Chapter 05 – Communicating and Interpreting Accounting Information
78. Which of the following statements is false?
79. Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The
journal entry to record the stock issue would include which of the following?
Chapter 05 – Communicating and Interpreting Accounting Information
80. Which of the following transactions results in a decrease in the return on assets ratio?
81. Which of the following results in an increase in the return on assets ratio?
Chapter 05 – Communicating and Interpreting Accounting Information
82. Marino Company has provided the following information:
• Net sales, $480,000
• Net income, $24,000
• Average total assets, $200,000
What is Marino’s net profit margin ratio?
83. Marino Company has provided the following information:
• Net sales, $480,000
• Net income, $24,000
• Average total assets, $200,000
What is Marino’s asset turnover ratio?
Chapter 05 – Communicating and Interpreting Accounting Information
84. Marino Company has provided the following information:
• Net sales, $480,000
• Net income, $24,000
• Average total assets, $200,000
What is Marino’s return on assets ratio?
85. Which of the following transactions will decrease both the return on assets ratio and the
asset turnover ratio?
Chapter 05 – Communicating and Interpreting Accounting Information
86. Which of the following statements is false?
87. Which of the following statements is true?
Chapter 05 – Communicating and Interpreting Accounting Information
88. Which of the following would most likely increase the net profit margin ratio?
89. Which of the following is true?
Chapter 05 – Communicating and Interpreting Accounting Information
90. Polk Company suffered a loss from earthquake damage at its plant in Nebraska. The loss
meets the criteria for an extraordinary item. Where will the company present the extraordinary
item on the income statement?
91. Which of the following statements regarding international financial reporting standards
(IFRS) is false?
Chapter 05 – Communicating and Interpreting Accounting Information
92. Which of the following statements does not accurately describe the affect of the sale of
inventory at a profit on the financial statements?
93. Which of the following statements regarding international financial reporting standards
(IFRS) is false?
Chapter 05 – Communicating and Interpreting Accounting Information
94. Which of the following statements is correct?
95. Which of the following statements correctly describe the effect of accruing interest
revenue at year-end?
Chapter 05 – Communicating and Interpreting Accounting Information
96. The balance sheet for Glenwood Corporation at December 31, 2011, showed the
following subtotals:
Based on the above data, calculate the following amounts:
Chapter 05 – Communicating and Interpreting Accounting Information
97. Ridgetop Corporation reported the following amounts on its balance sheet at December
31, 2011:
On January 1, 2011, total assets were $2,000,000, total liabilities were $1,200,000 and total
equity was $800,000. Calculate Ridgetop’s return on assets.
Chapter 05 – Communicating and Interpreting Accounting Information
98. Complete the following balance sheet by entering the appropriate amounts in the blanks
provided.
Chapter 05 – Communicating and Interpreting Accounting Information
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99. FocusMore, Inc., had the following alphabetical list of accounts taken from its adjusted
trial balance at December 31, 2011:
Required:
Prepare a multiple step income statement for 2011. (Include gross profit, but ignore income
taxes.)