Dino’s Pizza employs 10 workers in its plant. Each employee is paid $8 per hour and
works 8 hours per day, Monday through Friday. Employees are paid every Wednesday
for the previous Monday through Friday workweek. The last payday was Wednesday,
May 28. A) Compute the dollar amount of the weekly payroll. B) What is the effect on
the accounting equation of the adjusting entry required on Friday, May 30, the last day
of Dino’s Pizza fiscal period? C) What special precautions are necessary upon recording
the payment of wages to employees on the next payday, June 4?
The balance of the $0.50 par value Common Stock account for Murdock Company was
$60,000 before its recent 3-for-1 stock split. The market price of the stock was $30 per
share before the stock split. What occurred as a result of the stock split?
a. The balance in the Retained Earnings account decreased.
b. The balance in the Common Stock account declined to $20,000.
c. The market price of the stock was not affected.
d. The market price of the stock dropped to approximately $10 per share.
From the following list, select the proper section from the statement of cashflows in whi
ch it would beclassified.
a. Operating Activities
b. Investing Activities
c. Financing Activities
Purchased equipment for cash
Which one of the following items is a reconciling item on the bank side of a bank
reconciliation?
a. Canceled checks
b. Outstanding checks
c. NSF checks
d. Service charge
A company would repurchase its own stock for all of the following reasons except
a. it needs the stock for employee bonuses.
b. it wishes to make an investment in its own stock.
c. it wishes to prevent unwanted takeover attempts.
d. it wishes to improve the company’s financial ratios.
Which of the following solvency ratios is the best measure to determine the degree to
which a company relies on outsiders for funds?
a. Debt-to-equity ratio
b. Times interest earned ratio
c. Debt service coverage ratio
d. Cash flow from operations to capital expenditures ratio
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.
Segregation of duties
Select where the following accounts would be reported on CocaÂCola’s financial
statements. (Select all that apply.)
Cash received from the sale of a plant asset a. Balance Sheet-Property, Plant, and
Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
g. Statement of Cash Flows
The revenue recognition principle does not pertain to long-term contracts, franchises,
commodities, and installment sales.
a. True
b. False
The stockholders’ equity section of Twilight Time’s balance sheet on January 1, 2015,
appeared as follows:
On March 1, 2015, Twilight reacquired 800 shares of common stock at $10 per share.
Twilight sold 400 of the treasury shares on November 15 for $12 per share. The entry to
record the sale on November 15 would show:
a. an increase in Gain on Sale of Treasury Stock, $800
b. an increase in Common Stock, $4,800
c. a decrease in Cash, $4,800
d. a decrease in Treasury Stock, $4,000
Services are provided for customers who pay for the services immediately. For this
transaction, identify the effect on the accounting equation.
a. Assets increase and liabilities increase.
b. Assets increase and stockholders’ equity increases.
c. Liabilities increase and stockholders’ equity decreases.
d. Liabilities decrease and assets decrease.
Given below is a list of items that may be reported on a statement of cash flows.
Identify each as one of the following using the indirect method :
a. Operating
b. Investing
c. Financing
d. Not separately reported on a statement of cash flows
Cost incurred to acquire a patent
Pinecrest Company
Use the selected data from Pinecrest Company’s financial statements to answer the
following question.
Refer to the data for Pinecrest Company.Which of the following statements is true?
a. Net income must be at least $36,000 for 2016.
b. Net income must be less than $36,000 for 2016.
c. Cash flows from operating activities is twice as large as net income for 2016.
d. The amount of net income for 2016 cannot be determined based on the data provided.
The work sheet used to prepare a statement of cash flows (indirect method to determine
cash flows from operating activities) should have a total in the Changes column equal
to total assets.
a. True
b. False
is the capacity of information to make a difference in a decision.
The ratio of a company’s cost of goods sold to its average inventory is called its
________________________________________.
Norys Corp. received an 8-month, 9% note for $100,000 from its agent on October 1,
2014. The note is due on May 30, 2015. If Norys’ accounting period ends on December
31, 2014, how much interest revenue should Norys recognize during 2014 and 2015?
Earl’s Company reported its accounts receivable turnover ratio at 10 times. Its credit
terms are 2/10, n/20. What does this ratio tell you about Earl’s Company?
Burgess Company purchased an asset on January 1, 2014, for $10,000. The asset was
expected to have a ten-year life and a $1,000 salvage value. The company uses the
straight-line method of depreciation. On January 1, 2016, the company determines that
the asset will last only five more years. Calculate the amount of depreciation for 2016.
Cooking Corner Cooking Corner reported inventory on its balance sheet at December
31, 2013 at $32,000. During 2014, Cooking Corner purchased goods totaling $634,000
on account with terms of 2/10, n/30, FOB shipping point. Total charges paid by
Cooking Corner directly to the freight company were $1,000. At the end of 2014,
inventory on hand totaled to $45,000. Net sales for 2014 totaled $1,300,000. Cooking
Corner employs a periodic inventory system.
Refer to the information about Cooking Corner. How much is Cooking Corner’s cost of
goods sold assuming that Cooking Corner takes advantage of oneÂhalf of the cash
discount?