The selection of historical cost over current value as the attribute to be measured for
assets is an example of the trade-off of
a. Reliability over relevance
b. Costs over benefit
c. Comparability over consistency
d. Understandability over verifiability
All financial statements are prepared using the accrual basis of accounting.
a. True
b. False
Return on assets 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
Barker Corp. began operations on November 30, 2015, and immediately paid $48,000
for 6 months rent in advance for rental of a parking lot for the period beginning
December 1, 2015. Barker’s accounting period ends on December 31, 2015. Indicate
how much will be reported for each of the following accounts on Barker’s financial
statements for the period ending December 31, 2015. If the amount reported is zero,
indicate so by writing $0, and explain why zero is the appropriate amount. A) Rent
Expense B) Rent Payable C) Rent revenue D) Prepaid Rent
For each of the following accounts, indicate whether it is a balance sheet account or an i
ncome statement account.
a. Balance sheet account
b. Income statement account
Income Taxes Payable
On January 1, 2015, Bogart Acres Company issued 10,000 shares of 10%, $20 par
value cumulative preferred stock. In 2015 and 2016, no dividends were declared on
preferred stock. In 2017, Bogart had a profitable year and decided to pay dividends to
stockholders of both preferred and common stock. If they have $200,000 available for
dividends in 2017, how much could it pay to the common stockholders?
a. $140,000 b. $160,000 c. $180,000 d. $200,000
Which one of the following statements best describes the term ‘œoutstanding check?’
a. A check written by the company and presented to the bank for payment.
b. A check written by the company but not yet presented to the bank for payment.
c. A check written by a customer that has been presented to the bank for payment.
d. A check written by a customer that has not yet been presented to the bank for
payment.
Three organizations important to accounting are listed below. Select the organization th
at most closely achieves the role described.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Requires that publicly traded companies
file annual and quarterly financial statements on a timely basis.
A check drawn by a company for $360 in payment of a liability was recorded in the
journal as $630. This item would be included on the bank reconciliation as a(n)
a. addition to the balance per the company’s records
b. addition to the balance per the bank statement
c. deduction from the balance per the bank statement
d. deduction from the balance per the company’s records
Which one of the following business decisions will least likely require financial
information?
a. The Gulf Coast Bank is reviewing the loan application from Tuo’s Restaurant.
b. Tuo’s Restaurant is attempting to sell its stock to the public.
c. The labor union representing Flaggler’s Fitness Spa employees is negotiating a pay
raise as part of a new labor agreement.
d. Tuo’s Restaurant management is deciding whether to wash its catering vans today or
tomorrow.
Malco Tile Shop purchased insurance coverage for two years on July 1, 2015, for its
retail shop for $3,600. Malco recorded the prepayment as an asset. Malco prepares its
adjusting entries at year end December 31. A) What is the effect on the accounting
equation of the adjusting journal entry necessary at December 31, 2015?
B) How much will be reported on the balance sheet at December 31, 2015 for prepaid
insurance? C) How much will be reported on the income statement for the year ended
December 31, 2015, for insurance expense? D) If the adjustment in part A is not
recorded, by what amount will net income be over or understated at December 31,
2015? E) How much will be reported on the statement of cash flows for the year ended
December 31, 2015? In which activity? (operating, investing, financing) F) What
adjusting journal entry is necessary at December 31, 2016? G) How much will be
reported on the balance sheet at December 31, 2016 for prepaid insurance? H) How
much will be reported on the income statement for the year ended December 31, 2016,
for insurance expense? I) How much will be reported on the statement of cash flows for
the year ended December 31, 2016? In which activity? (operating, investing, financing)
Because plant and equipment are reported as long-term assets on the balance sheet, they
have no impact on net income for the period until they are sold.
a. True
b. False
The payee of a note recognizeson its income statement.
is (are) the right to produce or sell a published work.
On July 1, 2015, Crouch Corporation takes out a 12%, two-month, $50,000 loan at
Cocoa National Bank. Principal and interest are to be repaid on August 31. Required 1>
Prepare the journal entries for July 1 to record the borrowing, for July 31 to record the
accrual of interest, and for August 31 to record repayment of the principal and interest.
2> Evaluate the following statement: It would be much easier not to bother with an
adjusting entry on July 31 and simply record interest expense on August 31 when the
loan is repaid.
The financial statement that primarily reflects events related to the operating activities
of a business, or the selling of products or providing services is the.
Below are three notes payable:
REQUIRED: Part 1- For each of the notes, calculate the simple interest due at the end
of the term. Part 2- Now assume that the interest on the notes is compounded annually.
Calculate the amount of interest due at the end of the term for each note. Part 3- Finally,
assume that the interest on the notes is compounded semiannually. Calculate the amount
of interest due at the end of the term for each note. Part 4- What conclusion can you
draw from a comparison of your results of each of the three scenarios?
Tyson Trucking won a settlement in a lawsuit and was offered four different payment
alternatives by the defendant’s insurance company. The interest rate is 6%. Ignoring tax
considerations, which of the following four alternatives has the highest present value?
Support your answer with the appropriate calculations. I) $150,000 now II) $45,000 per
year for the next 4 years (payment made at the end of the year) III) $5,000 now and
then $20,000 per year for the next 10 years (payment made at the end of the year) IV)
$5,000 now and then $5,000 per year for the next 10 years (payment made at the end of
the year) plus a lump-sum payment of $200,000 at the end of the eleventh year
Below are two transactions for Navaho Co. 1> On June 1, Navaho Co. issued 2,000
shares of $5 par common stock for $16 per share. 2> On June 15, Navaho Co. issued
1,200 shares of $5 par preferred stock to acquire a building. The stock is not widely
traded, and the current market value of the stock is not evident. The building has
recently been appraised by an independent firm as having a market value of $15,000.
REQUIRED: For each of these transactions, record the journal entry that Navaho
Company would make.
Select the best answer from the list below to complete statements 131-141 that follow.
Stock issued by the firm, but then repurchased and not retired is
________________________.
The following data is available for one of the products sold by Share, Inc., which uses a
perpetual inventory system.
Refer to the data for Share, Inc. If the moving average method is used, how much is
ending inventory on May 30?
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 would Cooking Corner pay
its supplier if Cooking Corner paid for one-half of the goods acquired within the
discount period, and the other half after the expiration of the discount period?