Which of the following is false regarding the issue of stock versus the issue of bonds to
raise capital?
a. The issuance of stock decreases several important financial ratios.
b. Issuing bonds dilutes the voting power of the stockholders.
c. Corporations are not required to return the investment to the stockholders.
d. Investors expect to earn a higher rate of return on stocks than bonds.
Given below are three ratios calculated for Hall, Link, and Dollar Companies for 2016
and 2015.
A) Which company has the greatest percentage of inventory and prepaids? How can
you tell? B) Which company appears to be heading in the wrong direction concerning
its ability to pay its bills in a very short-run situation? Explain. C) Which company
appears to be the most liquid? Explain.
Which of the following statements is true of liabilities?
a. Accounts payable are listed in the current liabilities section in alphabetical order by
vendor.
b. Classification of current liabilities is important because of the liquidity concept.
c. Current liabilities are listed in order of decreasing amounts in the current liability
section of the balance sheet.
d. The accounting principles followed in the U.S. differ from those of other countries;
this is especially true for current liabilities.
Skyline, Inc. The balance sheet of Skyline Inc. includes the following items:
Read the information about Skyline, Inc. What is Skyline’s working capital?
a. $58,440
b. $89,740
c. $84,040
d. $9,740
FFor each item listed, select the section of the balance sheet in which the item would be
reported.
a. Current Assets
b. Property, Plant, and Equipment
c. Current Liabilities
d. Long-term Liabilities
e. Stockholders’ Equity
Retained earnings
St. Petersburg Corporation Use the information obtained from the comparative financial
statements included in the St. Petersburg Corporation’s 2016 annual report that is
presented below to answer the questions that follow. All amounts are in thousands of
dollars.
Refer to the financial information for St. Petersburg Corporation. REQUIRED: (A)
Identify the two components of the return on assets ratio for St. Petersburg. Explain the
change in the return on assets ratio during 2016 as it relates to these components. (B)
During 2016, how much is St. Petersburg’s average cost of borrowed capital as
compared to the cost of the money provided by the preferred stockholders? Which is the
more profitable? Explain.
Identify which of the following would be recorded as external events, recorded as
internal events, or not recorded.
a. Internal event
b. External event
c. Not recordedA customer pays its open account.
Calhoun, Inc. purchased equipment at the beginning of 2015 for $180,000. Rose
decided to depreciate the equipment over a 5-year period using the
double-declining-balance method. Calhoun estimated the equipment’s residual value at
$30,000. Which of the following statements is correct concerning Rose’s financial
statements at December 31, 2015?
a. The book value of the equipment is $108,000.
b. The book value of the equipment is $72,000.
c. The total accumulated depreciation is $90,000.
d. Depreciation expense for 2015 is $60,000.
The lack of a common depreciation method makes it impossible to compare the
performance companies using different methods.
a. True
b. False
Refer to the data for Computech Industries. Based on this information, what is
Computech’s number of days’ sales in receivables (assuming a 360 day year)?
a. 32.4 days
b. 36.0 days
c. 28.8 days
d. 25.2 days
The most liquid of all assets is cash.
a. True
b. False
A credit memorandum appeared on Central Company’s bank statement. How will
Central treat this amount on its bank reconciliation?
a. Add it to the bank balance
b. Add it to the book balance
c. Deduct from the bank balance
d. Deduct from the book balance
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. Capital stock
b. Asset
c. Owners’ equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
Claims of the creditors against the assets of a company.
What section of the statement of cash flows is related to the Stockholders’ Equity
section of the balance sheet? Name four different transactions that are reported in that
section that relate to the statement of cash flows.
Credits are always on theside of the T account.
The private sector group with authority to set accounting standards is the
__________________________________________________.
An obligation that involves an existing condition for which the outcome is not known
with certainty and depends on some event that will occur in the future is call a(n).
Share, Inc. The following data is available for one of the products sold by Share, Inc.,
which uses a perpetual inventory system.
Refer to the data for Share, Inc.
During the month, services performed for customers on account amounted to $4,500
and collections from customers in payment of their accounts totaled $3,000. At the end
of the month, the Accounts Receivable account had a balance of $3,500. What was the
Accounts Receivable balance at the beginning of the month? (Show your work using a
T account.)
The Starch Company experiences a 20% increase in sales over the previous
year. However, gross profit actually decreased by 10% from the previous
year. What are some of the possible causes for an increase in sales but a decline in gross
profit?
Distinguish between current assets and operating assets.
Flores Department Store currently uses the periodic inventory system. REQUIRED :
Explain what the advantages would be to Flores if it uses the perpetual inventory
system. Assume that Flores can use a computer system which is linked to its cash
registers and that all products have bar codes that can be read by bar code readers
attached to the cash registers.
Theof accounting necessitates a number of adjustments at the end of an accounting
period.