1) The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.
2) If the buyer bears the freight costs related to a purchase, the terms are said to be FOB
destination.
3) In preparing a bank reconciliation, the amount of deposits in transit is deducted from
the balance per bank statement.
4) The sum of the money on hand and petty cash receipts in a petty cash fund will
always be equal to the balance in the Petty Cash account.
5) Amortization is the allocation process of writing off bond premiums and discounts to
interest expense over the life of the bond issue.
6) Closing entries for a merchandising business are not similar to those for a service
business.
7) Cash paid to acquire treasury stock should be shown on the statement of cash flows
from investing activities.
8) Once equivalent units are calculated for materials, this number will also be used for
direct labor and factory overhead.
9) In the job order system, the finished goods account is the controlling account for the
factory overhead ledger.
10) In preparing the statement of cash flows, the correct order of reporting cash
activities is Financing, Operating, Investing.
11) A formal written statement of management’s plans for the future, expressed in
financial terms, is called a budget.
12) An unfavorable volume variance may be due to a failure of supervisors to maintain
an even flow of work.
13) Amounts withheld from each employee for Social Security and Medicare varies by
state.
14) The inventory accounts generally maintained by a manufacturing firm are only
finished goods and materials.
15) The statement of cash flows consists of three sections: cash flows from operating
activities, cash flows from income activities, and cash flows from equity activities.
16) A company depreciates its equipment $500 a year. The adjusting entry for
December 31 is debit Depreciation Expense, $500 and credit Equipment, $500.
17) The effects of differences in accounting methods are of little importance when
analyzing comparable data from competing businesses.
18) A $400,000 capital investment proposal has an estimated life of four years and no
residual value. The estimated net cash flows are as follows:
The minimum desired rate of return for net present value analysis is 12%. The present
value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is .893, .797, .712,
and .636, respectively. Determine the net present value.
19) The following data is from the Miser Company for years ended 2008-2011.
Calculate the following:
20) Why would a bank require a company to maintain a compensating balance?
21) On January 2nd, Dog Mart prepaid $30,000 rent for the year and recorded the
prepayment in an asset account. Prepare the January 31st adjusting entry for rent
expense.
22) A company reports the following:
Determine the companys price-earnings ratio. Round your answer to one decimal place.
23) Define (1) debt securities and (2) equity securities. Include their similarities and
differences in your discussion.
24) Using the following data taken from Hsus Imports Inc., prepare the cost of
merchandise sold section of the income statement for the year ended March 31, 2011.
25) The following data for the current year ended June 30 were extracted from the
accounting records of Excel Co.:
Prepare a multiple-step income statement for the year ended June 30, 2014.
26) The Austin Land Company sold land for $85,000 in cash. The land was originally
purchased for $65,000. At the time of the sale, $40,000 was still owed to Regions Bank.
After the sale, The Austin Land Company paid off the loan. Explain the effect of the
sale and the payoff of the loan on the accounting equation.