corporations as a form of ownership in the business.
m. The party that agrees to repay the money for a promissory note at some future date.
n. The amount of cash received, or the fair value of the products or services received,
by the maker when a promissory note is issued.
Maturity date
Blecher Co. reported the following information at the end of 2015 and 2016:
An analysis of Blecher's records indicated that there were no cash flow effects resulting
from the changes in the two accounts presented above. How should Blecher report the
changes in these accounts on a statement of cash flows?
a. Blecher should report $65,000 for the acquisition of land as an investing activity and
$65,000 for the issuance of stock as a financing activity.
b. Blecher should report $65,000 as a noncash investing and financing activity for the
acquisition of land by issuing common stock.
c. Blecher should report the issuance of common stock to acquire land in the financing
activity section with a net cash flow effect of zero.
d. Blecher should report the acquisition of land by issuing common stock in the
investing activity section with a net cash flow effect of zero
Which of the following items should not appear in the long-term liability section of the
balance sheet?
a. Accrued income taxes
b. Deferred income taxes
c. Bonds payable
d. Pension obligations
Assume the current ratio is 3 to 4. Purchases of inventory on account would cause the
current ratio to
a. increase
b. decrease
c. be unchanged since the effects offset each other
d. be unchanged since it has no effects on any current accounts
Select the financial statement on which the user would most likely find the answer to
the question given.
a. Income statement
b. Balance sheet
c. Statement of cash flows
d. Statement of retained earnings Acquisition cost is also known as historical cost with
respect to property plant and equipment.
a. True
b. False
For each transaction select the letter of the type of adjustment that would be required.
a. Deferred expense
b. Deferred revenue
c. Accrued liability
d. Accrued asset
The cost of commissions to salesmen that has been earned, but not paid at the end of the
accounting period is recorded
In 2015, Valencia Company purchased equipment for $363,000 and also sold some
special purpose machinery with a book value of $155,000 for $182,000. In its statement
of cash flows for 2015, Valencia should report the following with respect to the above
transactions:
a. $363,000 cash used by operating activities; $182,000 cash provided by financing
activities.
b. $181,000 net cash used by investing activities.
c. $181,000 net cash used by investing activities; $27,000 net cash provided by
operating activities.
d. $363,000 net cash used by investing activities.
Marvel Shoes Marvel Shoes reported the following items on its statement of cash flows
for the current year:
Read the information about Marvel Shoes. What was the amount of net increase or
decrease in the cash balance for Marvel Shoes for the current year?
a. $ 10,000 increase
b. $ 30,000 increase
c. $ 40,000 increase
d. $ 70,000 increase
Pharma Corp.
The data presented below for Pharma Corp. is for the year ended December 31, 2015:
See the data for Pharma Corp. If Pharma Corp. estimates its bad debts at 1% of net
credit sales, what amount will be reported as bad debt expense for 2015?
a. $12,400
b. $13,700
c. $14,000
d. $14,300
Given the following list of methods of depreciation, select the method that is best for
the situation or purpose given. Some answers may be used more than once, while others
may not be used at all.
a. Straight-line
b. Units-of-production
c. Double-declining-balance
d. MACRS
This method minimizes taxable income (early in the asset's life).
Advance ticket sales for a concert next month are a current liability.
a. True
b. False
Indicate the type of each ratio listed below.
a. liquidity ratio
b. solvency ratio
c. profitability ratio
Return on assets ratio
means the presentation of information is free from bias toward a particular result.
Fellsmere Corporation Presented below are the condensed balance sheets of Fellsmere
Corporation at December 31, 2014 and 2013. Net income for the years ending
December 31, 2014 and 2013 is $346, 000 and $109,000, respectively.
Read the information about Fellsmere Corporation.
What impact does materiality have on the determination of how a cost related to a plant
asset is reported on the financial statements?
The process of assigning a note due in the future to a bank before its maturity date is
called
____________________.
You friend, Edwin Slotkin, has started a new business, but has recently encountered a
slight cash flow problem. He obtains a $1,000 loan at 10% per year from a local bank,
but would like to ask you about the terms. The bank has deducted the interest in
advance and he wants to know if 10% is his effective interest rate. How would you
respond in an email?
For a capital lease, the lessee must record both an asset and a liability. The amount of
the asset is subsequently reduced by the process of __________________________.
Giant-Mart purchased a large shipment of shoes from Primus, Inc. on credit near the
end of its accounting period. Primus shipped the shoes in January and Giant-Mart
received the shoes in February. Assume that Giant-Mart's accounting period ends on
January 31, while Giant's accounting period ends on May 31. Answer each independent
question in the set that follows. REQUIRED : Under what shipping terms would
Giant-Mart include the shoes as part of inventory on its January 31 balance sheet?
is a measure of a company's ability to meet its future debt obligations after paying
income taxes and interest costs and making capital expenditures.
