Match the terms with the descriptions related to merchandise sales and purchases.
a. Transportation-in
b. Perpetual inventory system
c. Net purchases
d. FOB Destination
e. Cost of goods available for sale
f. Periodic inventory system
g. FOB Shipping point
h. Delivery expense
Relies on a count of inventory on the last day of the year to determine amount on hand.
Choose from the following list of account titles the one that most accurately fits the des
cription of that account or is an example of that account.An account title may be used m
ore than once or not at all.
a. Cash
b. Prepaid Asset
c. Investments
d. Taxes Payable
e. Preferred Stock
f. Accounts Receivable
g. Land
h. Accounts Payable
i. Retained Earnings
j. Notes Receivable
k. Buildings
l. Notes Payable
m. Common Stock
Corporate income taxes owed to the state government
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations. For a given
single sum invested at 8% for 4 years, how will the future value be affected if the
compounding period is changed from annual to quarterly?
a. The future value will decrease.
b. The future value will increase.
c. The future value will stay the same.
d. There is not enough information to determine the impact.
Flannery Company uses a worksheet to prepare its statement of cash flows. The
company also uses the indirect method for the Operating Activities section of its
statement. For each of the following changes in the balance sheet, indicate what activity
it affects and whether it is an addition or deduction. a. Deducted from Operating activity
b. Added to Operating activity
c. Deducted from Investing activity
d. Added to Investing activity
e. Deducted from Financing activity
f. Added to Financing activity
Land increased
Every company prepares only four adjustments-one for each of the four types of
adjustments.
a. True
b. False
Latahmer Corporation is reconciling its May bank account. For each item listed, state
how it would be handled on the bank reconciliation.
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to book balance
d. Subtraction from book balance
e. Would not appear on the May reconciliation
Consists of all methods and records used to accurately report an entity’s transactions.
Which of the following is a noncurrent asset?
a. Inventories
b. Office supplies
c. Land
d. Accounts receivable
Which of the following statements regarding the inclusion of liabilities on the statement
of cash flows is true?
a. All current liabilities affect the operating activities section.
b. Long-term liabilities generally affect the investing activities section.
c. A decrease in a current liability from the beginning to the end of the year is
accompanied by a decrease of cash.
d. A decrease in a current liability from the beginning to the end of the year is
accompanied by an inflow of cash.
For each ratio listed, select whether an increase or decrease in the ratio is generally
considered to be better.
a. increase
b. decrease
Dividend yield ratio
According to the text, in economies like those that made up the former Soviet Union,
accounting standards are relatively less complex due to the fact that they are just
beginning to be developed.
a. True
b. False
Bad Debts expense is debited and Accounts Receivable is credited at the end of the
period to recognize bad debts under the allowance method.
a. True
b. False
The repurchase of a company’s own stock should be reported on the statement of cash
flows as an investing activity.
a. True
b. False
Indicate whether each should be (a) included or (b) excluded from the line item titled
Cash and cash equivalents on the balance sheet.
a. Included
b. Excluded
Certificate of deposit maturing in six months
Use the following codes to indicate how the cash flow effect, if any, of each transaction
or event would be reported on a statement of cash flows if the operating activities
section is prepared using the indirect method.
a. Operating activity-add to net income
b. Operating activity-deduct from net income
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Recorded depreciation expenses for the year.
To determine the source of a company’s assets, on which financial statement will you
look?
a. Balance sheet only
b. Income statement only
c. Both the balance sheet and the income statement
d. Both the income statement and the statement of retained earnings
From the following list, select the proper section from the statement of cashflows in whi
ch it would beclassified.
a. Working capital will increase
b. Working capital will decrease
c. Working capital will not change
Purchased land for cash