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1) Explain the way in which costs flow through the merchandise inventory account to a
merchandiser's income statement.
2) What is the purpose of a good financial statement analysis report? What are the key
components?
3) ____________________________ are amounts owed by customers from credit sales
where payment is required in periodic amounts over an extended time period.
4) A company's income before interest expense and income taxes in 2014 and 2015 is
$225,000 and $250,000, respectively. Its interest expense was $45,000 for both years.
Calculate the company's times interest earned ratio, and comment on its level of risk.
5) Barzetti had no investments prior to the current year. It had the following
transactions involving available-for-sale and held-to-maturity securities during the year.
The stock purchases are considered short-term available-for-sale securities. Prepare
Barzetti's journal entries to record the transactions and events associated with the
investment purchases.
6) What are sales variances? How are they used?
7) An ________________________________ is an obligation requiring a series of
payments to the lender.
8) In year one, McClintock Co. acquired a truck that cost $75,500 with an estimated
$14,000 salvage value and 4 year estimated useful life. Depreciation in the first year
was $15,375. McClintock had the following transactions involving plant assets during
Year 2. Unless otherwise indicated, all transactions were for cash.
Prepare the general journal entries to record these transactions.
9) Identify and explain the primary differences between fixed and flexible budgets.
10) The rate of interest that borrowers are willing to pay and lenders are willing to
accept for a particular bond and its risk level is the ____________________ of interest.
