If a company’s asset turnover ratio decreased from 2014 to 2015, which of the following
conclusions can be made?
a. The company was more efficient during 2015 in using its assets to produce profits.
b. The company produced less sales in 2015 for each dollar invested in assets.
c. The company was less profitable in 2014.
d. The company’s average total assets decreased for relatively stable sales in 2014 and
2015.
Which internal control procedure is violated when the cashier at the checkout stand also
records the daily receipts in the journal?
a. Segregation of duties
b. Independent review and appraisal
c. Independent verifications
d. Proper authorizations
Amortization of bond discount results in a(n)
a. decrease of the bonds payable account.
b. decrease of stockholders’ equity.
c. increase of stockholders’ equity.
d. decrease in the cash account.
Under the effective interest method, the cash paid on each interest payment date will
a. decrease if bonds are issued at a premium.
b. increase if bonds are issued at a premium.
c. remain constant regardless of the issuance price.
d. increase if bonds are issued at a discount.
Line Corporation’s balance sheet showed the following amounts for their liability and
stockholders’ equity accounts: Current Liabilities, $5,000; Bonds Payable, $1,500;
Lease Obligations, $2,000; and Deferred Income Taxes, $300. Total stockholders’
equity was $6,000. The debt-to-equity ratio is
a. 0.63
b. 0.83
c. 1.42
d. 1.47
For each of the following accounts, indicate whether it is a balance sheet account or an i
ncome statement account.
a. Balance sheet account
b. Income statement account
Utilities Expense
The costs of doing business through the sale of goods and services are called
a. Net income
b. Expenses
c. Revenues
d. Dividends
For each of the following accounts, indicate whether it is a balance sheet account or an i
ncome statement account.
a. Balance sheet account
b. Income statement account
Sales Revenue
From the list of accounts below, determine whether the account would be a nominal
account or a real account.
a. nominal account
b. real account
Prepaid Rent
Treasury stock is reported as a reduction in stockholders’ equity.
a. True
b. False
Select the term from the list below that matches each of the following six descriptions.
a. Interest
b. Maturity value
c. Principal
d. Payee
e. Discounting
f. Term
g. Recourse
h. Implicit
i. Maker
The sale of a note
Bonds in the amount of $100,000 and a life of 10 years were issued by the Focus
Company. If the face rate is 6% and interest is paid semiannually, what would be the
total amount of interest paid over the life of the bonds?
a. $ 60,000
b. $120,000
c. $ 30,000
d. $ 6,000
During a period of increasing cost prices, which inventory costing method will yield the
lowest cost of goods sold?
a. Any method in which the company uses a periodic inventory system
b. FIFO
c. LIFO
d. Weighted Average Cost
Pinecrest Company
Use the selected data from Pinecrest Company’s financial statements to answer the
following question.
Refer to the data for Pinecrest Company.Competitors in Pinecrest Company’s industry
have an average accounts receivable turnover of 10.8 times. Pinecrest reported accounts
receivable at December 31, 2016 of $42,000 and has normal credit terms requiring
payment within 30 days. Pinecrest’s accounts receivable turnover for 2016 is: a.
probably indicating that the company probably has stricter credit terms and policies
than the industry as a whole, which may repel potential buyers.
b. of no value to bankers and other creditors.
c. less efficient in its collection policies in 2016 than the industry as a whole.
d. less than the industry, which means that its customers are paying on their accounts in
a more timely manner than are customers reflected by the industry average.
Research and development costs should be presented as intangible assets.
a. True
b. False
Generally, an increase in a current liability results in an increase in the operating
activities category of the cash flow statement.
a. True
b. False
On January 2, 2015, Wynn Corporation sold $750,000 of bonds for $745,000. The
bonds will mature in 10 years and pay interest annually on December 31. Wynn
properly recorded the payment of interest and amortization of the discount using the
effective interest method. Which of the following statements is true about the carrying
value of the bonds and/or the unamortized discount at the end of 2015?
a. The carrying value will be less than $745,000.
b. The carrying value will be $745,000.
c. The carrying value will be greater than $745,000.
d. The unamortized premium will be less than $5,000.
Below are several accounts and balances from the 2015 financial statements for Torrent,
Inc. Prepare the intangible asset section of the company’s balance sheet, as well as a
partial income statement in the space provided below using the accounts provided.
BALANCE SHEET INCOME STATEMENT
Selected data from the financial statements of Ames Corporation for the years ended
December 31, 2015 and 2016 are presented below.
REQUIRED:
What is the amount of cash and cash equivalents at the end of 2016?
A(n)is a form sent by the purchasing department to the supplier.
In a-step income statement, all expenses and losses are added together, then deducted
from the sum of all revenues and gains.
To
Motor Repair Shop uses the accrual basis of accounting, and had the following account
balances on its financial statements at December 31, 2014:
On January 1, the Utilities Payable Account had a zero balance. Motor Repair paid cash
for utilities totaling $45,000 during 2014. How much should Motor Repair report as
utilities expense as of December 31, 2014?
Caron Industries received authorization on December 31, 2014, to issue $7,000,000
face value of 6%, 10-year bonds interest payment dates are June 30 and December 31.
All the bonds were issued at par, plus accrued interest, April 2015. The bonds are
callable by Caron at any time at 102. REQUIRED: Prepare the journal entry to record
the first semiannual interest payment on the bonds at June 30, 2015.
What information is provided in an annual report in addition to the financial
statements?
Ais a certificate that represents a corporation’s promise to repay a certain amount of
money and interest in the future.