The capital account balances for Donald & Hanes LLP on January 1, 2013, were as
follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The
partners agreed to admit May to the partnership with a 35% interest in partnership
capital and net income. May invested $100,000 cash, and no goodwill was recognized.
What is the balance of Hanes’s capital account after the new partnership is created?
A.$84,000.
B.$100,000.
C.$140,000.
D.$176,000.
E.$200,000.
Cash outflows generated by capital investments include all of the following except:
A.depreciation expense
B.transportation costs
C.increased operating expenses
D.increase in the required amount of working capital
Richardson Company paid $850 cash for rent expense. As a result of this business
event,
A.Total assets decreased.
B.Liabilities decreased.
C.The net cash flow from operating activities decreased.
D.Total assets decreased and the net cash flow from operating activities decreased are
correct.
Regarding the relationships of revenues and expenses to assets and liabilities, state
whether each of the following statements is true or false.
_____ a) Recording an increase in a revenue account may be associated with an
increase in assets.
_____ b) Recording an increase in a revenue account may be associated with a decrease
in liabilities.
_____ c) An increase in Salaries Expense may be accompanied by a decrease in
Salaries Payable.
_____ d) Recording a decrease in assets may be associated with an increase in an
expense account.
_____ e) An increase in Supplies may be accompanied by an increase in Supplies
Expense.
A wrap-around filing:
A.may be used by large companies to sell securities over a period of two years without
refiling with the SEC.
B.is a simplified registration procedure for securities to be issued by small companies.
C.allows a company to simplify its form 10-K by referring to information in its annual
report.
D.is a filing completed using the SEC’s electronic filing system.
E.may remain in effect for a period of one to five years.
If a company misclassifies a general, selling and administrative cost as a product cost in
a period when production exceeds sales:
A.net income will be overstated.
B.total assets will be understated.
C.gross margin will be understated.
D.Both net income will be overstated and gross margin will be understated.
Harvey wants to determine the net present value for a proposed capital investment. He
has determined the desired rate of return, the expected investment time period, a series
of cash inflows of equal amount, the salvage value of the investment, and the required
cash outflows. Which of the following tables would most likely be used to calculate the
net present value of the investment?
A.Present value of annuity.
B.Future value of a lump sum.
C.Present value of annuity and present value of a lump sum.
D.Future value of annuity and future value of a lump sum.
Use the following information to prepare an income statement for Grandin Company
for the period ending December 31, 2012. All transactions were for cash.
A) Received revenue from services provided to customers, $28,500.
B) Paid $19,000 cash for land.
C) Paid operating expenses, $19,400.
D) Paid dividends to stockholders, $3,200.
E) Issued $16,000 of common stock.
The following information pertains to inventory held by a company at December 31,
2013.
What amount of inventory should be reported under U.S. GAAP?
A.$25,000.
B.$21,000.
C.$20,000.
D.$16,800.
E.$16,000.
The study of an individual financial statement item over several accounting periods is
called:
A.Horizontal analysis.
B.Vertical analysis.
C.Ratio analysis.
D.Time and motion analysis.
Which of the following is not included in the computation of the quick ratio?
A.Cash
B.Prepaid expenses
C.Accounts receivable
D.Marketable securities
On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts
carried balances of $30,000 and $500, respectively. During the year the company
reported $75,000 of credit sales. There were $550 of receivables written-off as
uncollectible in 2014. Cash collections of receivables amounted to $74,550. The
company estimates that it will be unable to collect one percent (1%) of credit sales.
The entry required to recognize the uncollectible accounts expense for 2014 will
A.increase total assets and retained earnings.
B.decrease total assets and retained earnings.
C.decrease total assets and increase net income.
D.increase total assets and decrease net income.
Findell Corporation is considering two projects, A and B, and it has gathered the
following estimates for the projecTrue
What is the present value index for project A?
A.1.096
B.1.124
C.0.889
D.0.913