Which of the following terms does not describe the interest rate printed on the bond
certificate?
a. Coupon rate
b. Effective rate
c. Face rate
d. Stated rate
Because of its objective nature, historical cost is the attribute used to measure many of
the assets recognized on the balance sheet.
a. True
b. False
Some of the steps in the accounting cycle are listed below. Select the choice that places
these steps in the correct order. 1> Close the accounts.
2> Post transactions to accounts in the ledger.
3> Journalize daily transactions.
4> Record and post adjustments.
5> Prepare financial statements.
a. 2, 3, 4, 5, 1
b. 3, 2, 4, 5, 1
c. 3, 2, 4, 1, 5
d. 3, 2, 5, 4, 1
From the following list, identify whether the change in the account balance during the
year would be reported as an operating (O), an investing (I), or a financing (F) activity
or not separately reported on the statement of cash flows (N). Assume that the indirect
method is used to determine the cash flows from operating activities.
a. O – Operating
b. I – Investing
c. F – Financing
d. N – Not separately reported on the Statement of Cash Flows
Salaries and wages payable
The statement of cash flows reflects the revenues actually earned by the business,
regardless of whether cash has been collected.
a. True
b. False
Accounting controls primarily concern safeguarding of assets and ensuring the
reliability of the financial statements.
a. True
b. False
Measurement of the economic effects on an entity involves each of the following
except
a. Quantification of effects
b. Identification of the attribute to be measured
c. Selection of an appropriate unit of measure
d. Recording the economic effects in the financial statements
A banker is analyzing a company which operates in the petroleum industry. Which of
the following might be a major consideration in determining whether the company
should receive a loan?
a. The petroleum industry suffers from political pressures concerning the selling price
of its products.
b. Inflation has been high for several years in a row.
c. All companies in the petroleum industry use the same accounting principles.
d. The company has a large amount of interest payments related to many outstanding
loans.
Which of the following best describes the term “expenses”?
a. The amount of total profits earned by a business since it began operations.
b. The amount of interest or claim that the owners have in the business.
c. The future economic resources of a business entity.
d. The outflow of assets resulting from the sale of goods and services.
If Crab Shack Company has a current ratio of 2.5 and current assets of $195,000, the
amount of working capital is:
a. $117,000
b. $330,000
c. $380,000
d. $78,000
Hammar Corporation’s partial income statement is as follows:
Required:
Determine the profit margin. Would you invest in Hammar Corporation? Explain your
answer.
Balance Sheet Accounts
(all accounts have normal balances)
(in millions)Refer to the account information for Auto Designs, Inc.
REQUIRED: (1) Calculate percentage changes in accounts payable and income taxes
payable. Give a possible explanation for the changes in these accounts. (2) By how
much did Auto Designs’ longÂterm and shortÂterm borrowings change from 2014 to
2015? Give a possible explanation for the change in debt. What other financial
statement would be useful in analyzing the change in borrowings? Why?
The garden club is planning a raffle. The president overheard you talking about internal
controls to another member and asked you to set up some guidelines to ‘œmake sure’
that all money collected for the upcoming raffle is accounted for by the club. Required
1> In general, describe some guidelines that the club should follow to achieve an
acceptable level of internal control.
2> Regarding the president’s request, is it really possible to make sure that all money is
collected and recorded?
Thethe accounts receivable turnover ratio, the quicker the each dollar of accounts
receivable can be collected.
The payment of salaries and wages decreases cash and increases a(n).