According to the Sarbanes-Oxley Act of 2002, only external auditors can provide
bookkeeping services for the clients they audit.
a. True
b. False
Which one of the following documents is used in the control of cash disbursements?
a. Income Statement
b. Bank deposit slips
c. Receiving reports
d. Cash register tapes
The following information is provided by the Centos Corporation:
What is the net income for Centos Corp.?
a. $10,000
b. $20,000
c. $30,000
d. Unable to tell from the information provided.
LongÂterm liabilities are a component of the ‘œcapital structure’ of a company.
a. True
b. False
From the following list, identify each item as operating (O), investing (I), financing (F),
or not separately reported on the statement of cash flows (N).
a. Operating-O
b. Investing-I
c. Financing-F
d. Not separately reported-N
Declaration of stock split
Crimson Company declared and paid $1,000,000 in dividends to the common
stockholders. The effect of this transaction is that the
a. earnings per share decreased
b. current ratio increased
c. debt-to-equity ratio increased
d. earnings per share increased
Dayton Ridge Co. purchased new trucks at the beginning of 2015 for $600,000. The
trucks had an estimated life of 4 years and an estimated residual value of $50,000.
Dayton Ridge uses straight-line depreciation. At the beginning of 2016, Dayton Ridge
sold the trucks for $480,000 and purchased new trucks for $700,000. Determine the
following amounts: A. Book value of the trucks at the end of 2015. B. Gain (loss) on
the sale of the trucks at the beginning of 2016 (Indicate the amount and whether a gain
or loss).
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. Stockholder
b. Company management
c. Supplier
d. Banker
e. Internal Revenue Service
f. Securities and Exchange Commission
g. Labor union The prospects for future dividend payments.
Gaulle Company began the year with a balance of $6,000 in Accounts Receivable and
ended the year with $9,000 in the account. Revenues for the period amounted to
$38,000. Under the direct method, Gaulle will report cash collected from customers of:
a. $44,000
b. $35,000
c. $41,000
d. $47,000
Which of the following ratios is least useful in evaluating a company’s ability to pay its
current debts as they become due?
a. current ratio
b. debt-to-equity ratio
c. debt service coverage ratio
d. acid-test ratio
Match the following bond and long-term liability related terms to the appropriate
definition.
a. Long-term liability
b. Face value
c. Debenture bonds
d. Serial bonds
e. Callable bonds
f. Face rate of interest
g. Market rate of interest
h. Bond issue price
i. Premium
j. Discount
k. Effective interest method of amortization
l. Carrying value
m. Gain or loss on redemption
The excess of the face value of bonds over the issue price. It occurs when the market
rate on the bonds exceeds the face rate.
How is the balance sheet linked to the other financial statements?
a. The amount of retained earnings reported on the balance sheet is equal to net income.
b. Retained earnings is added to total assets and reported on the balance sheet.
c. Net income increases retained earnings on the statement of retained earnings, which
ultimately increases retained earnings on the balance sheet.
d. There is no link between the balance sheet and other statements, as each contains
different accounts and provides different information.
Select the account that would be increased to show each of the following costs.
a. Land
b. Land Improvements
c. Buildings
d. Machinery and Equipment
e. An Expense Account
The sales taxes paid related to a machine purchased
The Ramien Store held inventory items at the end of 2014. Which items should Ramien
include as part of its total inventory cost?
a. Freight incurred in shipping goods to customers.
b. Annual income taxes paid for operations.
c. Cost of storing inventory before it is sold.
d. Cost of salaries of clerks that sell the inventory items.
Which of the following is not a requirement of a company’s external auditors under
SarbanesÂOxley?
a. They must give an opinion that management’s assessment that the internal control
system over financial reporting is fairly stated.
b. They must give an opinion that the company maintained an effective internal control
system over financial reporting.
c. They must design and implement an effective information system design.
d. They cannot perform any brokerage services for the company.
When using the indirect method, how is depreciation expense recorded on the statement
of cash flows?
a. Operating activity
b. Investing activity
c. Financing activity
d. Noncash investing and financing activity
Select the letter of the term each statement best describes.
a. authorized shares
b. issued shares
c. outstanding shares
d. par value
e. additional paid-in capital
f. retained earnings
g. cumulative feature
h. participating feature
i. callable stock
j. treasury stock
k. retirement of stock
l. dividend payout ratio
m. stock dividend
n. stock split
o. market value per share
p. convertible stock
q. book value per share
The amount received for the issuance of stock in excess of the par value of the stock.
When treasury stock is reissued and the cost is less than the reissue price, the difference
increases additional paid- in capital.
a. True
b. False
Both U.S. GAAP and IFRS apply the lower-of-cost-or market rule in a similar manner
to inventory.
a. True
b. False
A bank loaned Darden Company $10,000 on a 1-year, 6% note, but deducted the
interest in advance. The journal entry made by Darden to record receipt of the cash
would include a
a. an increase in Cash for $9,400
b. an increase in Cash for $600
c. a decrease in Notes Payable for $10,600
d. a decrease in Notes Payable for $9,400
The amount of cash provided from operating activities isunder both the direct and
indirect methods.
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:
Calculate the earnings per share for St. Petersburg for 2016 and 2015 assuming an
average of 100,000 common shares were outstanding during 2016 and an average of
80,000 common shares were outstanding during 2015. Explain the change as it
probably relates to the market value of the stock.
Another name for profits or earnings of a business is.
activities involve long-term liabilities and stockholders’ equity.
Given below are several transactions for Vision Inc. In the space provided, indicate the
impact on each of the stockholders’ equity accounts given, by placing the dollar amount
and either a plus sign (+) or a minus sign (-) in the box provided. For each account in
which there is no effect, place an X in the box.
What is the best way to assess solvency? Explain.