The establishment of a petty cash fund has no effect on the company’s total cash
balance.
a. True
b. False
Inventories and prepaid assets are excluded from the numerator used to compute the
quick ratio.
a. True
b. False
Sliders Company Sliders Company sells its merchandise only on credit. The following
data is available at December 31, 2014:
Refer to the data for Sliders Company. The firm estimates that bad debts could be 1% of
their net sales. A) What amount will Sliders Company recognize as bad debts expense
for the year? B) Once this calculation is recorded, assume that the company has a
balance of Accounts Receivable of $58,700, and an Allowance for Doubtful Accounts
of $800. What will be the net realizable value once the adjustment from Part A) is
made?
A credit means that
a. the event has an effect on the right side of an account.
b. the event is unfavorable.
c. the event is favorable.
d. the event always decreases the account.
Most investors would prefer to see equity rather than debt on the balance sheet.
a. True
b. False
Current assets, other than cash, are expected to be sold or consumed are during a
company’s normal operating cycle.
a. True
b. False
Hemmer Company received a 12%, 6-month promissory note with a face amount of
$10,000 from Stutfeld Company, for the sale of merchandise on December 1, 2014. A)
Which party is the maker? _______________________ B) Which party is the payee?
_____________________ C) Determine the maturity value of the note.
Super Clean operates an automatic car wash business, The Ultimate Shine. The
following amounts were taken from the company’s unadjusted trial balance at
December 31, 2014:
Determine the effect on the accounting equation of any adjusting entries necessary at
December 31, 2014, for each of the transactions that follow. A) The rent collected in
advance represents rent for the period December 1, 2014 through January 31, 2015. B)
In addition to the wages paid during the year, employees have not been paid for the last
week of December which amounts to $900.
Which of the following sets of factors is needed to calculate depreciation on plant and
equipment?
a. The asset’s acquisition cost, replacement cost, and its estimated residual value
b. The estimated residual value of the asset, its replacement cost, and its market value
c. The asset’s replacement cost, its estimated life, and its estimated residual value
d. The estimated life of the asset, its acquisition cost, and its estimated residual value
An alternate term for a timing difference is a.
The FASB requires a separate note in the financial statements to show the effects of
inflation so that investors are able to compare statements more accurately.
a. True
b. False
Foxrun, Inc. purchased a truck at the beginning of 2015 for $32,500. Foxrun decided to
depreciate the truck over an 8-year period using the straight-line method, and estimated
its residual value to be $4,500. At the beginning of 2016, Foxrun determined that a
5-year life should have been used to depreciate the truck. The estimated residual value
was not affected by the revision in the asset’s life. A. Determine the amounts to be
recorded as depreciation expense for 2015 and 2016. B. What factors may have
influenced Foxrun to change the useful life?
Dallas Corp. reported the following information for 2015 and 2016.
How much cash was received for interest during 2016?
a. $2,900
b. $3,200
c. $3,500
d. $3,800
Which of the following statements regarding the statement of cash flows is true?
a. The statement of cash flows analyzes the changes in consecutive balance sheets in
conjunction with the income statement.
b. The statement of cash flows is organized as cash inflows less cash outflows.
c. The statement of cash flows analyzes only the changes in current assets and current
liabilities.
d. The statement of cash flows is an optional financial statement.
Match the inventory-related accounts to costs that may be included in inventories for
retailers and manufacturers.
a. Merchandise Inventory
b. Raw Materials
c. Work in Process
d. Finished Goods
e. Cost of Goods Sold
Costs of direct materials, overhead, and direct labor used in goods that have been sold.
Asset turnover ratio
a. Market price per share
b. Net sales
c. Gross profit
d. Average total assets
e. Interest expense, net of tax
f. Net income
g. Total liabilities
h. Total assets