Givens Corp.
Givens Corp. is a merchandising company that uses the periodic inventory system.
Selected account balances are listed below:
Refer to the information for Givens Corp. Calculate the gross profit.
a. $241,000
b. $275,000
c. $289,000
d. $425,000
Which of the following lease conditions would result in a capital lease to the lessee?
a. The lessee will return the property to the lessor at the end of the lease term.
b. The lessee can purchase the property for $1 at the end of the lease term.
c. The fair market value of the property at the inception of the lease is $18,000; the
present value of the minimum lease payments is $15,977.
d. The lease term is 70% of the property’s economic life.
Select the financial statement on which the user would most likely find the answer to
the question given. (Select all that apply.) Did the company purchase any intangible
assets during the year?
a. Income statement
b. Balance sheet
c. Statement of cash flows
d. Statement of retained earnings
A company’s internal control system is designed by its external auditors.
a. True
b. False
Which of the following statements is true regarding a bond?
a. A bond is a certificate that acts as evidence of ownership in a corporation.
b. A bond is a certificate that represents a corporation’s promise to repay a certain
amount of money and interest in the future.
c. If you buy a bond from a company, you are borrowing money from the company.
d. Bondholders receive dividends semiannually.
Many companies assign only the net invoice price for merchandise to inventory and
cost of goods sold. All other costs, including transportation and other costs of bringing
merchandise to the place of business, are charged to expense of the period in which they
are incurred. Which accounting principle or concept is applied in this example?
a. Historical cost
b. Matching
c. Cost/Benefit
d. Conservatism
On a bank reconciliation, bank charges for the month are added to the cash balance per
the books.
a. True
b. False
For each item listed below, identify how it will be reported on the Statement of Cash
Flows under the indirect method.
a. Operating activity
b. Investing activity
c. Financing activity
d. Not reported separately on the cash flow statement WriteÂoff of a customer’s account
receivable under the allowance method
Which one of the following is least likely to be a user of financial information of a
grocery store?
a. The manager of the grocery store.
b. The supplier of milk to the grocery store.
c. A stockbroker looking for a possible investment.
d. A customer at the grocery store.
Pinecrest Company
Use the selected data from Pinecrest Company’s financial statements to answer the
following question.
Refer to the data for Pinecrest Company.The amount of working capital at the end of
2016 is
a. $ 36,000
b. $ 44,000
c. $ 99,000
d. $174,000
Which of the following items would be considered a cash equivalent if it was held at
the balance sheet date?
a. U.S. Treasury bill purchased when there were 90 days until maturity.
b. Commercial paper with a 6-month maturity which was purchased at the issue date.
c. The common stock of a company traded on the New York Stock Exchange which was
purchased 30 days before the balance sheet date.
d. U.S. Treasury note which matures 2 years after it is issued and which was purchased
4 months before the balance sheet date.
Which of the following transactions is a significant noncash investing and financing
activity?
a. Land is purchased for cash.
b. Bonds are issued for cash.
c. Cash equivalents are purchased.
d. Equipment is acquired by issuing a long-term note.
An example of a current liability that must be accrued is
a. accounts payable.
b. current maturity of long-term debt.
c. revenue received in advance.
d. income taxes payable.
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
Repaid a long-term bank loan.
Which of the following represents a group composed of key officers of a corporation
and outside members responsible for the general oversight of the affairs of the
company?
a. Board of Directors
b. Internal Audit Staff
c. External Auditors
d. Audit Committee
Land is not depreciated because it
a. appreciates in value.
b. does not have an established depreciable life.
c. has a useful life that is limited to the period of time a company is in business.
d. will provide future benefits for a company for an unlimited period of time.