Earnings per share is an indication of how much
a. the company paid as dividends for each share of stock held by stockholders.
b. the company earned for each share of outstanding common and preferred stock.
c. the company earned for each share of outstanding common stock.
d. cash the company has for each share of all outstanding stock.
Match the action with the category of internal control procedures
a. One department should check on another
b. Internal audit staff ensure all is working as intended
c. Accounting and cash collection is properly separated
d. Blank checks are locked at all times when not in use
e. Origination of initial entry into accounting system
f. Specific authority is given by management for the performance of activities.
Design and use of business documents
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. a. Add to inventory cost
b. Subtract from inventory cost
c. Not an inventory cost
Excise taxes paid on goods acquired
Which one of the following would not appear on a bank statement for a checking
account?
a. Service charges
b. Interest earned
c. Outstanding checks
d. Deposits
A gain on bond redemption
a. is considered unusual and infrequent.
b. should be treated as part of operating income.
c. decreases a company’s income.
d. is always included when predicting a company’s future income.
Information that is material means that an error or alternative method of handling a
transaction
a. Would possibly affect the judgment of someone relying on the financial statements
b. Would not affect the decisions of users
c. Might cause a company to understate its earnings for the accounting period
d. Could increase the profitability of a company
Which of the following statements is true regarding valuation amounts on the balance
sheet?
a. Stockholders’ equity reflects the amount the stockholders would receive upon
liquidation.
b. Assets are recorded at current cost.
c. Stockholders’ equity reflects the current market value of the stock
d. There are a variety of assumptions used in determining amounts reported on the
balance sheet.
Transportation-in is
a. an operating expense.
b. part of purchases.
c. added to transportation-out as part of the calculation of cost of goods sold.
d. part of cost of goods purchased.
An external event involves interaction between an entity and its environment.
a. True
b. False
The Stockholders’ Equity section of Taco Reef, Inc.’s balance sheet on January 1, 2015,
appeared as follows:
On March 1, 2015, Taco Reef reacquired 4,000 shares of common stock at $50 per
share. All common shares were originally sold for $42 each. How much should be
reported in the treasury stock account on the March 31, 2015 balance sheet?
a. $ 128,000
b. $ 168,000
c. $ 200,000
d. $ 32,000
Which of the following is false regarding the issue of stock versus the issue of bonds to
raise capital?
a. The payment of dividends is at the discretion of the board of directors.
b. The payment of interest on bonds payable is required by law.
c. Interest accrues, whereas dividends do not accrue.
d. The declaration of dividends reduces the amount of income taxes the corporation
must pay.
McDonald’s Corporation is the largest food service organization in the world. The
proper handling of cash and food is important to the profitability of McDonald’s. Based
on your personal knowledge of McDonald’s and the internal control concepts and
procedures described in the textbook, answer the following questions. REQUIRED:
Most corporations, including McDonald’s, include a Report of Management in their
annual report. Describe, in general, the main elements that should be included in a
Report of Management and give the purpose of this report.
Gemini Company has the following accounts in the Stockholders’ Equity category of
the balance sheet:Common Stock, $10 no par, 10,000 shares authorized, 9,000 issued,
8,000 outstanding
Preferred Stock, $100 par, 8%, cumulative, participating, 1,000 shares authorized,
issued, and outstanding
1> Explain how the issuance of stock affects the financial statements when the stock
has no par value.
2> Why would preferred stockholders want to have a cumulative feature in preferred
stock?
3> When a participating feature is present in preferred stock, how does it affect the
amount of dividends that preferred stockholders can expect to receive?
The financial statement that summarizes the operating, investing, and financing
activities of a business over a period of time is the
___________________________________.
Select the best answer from the list below to complete statements 131-141 that follow.
The annual dividend amount divided by the annual net income is.
The following account balances are taken from the records of the Odessa Industries:
Odessa extends credit terms requiring full payment in 45 days, with no discount for
early payment.
REQUIRED: 1> Compute Odessa’s accounts receivable turnover ratio for 2016 and
2015.
2> Compute the number of days’ sales in receivables for 2016 and 2015. Assume 360
days in a year.
3> Comment on the efficiency of Odessa’s collection efforts over the twoÂyear period.
Why is the cash basis of accounting too limited for proper financial reporting?
Canyon Corporation
The accountant for the Canyon Corporation prepared the following list from the
company’s accounting records for the year ended December 31, 2014:
Read the information for Canyon Corporation. Using good form, prepare an income
statement for Canyon Corporation.
What is meant by generally accepted accounting principles?
Trend analysis is another name foranalysis.