1) accounts receivable arising from sales to customers amounted to $35,000 and
$40,000 at the beginning and end of the year, respectively. income reported on the
income statement for the year was $120,000. exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
a.$120,000
b.$125,000
c.$155,000
d.$115,000
2) which one of the following is not a tool in financial statement analysis?
a.horizontal analysis
b.circular analysis
c.vertical analysis
d.ratio analysis
3) an architecture firm earned $2,000 for architecture services provided with the fee to
be paid in the future. no entry was made at the time the service was provided. if the fee
has not been paid by the end of the accounting period and no adjusting entry is made,
this would cause:
a.revenues to be overstated
b.net income to be overstated
c.liabilities to be understated
d.revenues to be understated
4) n3 corporation has assets of $3.6 million, common stock of $936,000, and retained
earnings of $571,000. what are the creditors claims on their assets?
a.$3,235,000
b.$1,507,000
c.$2,093,000
d.$3,965,000
5) in published annual reports
a.subclassifications within the stockholders equity section are routinely reported in
detail
b.capital surplus is used in place of retained earnings
c.the individual sources of additional paid-in capital are often combined
d.retained earnings is often not shown separately
6) sales taxes collected by a retailer are reported as
a.contingent liabilities
b.revenues
c.expenses
d.current liabilities
7) identify the following expenditures as capital expenditures or revenue expenditures.
(a)replacement of worn out gears on factory machinery.
(b)construction of a new wing on an office building.
(c)painting the exterior of a building.
(d)oil change on a company truck.
(e)replacing a 486 computer chip with a pentium chip, which increases productive
capacity. no extension of useful life expected.
(f)overhaul of a truck motor. one year extension in useful life is expected.
(g)purchased a wastebasket at a cost of $10.
(h)painting and lettering of a used truck upon acquisition of the truck.
8) cash receipts from customers are greater than sales revenues when there is a(n)
a.increase in accounts receivable
b.decrease in accounts receivable
c.increase in cost of goods sold
d.decrease in cost of goods sold
9) which is not an application of revenue recognition?
a.recording revenue as an adjusting entry on the last day of the accounting period
b.accepting cash from an established customer for services to be performed over the
next three months
c.billing customers on june 30 for services completed during june
d.receiving cash for services performed
10) accrued revenues are:
a.received and recorded as liabilities before they are earned
b.earned and recorded as liabilities before they are received
c.earned but not yet received or recorded
d.earned and already received and recorded
11) the following information pertains to bell company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the return on common stockholders equity for this company?
a.13.3%
b.5%
c.23.3%
d.53.3%
12) use the following information to calculate for the year ended december 31, 2012 (a)
net income (net loss), (b) ending retained earnings, and (c) total assets.
13) factoring arrangements
a.are ways to accelerate receivable collections
b.involve no commissions or service charges because the factor is guaranteed
collections on the due date
c.are generally used by businesses that are insolvent
d.are mainly used in the textile and furniture industries
14)
the comparative balance sheet of dunbar company appears below:
instructions
(a)using horizontal analysis, show the percentage change for each balance sheet item
using 2011 as a base year.
(b)using vertical analysis, prepare a common size comparative balance sheet.
15) three factors that affect the computation of periodic depreciation expense are (1)
_______________, (2) _______________, and (3) _________________.
16) the times interest earned ratio is calculated by dividing ___________________
before __________________ and __________________ by interest expense.
17) elizabeth gilmore is the daughter of edward gilmore, the founder and president of
big sky enterprises. she has been working in various departments during school
vacations throughout high school. she burst into the accounting department excitedly
one morning. she said that the stock price of several of the firm’s temporary investments
are up, and that her father said that the company had made over $10,000 because of this
jump in stock prices. she asks to see how the increase is recorded. it is a very busy time
in the accounting department, and so her question is deferred.
18) wishbone company maintains two separate accounts payable computer systems. one
is known to all the users, and is used to process payments to vendors. employees enter
the vendor code, or the name and address of new vendors, the amount, the account, and
so on. the other system is a secret one. it is used to cross-check the vendors against an
approved vendor list. if a vendor is not listed as approved, the payment process is
halted. internal audit employees seek to verify the existence of a bona fide claim by the
vendor. all inquiries are made at the top management level, and very discreetly. no one
but top management, the internal audit staff, and the board of directors of the company
is even aware of the second system.
is it ethical for a company to have a secret system like the one described? explain.
19) in general, how does one determine whether or not an expenditure should be
included in the acquisition cost of property, plant, and equipment?
20) on october 1, sam’s painting service borrows $80,000 from national bank on a
3-month, $80,000, 4% note. the entry by sam’s painting service to record payment of
the note and accrued interest on january 1 is
21) kendrick company was organized on january during the first year of operations, the
following expenditures and receipts were recorded in random order.
analyze the foregoing transactions using the following tabular arrangement. insert the
number of each transaction in the item space and insert the amounts in the appropriate
columns.
22) net cash provided/used by operating activities can be determined using the
____________ method or the ______________ method.
23) the periodic and the perpetual inventory systems are two methods that companies
use to account for inventories. briefly describe the major features of each system and
explain why a physical inventory is necessary under both systems.
24) fifo and lifo are the two most common cost flow assumptions made in costing
inventories. the amounts assigned to the same inventory items on hand may be different
under each cost flow assumption. if a company has no beginning inventory, explain the
difference in ending inventory values under the fifo and lifo cost bases when the price
of inventory items purchased during the period have been (1) increasing, (2) decreasing,
and (3) remained constant.