1) an awareness of the normal balances of accounts would help you spot which of the
following as an error in recording?
a.a debit balance in the dividends account
b.a credit balance in an expense account
c.a credit balance in a liabilities account
d.a credit balance in a revenue account
2) which inventory method generally results in costs allocated to ending inventory that
will approximate their current cost?
a.lifo
b.fifo
c.average cost method
d.whichever method that produces the highest ending inventory figure
3) in a common size income statement, the 100% figure is
a.net income
b.cost of goods sold
c.gross profit
d.net sales
4) the financial statements of lewis company appear below:
additional information:
a.cash dividends of $50,000 were declared and paid on common stock in 2012.
b.weighted-average number of shares of common stock outstanding during 2012 was
64,000 shares.
c.market value of common stock on december 31, 2012, was $15 per share.
d.net cash provided by operating activities for 2012 was $70,000.
instructions
using the financial statements and additional information, compute the following ratios
for the lewis company for 2012. show all computations.
5) collier company has implemented a just-in-time system, which relies on suppliers to
deliver goods for resale as needed. this implementation is most consistent with which of
the following basic principles of cash management?
a.increasing the speed of receivables collection
b.planning the timing of major expenditures
c.keeping inventory levels low
d.delaying the payment of liabilities
6) the following credit sales are budgeted by garcia company:
the companys past experience indicates that 70% of the accounts receivable are
collected in the month of sale, 20% in the month following the sale, and 8% in the
second month following the sale. the anticipated cash inflow for the month of march is
a.$308,600
b.$280,000
c.$300,000
d.$294,000
7) which activities involve putting the resources of the business into action to generate a
profit?
a.delivering
b.financing
c.investing
d.operating
8) an adjusted trial balance:
a.is prepared after the financial statements are completed
b.proves the equality of the total debit balances and total credit balances of ledger
accounts after all adjustments have been made
c.is a required financial statement under generally accepted accounting principles
d.cannot be used to prepare financial statements
9) for each of the following items, indicate by using the appropriate code letter, how the
item should be reported in the statement of cash flows, using the direct method.
a.added in determining cash receipts from customers
b.deducted in determining cash receipts from customers
c.added in determining cash payments to suppliers
d.deducted in determining cash payments to suppliers
e.cash outflowinvesting activity
f.cash inflowinvesting activity
g.cash outflowfinancing activity
h.cash inflowfinancing activity
i.significant noncash investing and financing activity
j.is not shown
1>decrease in accounts payable during a period.
2>declaration and payment of a cash dividend.
3>decrease in accounts receivable during a period.
4>depreciation expense.
5>conversion of bonds payable into common stock.
6>decrease in merchandise inventory during a period.
7>sale of equipment for cash at book value.
8>issuance of preferred stock for cash.
9>purchase of land for cash.
10>loss on sale of a plant asset.
10) debt and obligations of a business are referred to as
a.assets
b.equities
c.liabilities
d.expenses
11) the left side of an account is
a.blank.
b.a description of the account.
c.the debit side.
d.the balance of the account.
12) on january 1, 2012, holt corporation had $1,000,000 of common stock outstanding
that was issued at par and retained earnings of $750,000. the company issued 40,000
shares of common stock at par on july 1 and earned net income of $400,000 for the
year.
instructions
journalize the declaration of a 15% stock dividend on december 10, 2012, for the
following two independent assumptions.
(a)par value is $10 and market value is $16.
(b)par value is $5 and market value is $8.
13) which one of the following sections would not appear on a cash budget?
a.cash receipts
b.financing needed
c.investing
d.cash disbursements
14) using the allowance method, the uncollectible accounts for the year is estimated to
be $35,000. if the balance for the allowance for doubtful accounts is a $9,000 credit
before adjustment, what is the amount of bad debt expense for the period?
a.$9,000
b.$26,000
c.$35,000
d.$44,000