1) A company has $2,400,000 in stockholders’ equity that includes 500 shares of $50
par value noncallable preferred stock outstanding and 250,000 shares of common stock
outstanding. Calculate the book value per (1) preferred share, and (2) common share.
2) The price-earnings (PE) ratio is calculated by dividing
___________________________ by ______________________________.
3) For each of the characteristics below, identify whether it is a focus of financial
accounting or managerial accounting. Use the letter F to identify financial accounting
and M to identify managerial accounting.
4) Stockholders who are not officers or managers of a corporation do not have the
power to bind the corporation to contracts. This is called ____________________.
5) How do closing entries for a merchandising company that uses the perpetual
inventory system differ from the closing entries for a service company?
6) Explain why the lower of cost or market rule is used to value inventory.
7) Describe how accounts receivable arise and how they accounted for, including the
use of a subsidiary ledger and an allowance account.