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Discounting a note receivable
a. Requires using an account called discount on notes receivable
b. Is the process of lending money
c. Slows the collection process
d. Is the process of selling a promissory note
If a credit memo appears on a bank reconciliation, this could be an indication that:
a. there has been a decrease the company's bank account
b. there has been a bank service charge
c. there has been a deposit of a customer's NSF check
d. there has been a note receivable for the company that was collected by the bank.
From the following list, select the proper section from the statement of cashflows in whi
ch it would beclassified.
a. Working capital will increase
b. Working capital will decrease
c. Working capital will not change
Paid cash for supplies
Gear Shop purchased supplies at a cost of $1,000 during the year. At January 1, the
beginning balance in the supplies account was $300. At December 31, supplies on hand
are $100. Determine supplies expense for the year.
a. $ 1,300
b. $ 1,200
c. $ 1,100
d. $ 1,400
Tracy, Inc.
Tracy, Inc. adjusts its books each month but closes its books at the end of the year. The
trial balance at July 31 before adjustments is as follows:
Refer to the trial balance of Tracy, Inc. (Round calculations to the nearest dollar.)If the
equipment had an estimated useful life of five years and no salvage value, what is its
book value at July 31, after the proper monthly July adjustment is recorded?
a. $10,400
b. $25,567
c. $15,167
d. $10,833
Identify where each of the following accounts would be reported on CocaÂCola's
financial statements.
a. Balance Sheet-Property, Plant, and Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
g. Statement of Cash Flows
Accumulated depreciation
a. A liability resulting from the signing of a promissory note.
b. A measure of how long it takes to collect receivables.
c. A written promise to repay a definite sum of money on demand or at a fixed or
determinable date in the future.
d. The length of time a note is outstanding, that is, the period of time between the date it
is issued and the date it matures.
e. The party that will receive the money from a promissory note at some future date.
f. The process of selling a promissory note.
g. The date the promissory note is due.
h. The amount of cash the maker is to pay the payee on the maturity date of the note.
i. The difference between the principal amount of the note and its maturity value.
j. An asset resulting from the acceptance of a promissory note from another company.
k. Securities issued by corporations and governmental bodies as a form of borrowing.
l. Securities issued by corporations as a form of ownership in the business.
m. The party that agrees to repay the money for a promissory note at some future date.
n. The amount of cash received, or the fair value of the products or services received,
by the maker when a promissory note is issued.
Maker
The payment of dividends is a financing activity.
a. True
b. False
Mobile Power Corp. reported the following information for the year ended December
31, 2015.
What was the retained earnings balance for Mobile Power at December 31, 2014?
a. $ 165,000
b. $ 168,000
c. $ 182,000
d. $ 192,000
Warranty expenses are the result of the selling company's estimate of the number of
units sold during the current year that may become defective and need repair or
replacement during the warranty period.
a. True
b. False
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
Approximately how many years will it take for a sum invested at 8% with annual
compounding to quadruple?
a. 9 years
b. 17 years
c. 18 years
d. 81 years
Amortized premium is computed annually when a bond is issued for other than its face
value. For a bond issued at a premium, how will this component change as the bond
approaches maturity?
a. decrease
b. increase
c. remain constant
d. not enough information given to decide
Bondholders are internal users of company's accounting information.
a. True
b. False
Some companies use a work sheet approach, which functions like the T account
approach, as a tool to aid in preparing the statement of cash flows.
a. True
b. False
Surplus Mining Company has leased a machine from Craft Machinery Company. The
annual payments are $6,000 and the life of the lease is 8 years. It is estimated that the
useful life of the machine is 9 years. How would Surplus Mining record the acquisition
of the machine?
a. The machine would be recorded as an asset with a cost of $48,000.
b. The company would not record the machine as an asset but would record rent
expense of $6,000 per year.
c. The machine would be recorded as an asset, at the present value of the annual cash
payments, $6,000 for 8 years.
d. The machine would be recorded as an asset, at the present value of the annual cash
payments, $6,000 for 9 years.
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If a
company wishes to accumulate $500,000 in 20 years at 5% by making equal yearly
deposits into an account, calculation of the deposits is an application of the
a. future value of a single amount
b. present value of a single amount
c. future value of an annuity
d. present value of an annuity
