What is the effect on the balance sheet of making cash sales of inventory to customers
on profit?
A.Assets and equity increase.
B.Assets and equity decrease.
C.Assets decrease and equity increases.
D.Assets increase and equity decreases.
Cash inflows generated by capital investments include all of the following except:
A.incremental revenues.
B.cost savings.
C.reduction in the amount of required working capital.
D.increase in operating expenses.
James Company paid $1,800 for one year’s rent in advance beginning on October 1,
2013. James’s 2013 income statement would report rent expense, and its statement of
cash flows would report cash outflow for rent, respectively, of
A.$1,800; $1,800
B.$450; $1,800
C.$450; $450
D.$300; $1,800
A partnership began its first year of operations with the following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary assigned to
Thurman.
Each partner was to be attributed with interest equal to 10% of the capital balance as of
the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman,
respectively.
Each partner withdrew $13,000 per year.
Assume that the net loss for the first year of operations was $26,000 with net income of
$52,000 in the second year.
What was Eaton’s total share of net loss for the first year?
A.$3,900 loss.
B.$11,700 loss.
C.$10,400 loss.
D.$24,700 loss.
E.$9,100 loss.
Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and
$30,000 respectively. The partners share profits and losses 20%, 40%, and 40%
respectively.
Anne retires and is paid $80,000 based on an independent appraisal of the business. If
the goodwill method is used, what is the capital of the remaining partners?
A.Donald, $55,000; Todd, $60,000
B.Donald, $40,000; Todd, $30,000
C.Donald, $65,000; Todd, $55,000
D.Donald, $15,000; Todd, $30,000
Anne receives an additional $30,000 above her capital balance. Since she is assigned 40
percent of all profits and losses, this extra allocation indicates total goodwill of
$75,000, which must be split among all partners.
Vantage Corporation invested $800 cash in Tandem Company stock.
As a result of this transaction,
A.Vantage Corporation would have a cash outflow from financing activities.
B.Tandem Company would have a cash inflow from investing activities.
C.The balance in the Cash account on Vantage’s books would decrease, while the
balance in the Cash account on Tandem Company’s books would increase.
D.All of these statements are true.
Indicate whether each of the following statements about accounting information is true
or false.
_______ a) Financial accounting is primarily intended to satisfy the information needs
of external resource providers.
_______ b) Financial accounting information is useful only to banks and stockholders.
_______ c) The accounting information intended to satisfy the needs of a company’s
employees is managerial accounting information.
_______ d) GAAP requires that companies adhere to managerial accounting standards.
_______ e) Managerial accounting information is usually more detailed than financial
accounting information.
Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments
of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed
to (1) interest of 10% of the beginning capital balance each year, (2) annual
compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss
in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was
$150,000 in 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use
every month during 2012 and 2013.
What was the amount of interest attributed to Wasser for 2013?
A.$17,600
B.$18,800
C.$20,100
D.$17,800
E.$30,100
Which of the following is not a criteria that is used to determine whether a project is
acceptable under the net present value method?
A.If the net present value is equal to zero
B.If the net present value is greater than zero
C.If the net present value is equal to the required rate of return
D.None of these answers is correct.
What amount of cash would result at the end of one year, if $15,000 is invested today
and the rate of return is 8%? (Do not round your PV factors.)
A.$16,200
B.$13,889
C.$15,000
D.$1,200
During its first year of operations, Silverman Company paid $14,000 for direct
materials and $19,000 for production workers’ wages. Lease payments and utilities on
the production facilities amounted to $17,000 while general, selling, and administrative
expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a
price of $15.00 a unit.
What is the amount of finished goods inventory on the balance sheet at year-end?
A.$10,000
B.$20,000
C.$4,000
D.$15,000
Jacks Company had a net increase in cash from operating activities of $8,000 and a net
decrease in cash from financing activities of $1,000. If the beginning and ending cash
balances for the company were $3,000 and $11,000, then net cash change from
investing activities was:
A.an outflow or decrease of $1,000.
B.an inflow or increase of $2,000.
C.an inflow or increase of $1,000.
D.zero.
Which of the following choices accurately reflects how the recording of accrued salary
expense affects a business’s financial statements?
A.
B.
C.
D.
Which of the following accounts is not closed at the end of an accounting cycle?
A.Liabilities
B.Revenues
C.Dividends
D.Expenses
Which ratio measures how effectively a company is using assets to generate revenue?
A.Net margin
B.Plant assets to long-term liabilities
C.Asset turnover
D.Inventory turnover