A company is not required to prepare both a(n)
a. Income statement and statement of stockholders’ equity.
b. Income statement and statement of retained earnings.
c. Statement of stockholders’ equity and statement of retained earnings.
d. Statement of cash flows and statement of retained earnings.
The department in an organization that is responsible for preparing the invoice approval
form to document all of the information about a particular purchase is:
a. the human resources department.
b. the purchasing department.
c. the receiving department.
d. the accounting department.
If the sum of the debits and credits in a trial balance is not equal, then
a. there is no concern because the two amounts are not meant to be equal.
b. the chart of accounts also does not balance.
c. it is safe to proceed with the preparation of financial statements.
d. most likely an error was made in posting journal entries to the general ledger or in
preparing the trial balance.
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. To calculate
the future value of an amount that is invested at 12%, compounded quarterly, at the end
of three years, the interest factor used would be
a. 1% for 12 periods
b. 3% for four periods
c. 3% for 12 periods
d. 12% for three periods
Volt Corp. reported the following information for the year ended December 31, 2015:
How much was paid out in dividends by Volt in 2015?
a. $ 20,000
b. $ 25,000
c. $ 30,000
d. $ 50,000
Both stock and bond investments have maturity dates.
a. True
b. False
A check drawn by a company for $360 in payment of a liability was recorded in the
journal as $630. What entry is required in the company’s accounts?
a. debit Accounts Payable; credit Cash
b. debit Cash; credit Accounts Receivable
c. debit Cash; credit Accounts Payable
d. debit Accounts Receivable; credit Cash
The concept of leverage refers to the practice of using borrowed funds and amounts
received from preferred stockholders in an attempt to earn an overall return that is
higher than the cost of these funds.
a. True
b. False
A liability for dividends is created
a. at the end of each fiscal year.
b. at the date of payment.
c. at the date of record.
d. at the date of declaration.
Which method assigns the cost of the most recent items purchased to cost of goods
sold?
a. Specific identification
b. Weighted average cost
c. FIFO
d. LIFO
An entity’s assets come from three primary sources: creditors, investors, and profits
retained in the business.
a. True
b. False
Carlton Industries has identified the following items and would like you to answer a
few questions about their effect on Stockholders’ Equity. (Items are used only once.)
a. Preferred stock issued by Carlton
b. Amount received by Carlton in excess of par value when preferred stock was issued
c. Dividends in arrears on Carlton preferred stock
d. Cash dividend declared but unpaid on Carlton stock
e. Stock dividend declared but unissued by Carlton
f. Treasury stock
g. Amount received in excess of cost when treasury stock is reissued by MJ
h. Retained earnings
Which item is recorded as Additional Paid-In Capital – Preferred Stock?
IFRS typically uses a more ‘œruleÂbased’ approach than U.S. GAAP.
a. True
b. False
The following information was obtained from the comparative financial statements
included in Arco Inc.’s 2016 annual report. (All amounts are in millions of dollars.)
REQUIRED:
1> Using the information provided, compute the following for 2016 and 2015: a.
Debt-to-equity ratio (at each year-end)
b. Times interest earned ratio
c. Debt service coverage ratio
d. Cash flow from operations to capital expenditures ratio 2> Comment briefly on the
company’s solvency.
Which of the following accounts are normally reported as current liabilities on a
classified balance sheet?
a. Accounts payable and bonds payable
b. Interest payable and mortgage payable
c. Income taxes payable and salaries payable
d. Capital stock and accounts payable
Herbert and Evita are planning to open a quick copy center near the local college. They
will make both cash and credit sales. They will hire college students to make copies and
to operate the cash register. Either Herbert or Evita will act as manager during most
hours that the business will be open. One student will be designated as assistant
manager when they cannot be present. Describe procedures that Herbert and Evita
might use to provide adequate internal control over cash and credit sales and bank
deposits.
are the crucial link between economic transactions entered into by an entity and the
accounting for these events.
Florence, Inc. purchased equipment at the beginning of 2014 for $140,000. The
company decided to depreciate the equipment over a 10-year period using the
double-declining-balance method. The company estimated the equipment’s salvage
value at $12,000. Show how the costs should be presented on Florence’s financial
statements at December 31, 2015. Label the statements properly.
Hensley Painting Company painted four houses in June at $500 each. At the end of
June, three homeowners had paid Hensley cash for the jobs. Under the accrual basis,
what amounts will be reported on the income statement and the statement of cash flows
for June?
A check that is returned or “bounces” because of insufficient funds is called a(n).
Quirin Corp. purchases office supplies once a month and prepares monthly financial
statements. The asset account Office Supplies on hand has a balance of $1,850 on
March 1. Purchases of supplies during March amount to $1,500. Supplies on hand at
March 31 amount to $1,020. Prepare the necessary adjusting entry on Quirin’s books on
March 31. What will be the effect on net income for March if this entry is notrecorded?
The issuance of common stock increases bothand stockholders’ equity.
If a 12% interest rate is compounded quarterly for 3 years, then there would be
__________________________ compounding periods.