Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments
of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed
to (1) interest of 10% of the beginning capital balance each year, (2) annual
compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss
in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was
$150,000 in 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use
every month during 2012 and 2013.
What was Nolan’s total share of net income for 2013?
A.$34,420.
B.$75,540.
C.$65,540.
D.$70,040.
E.$61,420.
Which of the following is not a factor influencing a country’s financial reporting
practices?
A.Providers of financing.
B.Inflation.
C.Legal system.
D.Gross National Product.
E.Political and economic ties.
As of December 31, 2013, Bloch Company had $3,800 of assets, $1,600 of liabilities
and $700 of retained earnings. The balance in the common stock account on the
December 31, 2013 balance sheet was
A.$2,900.
B.$3,800.
C.$1,500.
D.none of these.
Select the incorrect statement regarding service companies.
A.Because service companies do not carry inventory, it is impossible to determine
product costs.
B.Because the products of service companies are consumed immediately, there is no
finished goods inventory on their balance sheets.
C.Managers of service companies are expected to control costs, improve quality, and
increase productivity just like managers of manufacturing companies.
D.Material, labor, and overhead costs of service companies are treated as period costs.
Which of the following is an asset source transaction?
A.Issued common stock.
B.Paid a cash dividend to stockholders.
C.Received a payment on accounts receivable.
D.Accrued salary expense.
Indicate whether each of the following statements about the types of transactions is true
or false.
_______ a) An asset source transaction increases total assets and decreases claims to
assets.
_______ b) The issuance of stock to owners for cash would be an example of an asset
exchange transaction.
_______ c) Purchasing equipment for cash is an example of an asset exchange
transaction.
_______ d) Paying a dividend to stockholders is an example of an asset use transaction.
_______ e) Making a payment on a bank loan is an example of an asset exchange
transaction.
A partnership began its first year of operations with the following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary assigned to
Thurman.
Each partner was to be attributed with interest equal to 10% of the capital balance as of
the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman,
respectively.
Each partner withdrew $13,000 per year.
Assume that the net loss for the first year of operations was $26,000 with net income of
$52,000 in the second year.
What was Thurman’s total share of net income for the second year?
A.$17,160 income.
B.$4,160 income.
C.$19,760 income.
D.$17,290 income.
E. $28,080 income.
Wyatt Company paid $57,000 in January 2013 for salaries that had been earned by
employees in December 2012. Indicate whether each of the following statements about
financial statement effects of the January 2013 event is true or false.
_____ a) The income statement for 2013 is not affected because the salaries expense
had been recognized at the end of December.
_____ b) On the 2013 statement of cash flows, cash flows from operating activities
decreased.
_____ c) Payment of the salaries in 2013 decreased a liability.
_____ d) The 2013 statement of changes in stockholders’ equity would not be affected
because the salaries expense had been recognized at the end of December.
_____ e) Both assets and equity decreased as a result of this transaction.
The Martin Company reported net income of $15,000 on gross sales of $80,000. The
company has total assets of $135,000, of which $102,000 is property, plant and
equipment. What is the company’s return on investment?
A.18.8%
B.11.1%
C.14.7%
D.12.5%
Ashley Bradshaw is the manager of one department in a large store. In this capacity,
which of the following kinds of information would she be interested in?
A.Economic data
B.Financial data
C.Nonfinancial data
D.Both Financial data and Nonfinancial data
Vantage Corporation invested $800 cash in Tandem Company stock.
Which of the following describes the effects of this transaction on Vantage
Corporation’s books?
A.
B.
C.
D.
Which one of the following Federal laws was enacted in 1935?
A.Securities Act.
B.Securities Exchange Act.
C.Trust Indenture Act.
D.Investment Company Act.
E.Public Utility Holding Company Act.
Indicate whether each of the following statements about decentralization is true or false.
_____ a) Decentralization of an organization means that the organization has operations
in many different places.
_____ b) Decentralization allows local managers to make more decisions.
_____ c) Decentralization means delegating authority to managers and holding them
responsible for their performance.
_____ d) Investment centers tend to appear in the upper levels of a company’s
organization chart.
_____ e) Managers of investment centers are accountable for assets, liabilities, and
earnings.
What is included in Part I of a securities registration statement?
Indicate how each event affects the elements of financial statements. Use the following
letters to record your answer in the box shown below each element. You do not need to
enter amounts.
Vegas Co. issued a note to purchase a building.
Indicate how each event affects the elements of financial statements. Use the following
letters to record your answer in the box shown below each element. You do not need to
enter amounts.
Vincent Co. provided services for $25,000 cash.
Gordon Company is considering a three-year capital investment that will return
$150,000 per year. The present value of this annuity at the company’s required rate of
return of 12% is $360,275.
Required:
Complete the table that has been started below to show the return on investment at 12%
and the amount of investment recovered each year. Remember that the investment
balance should be zero at the end of the three years.
Fill in the missing information by determining the amounts represented by letters a – d.
Select the term from the list provided that best matches each of the following
definitions or descriptions. Put the number of the term in the answer column.
