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Which of the following will not cause a trial balance to be out of balance?
a. The balance for an account is incorrectly computed.
b. A debit entry is posted as a credit.
c. A credit entry is posted to the wrong account as a credit.
d. An account is accidentally omitted from the trial balance.
The purpose of financial reporting is to provide economic information to external
decision makers only.
a. True
b. False
The following set of items describes activities completed by a company in collecting
cash for merchandise sales. For each activity, identify whether or not the activity
adheres to or violates sound internal control procedures. Cash register tapes are picked
up daily by an employee from the accounting department.
a. Adheres to sound internal control procedures
b. Violates sound internal control procedures
c. Neither strengthens nor violates internal control
Utah Corp. Use the following selected data and additional information from the records
of Utah Corp. to answer the questions that follow.Balance Sheet Data
2016 2015
Additional information:
(1) Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000
during 2016.
(2) Common stock was issued to retire bonds payable during 2016.
(3) The only items affecting retained earnings in 2016 were net income and dividends
declared and paid.Review the data for Utah Corp.REQUIRED:
(A) What amount of cash was collected from customers during 2016?
(B) What is the amount paid for purchases of merchandise during 2016?
(C) What is the amount paid for operating expenses during 2016?
The following set of items describes activities completed by a company in purchasing
and paying for merchandise. For each activity, identify whether or not the activity
adheres to or violates sound internal control procedures. Checks are signed by
designated officers in the finance department.
a. Adheres to sound internal control procedures
b. Violates sound internal control procedures
c. Neither strengthens nor violates internal control
Which of the following events will cause a company's current ratio to decrease?
a. The sale of inventory for cash
b. The sale of inventory for credit (accounts receivable)
c. Issuing stock for cash
d. Paying off long-term debt with cash
Refer to the data for Computech Industries.Based on this information, what is
Computech's inventory turnover ratio for the current period?
a. 1.67 times
b. 2.73 times
c. 0.33 times
d. 3.00 times
Which of the following journal entries is required to close the Income Summary
account of a company with a net loss ?
a. Debit Income Summary, credit Capital Stock.
b. Debit Income Summary, credit Retained earnings.
c. Credit Income Summary, debit Retained earnings.
d. Credit Income Summary, debit Dividends.
Provided below is a list of important users of accounting information.Below the list are
descriptions of a major need of each of the various users. Fill in the blank with the one
user group that is most likely to have the need described to the right of the blank. Some
user groups may be used more than once or not at all.
a. Stockholder
b. Company management
c. Supplier
d. Banker
e. Internal Revenue Service
f. Securities and Exchange Commission
g. Labor union The financial status of a company issuing securities to the public for the
first time.
Carlton Industries has identified the following items and would like you to answer a
few questions about their effect on Stockholders' Equity. (Items are used only once.)
a. Preferred stock issued by Carlton
b. Amount received by Carlton in excess of par value when preferred stock was issued
c. Dividends in arrears on Carlton preferred stock
d. Cash dividend declared but unpaid on Carlton stock
e. Stock dividend declared but unissued by Carlton
f. Treasury stock
g. Amount received in excess of cost when treasury stock is reissued by MJ
h. Retained earnings
Which item results in no change to stockholders' equity?
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method.
a. Inflow from operating activity
b. Outflow from operating activity
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Purchased computer equipment for cash.
Cash interest payment is computed annually when a bond is issued for other than its
face value. For a bond issued at a discount, how will this component change as the bond
approaches maturity?
a. decrease
b. increase
c. remain constant
d. not enough information given to decide
All the information needed to compute the cash flow adequacy ratio is found on the
balance sheet.
a. True
b. False
Specific identification relies on matching unit costs with the actual units sold.
a. True
b. False
Union Company purchased a delivery van at a cost of $30,000 cash on January 1, 2014.
The van has an estimated useful life of 6 years and a $6,000 estimated residual value. A.
What is the effect on the accounting equation of the purchase of the van?
B. How much depreciation expense should be reported for 2015? C. What is the total
amount of accumulated depreciation at December 31, 2015?
On January 1, 2014, Aaron Simpson bought a farm store of a small competitor for
$620,000. An appraiser, hired to assess the acquired assets' value, determined that the
land, building, and equipment had market values of $300,000, $215,000, and $270,000,
respectively. REQUIRED:
1> What is the acquisition cost of each asset? Prepare a journal entry to record the
acquisition (rounded to the nearest dollar).
2> Simpson plans to depreciate the building on a straight-line basis for 30 years and the
equipment over 16 years. Determine the amount of depreciation expense for 2014 on
these newly acquired assets (rounded to the nearest dollar). You can assume zero
residual value for all assets.
3> How would the assets appear on the balance sheet as of December 31, 2014?
Beatrice Equipment Beatrice Equipment sells merchandise only on credit. For the year
ended December 31, 2014, the following data is available:
Refer to the data for Beatrice Equipment. Determine the balance of Accounts
Receivable at December 31, 2014.
Hart Concerts Inc. was organized on May 1, 2015, by two students majoring in
education. The two entrepreneurs provided entertainment for children's birthday parties
to supplement their college career. The following transactions occurred during the first
month of operations: May 1: Received contribution of $6,000 from each of the two
principal owners of the new business in exchange for shares of stock.
May 1: Purchased lighting equipment for $300 on an open account. The company has
30 days to pay for the equipment.
May 5: Registered as a vendor with the city and paid the $25 monthly fee. May 9:
Purchased an event tent to set up at parties for $2,400 cash.
May 10: Purchased $100 in miscellaneous supplies on account. The company has 30
days to pay for the supplies. May 15: Paid a $75 bill from local printer for
advertisement signs.
May 17: Customers paid for services with cash of $1,500.
May 24: Billed the local park district $800 entertainment provided to a summer camp.
The park district is to pay one-half of the bill within five working days and the rest
within 30 days. May 29: Received 50% of the amount billed to the park district.
May 30: Customers paid cash for parties of $2,000.
May 30: Paid wages of $300 to a friend who helped over the weekend. May 31: Paid
the balance due on the supplies. Required
1> Prepare a table to summarize the preceding transactions as they affect the accounting
equation. Use the following format. Identify each transaction with the date.
2> Prepare an income statement for the month ended May 31, 2015.
3> Prepare a classified balance sheet at May 31, 2015.
4> Why do you think the two students decided to incorporate their business rather than
operate it as a partnership?
The 2015 annual report of Ski Products, Inc. reported the following amounts (in
millions of dollars):
REQUIRED:
1> Compute Ski's accounts receivable turnover ratio for the year ended May 31, 2015.
(Assume that all sales are on credit.)
2> What is the average collection period in days for an account receivable? Explain
your answer.
3> Ski's main products are medium to highÂend skis and snow boards. Give some
examples of the types of customers you would expect Ski to have. Do you think the
average collection period for sales to these customers is reasonable? What other
information do you need to fully answer that question?
Refer to the data for Slammer Sports. If the aging approach is used to estimate bad
debts, how much bad debts expense will Slammer Sports report for 2014?
is the allocation of the cost of a tangible, long-term asset over its useful life.
