1) investing activities involve collecting the necessary funds to support the business.
2) an investment in short-term equity securities should be charged to a nominal account
since the investment is temporary.
3) employees sometimes commit fraud because of personal financial problems caused
by too much debt.
4) if bonds are issued at a discount, the issuing corporation will pay a principal amount
less than the face amount of the bonds on the maturity date.
5) the amount of a cash dividend liability is recorded on the date of record because it is
on that date that the persons or entities who will receive the dividend are identified.
6) bonds are a form of interest-bearing notes payable.
7) which of the following accounts will reflect the accounts beginning balance on the
adjusted trial balance?
a.prepaid rent
b.retained earnings
c.prepaid insurance
d.unearned revenue
8) during 2014, its first year of operations, jane’s bakery had revenues of $65,000 and
expenses of $33,000. the business paid cash dividends of $18,000. what is the balance
in retained earnings at december 31, 2014?
a.$0
b.$18,000 debit
c.$14,000 credit
d.$32,000 credit
9) the statement of cash flows will not provide insight into
a.why dividends were not increased
b.whether cash flow is greater than net income
c.the exact proceeds of a future bond issue
d.how the retirement of debt was accomplished
10) in a perpetual inventory system, cost of goods sold is recorded
a.on a daily basis
b.on a monthly basis
c.on an annual basis
d.each time a sale occurs
11) a company that receives money in advance of performing a service
a.debits cash and credits unearned service revenue.
b.debits unearned service revenue and credits accounts payable
c.debits cash and credits prepaid insurance.
d.debits cash and credits accounts receivable.
12) hagen company had these transactions pertaining to stock investments
feb. 1purchased 2,500 shares of farley company (10%) for $41,500 cash plus brokerage
fees of $1,000.
june 1received cash dividends of $2 per share on farley stock.
oct. 1sold 1,000 shares of farley stock for $20,000 less brokerage fees of $500.
dec. 1received cash dividends of $2 per share on farley stock.
the entry to record the receipt of the dividends dec. 1 would include a
a.debit to stock investments of $3,000
b.credit to dividend revenue of $3,000
c.debit to dividend revenue of $3,000
d.credit to the stock investments of $3,000
13) manning company has $1,000,000 in assets and $1,000,000 in stockholders’ equity,
with 50,000 shares outstanding the entire year. it has a return on assets ratio of 9%. in
the past year it had net income of $80,000. on january 1, 2012, it issued $400,000 in
debt at 5% and immediately repurchased 25,000 shares for $400,000. management
expected that, had it not issued the debt, it would have again had net income of
$90,000.
instructions
(a)determine the company’s net income and earnings per share for 2011 and 2012.
(ignore taxes in your computations.)
(b)compute the company’s return on equity for 2011 and 2012
(c)compute the company’s debt to assets ratio for 2011 and 2012
14) in 2012 wilkinson company had net credit sales of $1,125,000. on january 1, 2012,
allowance for doubtful accounts had a credit balance of $27,000. during 2012, $45,000
of uncollectible accounts receivable were written off. past experience indicates that the
allowance should be 10% of the balance in receivables (percentage of receivables
basis). if the accounts receivable balance at december 31 was $300,000, what is the
required adjustment to the allowance for doubtful accounts at december 31, 2012?
a.$ 30,000
b.$112,500
c.$ 48,000
d.$ 45,000
15) a balance sheet shows
a.revenues, liabilities, and stockholders equity
b.expenses, dividends, and stockholders equity
c.revenues, expenses, and dividends
d.assets, liabilities, and stockholders equity
16) jahnke corporation issued 5,000 shares of 2 par value ordinary shares for 11 per
share. the journal entry to record the sale will include
a.a debit to cash for 10,000
b.a credit to share premiumordinary for 45,000
c.a credit to share capitalordinary for 55,000
d.a debit to retained earnings for 22,000
17) geringer company had the following transactions pertaining to its temporary stock
investments.
instructions
journalize the transactions.
18) presented below is the trial balance and adjusted trial balance for stabler company
on december 31
instructions:
prepare in journal form, with explanations, the adjusting entries that explain the
changes in the balances from the trial balance to the adjusted trial balance.
19) your former college roommate is opening a new retail store and asks you which
inventory costing method should i use?
what is your response? include a comparison of the tax effect, balance sheet effect, and
income statement effect for fifo versus lifo.
20) in 2012, blanchard corporation has plant equipment that originally cost $75,000 and
has accumulated depreciation of $30,000. a new processing technique has rendered the
equipment obsolete, so it is retired. which of the following entries should blanchard use
to record the retirement of the equipment?
21) the income statement is an important financial statement used by individuals who
are interested in the operations of a business enterprise. explain how the periodicity
assumption and the revenue recognition and expense recognition principles provide
guidance to accountants in preparing an income statement.
22) at june 1, 2014, massoth industries had an accounts receivable balance of $18,000.
during the month, the company had credit sales of $25,000 and collected accounts
receivable of $27,000. what is the balance in accounts receivable at june 30, 2014?
23) gross profit is obtained by subtracting ________________ from
________________.
24) using the indirect method, which of the following adjustments to convert net
income to net cash provided by operating activities is incorrect?