Match the selected items from a classified balance sheet and multiple-step income state
ment to the section in which they would appear on the classified balance sheetor the inc
ome statement.
a. Current Assets (balance sheet)
b. Property, Plant, & Equipment (balance sheet)
c. Current Liabilities (balance sheet)
d. Long-term Liabilities (balance sheet)
e. Stockholders’ Equity (balance sheet)
f. Operating Revenue (income statement)
g. Operating Expenses (income statement)
h. Other Revenue & Expenses (income statement)
i. Income Taxes (income statement)
Cost of goods sold
Debt-to-equity ratio
a. Total liabilities
b. Total stockholders’ equity
c. Net income
d. Interest expense
e. Cash flow from operations before interest and tax payments
f. Cash paid for acquisitions
g. Cash flow from operations
h. Total dividends paid
The key to the classification of an amount as cash is that it be available to pay debts
within a three-month period of time.
a. True
b. False
Use the information below for Flora Inc. for 2015 and 2016 to answer the following
question.
During 2016, Flora Inc. sold equipment with a cost of $30,000 and accumulated
depreciation of $25,000. A gain of $3,000 was recognized on the sale of the equipment
This was the only equipment sale during the year. What was depreciation expense for
2016?
a. $ 9,000
b. $16,000
c. $21,000
d. $30,000
Provided below is a list of important users of accounting information.Below the list are
descriptions of a major need of each of the various users. Fill in the blank with the one
user group that is most likely to have the need described to the right of the blank. Some
user groups may be used more than once or not at all.
a. Capital stock
b. Asset
c. Owners’ equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
An entity that lends a company money with the expectation of repayment.
The balance sheet is linked to the retained earnings statement by the ending retained
earnings balance.
a. True
b. False
For each of the following accounts, indicate whether it is a balance sheet account or an i
ncome statement account.
a. Balance sheet account
b. Income statement account
Income Taxes Expense
On the balance sheet, a company reports plant assets by subtracting residual value from
the original cost of the plant asset.
a. True
b. False
On January 15, 2015, the accounts receivable balance was $7,000 and the balance in the
allowance for doubtful accounts was $700. On January 16, 2015, a $200 uncollectible
account was written-off. The net realizable value of accounts receivable on January 16
immediately after the write-off is:
a. $6,300
b. $6,800
c. $6,500
d. $7,900
Match the following terms with the best definitions for questions 212 through a.
Purchase requisition.
b. Receiving Report.
c. Vendor Invoice.
d. Check.
e. Control procedures.
f. Inventory count.
g. Segregation of duties.
h. Source document control.
A form used for verification that the items originally requested have been received.
What is the impact on the cash flow statement from an increase in short-term notes
receivable, assuming the indirect method is used?
a. A decrease in the cash flow from operating activities
b. An increase in the cash flow from operating activities
c. An increase in the cash flow from financing activities
d. An increase in the cash flow from investing activities
Caron Industries received authorization on December 31, 2014, to issue $7,000,000
face value of 6%, 10-year bonds. The interest payment dates are June 30 and December
31. All the bonds were issued at par, plus accrued interest, April 1, 2015. The bonds are
callable by Caron at any time at 102. REQUIRED: Prepare the journal entry to record
issuance of the bonds on April 1, 2015.
Why is cash management necessary?
Fasoli, Inc. The following balance sheet items from Fasoli, Inc. are listed for December
31, 2015:
Read the information about Fasoli, Inc.
Compute Fasoli’s current ratio. On the basis of your answer, does Fasoli appear to be
liquid? What other information do you need to fully answer that question?
is the magnitude of an omission or misstatement in accounting information that will
affect the judgment of someone relying on the information.
Your uncle has just started a business and comes to you with a question. ‘œI’m
confused. I have a memo included with my bank statement indicating a $45 service
charge for printing new checks. Since you’re an accounting major, maybe you can
explain to me why they call it a ‘˜debit memorandum,’ even though they are deducting
this amount from my account. When I took Accounting in school, I could have sworn
that a decrease in the Cash account would be a credit and not a debit. REQUIRED:
In a short paragraph, explain this issue to your uncle.
Padagonian Company Use the deferred tax account that appears in the financial
statements of Padagonian Company to answer the related questions.
Review the information for Padagonian Company. REQUIRED: (1) Where will the
Deferred Income Taxes account most likely appear on a classified balance sheet? (2)
What percent is deferred income taxes of long-term liabilities for the two years?
2016 __________ 2015 ___________ (3) What percent is deferred income taxes of
total liabilities for the two years?
2016 __________ 2015 ___________