Ed’s Drive-In $175,000 of current assets and $80,000 of current liabilities before
borrowing $60,000 from the bank with a 3-month note payable. What effect did the
borrowing transaction have on Ed’s Drive-In’s current ratio?
a.The ratio remained unchanged.
b.The change in the current ratio cannot be determined.
c.The ratio decreased.
d.The ratio increased.
Foyle Company purchased a new van for floral deliveries on January 1, 2013. The van
cost $48,000 with an estimated life of 5 years and $12,000 salvage value at the end of
its useful life. The double-declining-balance method of depreciation will be used. What
is the balance of the Accumulated Depreciation account at the end of 2014?
a.$7,680.
b.$23,040.
c.$30,720.
d.$11,520.
(a)Identify three taxes commonly paid by employers on employees’ salaries and wages.
(b)Where in the financial statements does the employer report taxes withheld from
employees’ pay?
Minette Company reported net income of $120,000 for the year ended December 31,
2014. During the year, inventories decreased by $24,000, accounts payable decreased
by $36,000, depreciation expense was $27,000 and a gain on disposal of equipment of
$9,000 was recorded. Net cash provided by operating activities in 2014 using the
indirect method was
a.$168,000.
b.$126,000.
c.$147,000.
d.$144.000.
Masterfalls Corporation purchased a one-year insurance policy in January 2013 for
$30,000. The insurance policy is in effect from March 2013 through February 2014. If
the company neglects to make the proper year-end adjustment for the expired insurance:
a.net income and assets will be understated by $25,000.
b.net income and assets will be overstated by $25,000.
c.net income and assets will be understated by $5,000.
d.net income and assets will be overstated by $5,000.
The profit margin is calculated by dividing
a.sales by cost of goods sold.
b.gross profit by net sales.
c.net income by stockholders’ equity.
d.net income by net sales.
The statements of financial position of Rocky Acre Spread Ltd. include the following:
Instructions
Calculate the following for 2014:
1>Cash received for interest.
2>Cash paid for supplies.
3>Cash paid for salaries and wages.
4>Cash received for service revenue.
Koppernaes Corporation earns 12% on an investment that will return $1,350,000, 7
years from now. Below is some of the time value of money information that
Koppernaes has compiled that might help in planning compounded interest decisions.
To the closest dollar, what is the amount Koppernaes should invest now to earn this rate
of return?
a.$298,442
b.$610,673
c.$1,134,,000
d.$616,107
The trial balance for Greenway Corporation appears as follows:
If, on December 31, 2014, the insurance still unexpired amounted to $10, the adjusting
entry would contain a:
a.debit to Prepaid Insurance for $50
b.credit to Prepaid Insurance for $10
c.debit to Insurance Expense for $50
d.debit to Prepaid Insurance for $10
The ratios that are used to determine a company’s short-term debt paying ability are
a.asset turnover, times interest earned, current ratio, and accounts receivables turnover.
b.times interest earned, inventory turnover, current ratio, and receivables turnover.
c.times interest earned, accounts receivable turnover ratio, current ratio, and inventory
turnover.
d.current ratio, current debt coverage, receivable turnover, and inventory turnover.
Berman Inc. has 6,000 shares of 8%, $50 par value, cumulative preferred stock and
50,000 shares of $1 par value common stock outstanding at December 31, 2013, and
December 31, 2014. The board of directors declared and paid an $18,000 dividend in
2013. In 2014, $72,000 of dividends are declared and paid. What are the dividends
received by the common stockholders in 2014?
a.$42,000.
b.$36,000.
c.$30,000.
d.$24,000.
A useful measure of solvency is the
a.current ratio.
b.earnings per share.
c.return on assets ratio.
d.debt to assets ratio.