A cancelled check would be a source document for which of the following?
a. recording a purchase of inventory on credit
b. recording cash received on an customer account
c. recording accrued payroll
d. recording a cash payment to a creditor
Presented below are selected data from the financial statements of Parade Corp.
Which of the following statements is true concerning external users of financial
information?
a. External users need detailed records of the business to make informed decisions.
b. External users are primarily responsible for the preparation of financial statements.
c. External users rely on the financial statements to help make informed decisions.
d. External users rely on management to tell them whether the company is a good
investment
Which of the following is another term for the invoice approval form?
a. a receiving report
b. an invoice
c. a voucher
d. a remittance advice
Boston Corp. purchased equipment with a cost of $70,000 at the beginning of 2015.
The equipment has an estimated life of 25 years or 25,000 units of product. The
estimated residual value is $7,500. During 2015, 1,100 units of product were produced
with this machinery. Determine the following: A. Amount of total accumulated
depreciation at December 31, 2015, using units-of-production depreciation B. Book
value at the end of 2015 using straight-line depreciation C. Why would the company
choose units-of-production depreciation instead of straight-line?
Which of the following best describes a company’s operating activities?
a. Operating activities focus on the sale of products and services.
b. Operating activities are necessary to provide the money to start a business.
c. Operating activities are needed to provide the valuable assets required to run a
business.
d. Operating activities represent the right to receive a benefit in the future.
The bank informs a customer that a service charge has been assessed on their account
by including a credit memorandum in the monthly bank statement.
a. True
b. False
Select the term from the list below that matches each of the following six descriptions.
a. Interest
b. Maturity value
c. Principal
d. Payee
e. Discounting
f. Term
g. Recourse
h. Implicit
i. Maker
The amount of cash the maker is to pay the payee on the maturity date of the note
Indicate the type of each ratio listed below.
a. liquidity ratio
b. solvency ratio
c. profitability ratio
Inventory turnover ratio
When a company recognizes the portion of supplies used during a year, the effect is to
decrease net income.
a. True
b. False
Which one of the following correctly represents one of the basic financial statement
models?
a. Assets – Liabilities = Net Income
b. Assets + Liabilities = Owners’ Equity
c. Revenues + Expenses = Net Income
d. Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings
Dino’s Italian Grille purchased $6,000 of napkins for its business. OneÂfourth of the
bill is unpaid. Upon review of the napkins still on hand, 20% were still available. What
combination of amounts would affect the income statement and statement of cash
flows?
Grove Corp. purchased equipment at a cost of $260,000 in January, 2010. As of January
1, 2014, depreciation of $88,000 had been recorded on this asset. Depreciation expense
for 2014 is $22,000. After the adjustments are recorded and posted at December 31,
2014, what are the balances for the Depreciation Expense and Accumulated
Depreciation?
Shipping terms ofmean that the buyer pays shipping costs.
Note Disclosure of Legal Matters Use the Note Disclosure Of Legal Matters below to
answer the questions that follow. Note 13 – Legal Matters On December 14, 2015, the
Company was served with a class action complaint filed in federal court in Burlington,
Vermont. The complaint, captioned John Doe vs. The Company was filed by a
Company’s shareholder on behalf of himself and purportedly on behalf of all other
Company’s shareholders who purchased the common stock of the Company during the
period from March 25, 2014 through December 19, 2014. Plaintiff alleges that the
Company violated the federal securities laws by making, in 2014, untrue statements of
material facts and omitting to state material facts primarily concerning the Company’s
construction and start-up of its new manufacturing facility. Also named as defendants in
the Complaint are certain present and former officers and directors of the Company.
Plaintiff is seeking an unspecified amount of monetary damages. While this action is in
its preliminary stages, management believes, based on an initial review, the allegations
made in the lawsuit are without merit and the Company intends to defend the lawsuit
vigorously.
Review the Note Disclosure of Legal Matters. REQUIRED: (1) What type of liability
does this lawsuit typify? (2) In your opinion, should the Company prepare a journal
entry in 2015 to record a liability for this lawsuit? Why or why not?
According to the revenue recognition principle, revenues are recognized when they are
_________________________.
Assume that Halpern Company purchased an asset on January 1, 2014, for $122,800.
The asset had an estimated life of six years and an estimated residual value of $2,200.
The company used the straight-line method to depreciate the asset. Assume that Halpern
Company sold the asset on July 1, 2015, and received $96,000 cash and a note for an
additional $22,000.
Develop an ethical dilemma scenario that an accountant may face and give examples of
key elements (listed below) that should be considered when analyzing the decision: 1>
Those who may benefit or be harmed
2> What potential benefits or harm could result from the situation
3> The rights or claims violated
4> The specific interests in conflict
5> The responsibilities and obligations
Discuss at least four reasons that accounting standards currently differ between
countries.