Which one of the following items is reported as a current asset on a classified balance
sheet?
a. Inventory
b. Accounts payable
c. Land
d. Common stock
If Ash Company had sales during the year of $10,000,000, an average accounts
receivable of $2,000,000, and net income of $500,000, its accounts receivable turnover
ratio would be 0.25.
a. True
b. False
Companies in Mexico had to begin using IFRS by 2012.
a. True
b. False
Identify the classifications of the following accounts as either current or long-term
liabilities for the December 31, 2014 balance sheet.
a. Current liability
b. Long-term liability
An amount of money owed to a creditor on a note due August 15, 2022.
Deposits made by a company but not yet reflected in a bank statement are called
a. Debit memoranda
b. Deposits in transit
c. Credit memoranda
d. None of the above
Authorized stock represents the
a. maximum number of shares that can be issued.
b. number of shares that have been sold.
c. number of shares that are currently held by stockholders.
d. number of shares that have been repurchased by the corporation.
Match the following characteristics with the statements about each qualitative character
istic’s importance.
a. Consistency
b. Materiality
c. Conservatism
d. Comparability
e. Reliability
f. Relevance
g. Understandability
The accounting information must be information that could affect a decision.
The following set of items describes activities completed by a company in purchasing
and paying for merchandise. For each activity, identify whether or not the activity
adheres to or violates sound internal control procedures. All documents attached to an
invoice approval form are canceled before a check is signed.
a. Adheres to sound internal control procedures
b. Violates sound internal control procedures
c. Neither strengthens nor violates internal control
When using the indirect method, how is the issuance of stock to retire a long-term debt
shown on a statement of cash flows?
a. Operating activity
b. Investing activity
c. Financing activity
d. Noncash investing or financing activity
The correct term for the process of transferring amounts from a book of original entry
to specific assets, liabilities, revenues, expenses, and stockholders’ equity items is
a. Double-entry system
b. Posting
c. Credit
d. Journalizing
If current assets amount to $150, total assets $350, current liabilities $65, and total
liabilities $100, then the current ratio is
a. 2.12 to 1
b. 2.31 to 1
c. 3.03 to 1
d. 3.50 to 1
Royal Company purchased a dump truck at the beginning of 2012 at a cost of $60,000.
The truck had an estimated life of 6 years and an estimated residual value of $24,000.
On January 1, 2014, the company made major repairs of $20,000 to the truck that
extended the life 1 year. Thus, starting with 2014, the truck has a remaining life of 5
years and a new salvage value of $8,000. Royal uses the straight-line depreciation
method. What amount should be recorded as depreciation expense each year starting in
2014?
a. $6,000
b. $12,000
c. $13,600
d. $14,400
Expired costs are called assets.
a. True
b. False
On July 1, 2014, Falcon Company received a $20,000 promissory note for services
from Jordyn Company. The annual interest rate is 5%. Principal and interest are paid in
cash at the maturity date of June 30, 2013. The effect on Falcon’s financial statements
on July 1, 2014 is as follows
a. Assets increase; owners’ equity increases
b. Assets decrease and owners’ equity decreases
c. Assets decrease
d. No net change in assets
Match the following choices to the listed situation.
a. a deferred expense
b. a deferred revenue
c. an accrued liability
d. an accrued asset
The cost of supplies used during the current year is determined and recorded
Presented below are a list of source documents and a list of transactions. Using the
identification letters before each source document, indicate next to each transaction
which source document serves as evidence for the recording of the transaction.
SourceDocuments
A) Purchase invoice
B) Sales invoice
C) Cash register tape
D) Check
E) Time card
F) Monthly statement
G) Promissory note
H) Stock certificate Transactions
_____ (1) Supplies are purchased on credit. _____ (2) Cash sales are made to
customers. _____ (3) Land is acquired by signing an agreement to pay a stated amount
plus interest in one year. _____ (4) Utilities expense is recorded for the current month.
_____ (5) The weekly payroll is paid. _____ (6) Merchandise is sold to a customer on
account. _____ (7) Payment is made for utility bills which were recorded earlier. _____
(8) Investors purchase additional shares of the company’s stock directly from the
company.
Hu Corporation Use the following Assets section of Hu Corporation’s balance sheets for
the years ended December 31, 2015 and 2014 to answer the questions that follow. HU
CORPORATION
Assets Section of Consolidated Balance Sheets (in millions)at December 31,
Hu Corporation recorded depreciation expense of $344 million for 2014 Refer to the
information for Hu Corporation.
A company that holds a promissory note from another company has an asset, called a(n)
____________________.
Explain the two ways that a dividend rate on preferred stock may be stated by giving
examples.
A(n)is a list of each account and its balance at a specific point in time.
The party that agrees to repay is theof the note.
Fasoli, Inc. The following balance sheet items from Fasoli, Inc. are listed for December
31, 2015:
Read the information about Fasoli, Inc.
Present the Current Assets section (including the total) of a classified balance sheet.
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: During
2016, has St. Petersburg successfully employed favorable leverage based on the average
cost of capital? What action should the company take?
The effective interest method amortizes premium or discount in a manner that produces
a(n) rate of interest from period to period.