Which of the following statements regarding the activities of Forman Corp. is true?
a. Revenues decrease Forman’s stockholders’ equity.
b. Expenses increase Forman’s stockholders’ equity.
c. Expenses decrease Forman’s stockholders’ equity.
d. None of these answer choices is correct.
Vegas Finance Company reported the following: Common stock, $10 par, 100,000
shares authorized, 80,000 shares issued and outstanding What is the effect of issuing
1,000 shares of common stock at $15 per share?
a. Cash increases $10,000.
b. Common Stock increases $15,000.
c. Additional Paid-in Capital increases $5,000.
d. Retained Earnings increases $5,000.
Sunshine Farm Supply Following are selected data from the financial statements of
Sunshine Farm Supply:
Refer to the data for Sunshine Farm Supply. Which of the following would result from a
vertical analysis of its income statement?
a. Accounts receivable increased $22,000 or 57.9% during 2016.
b. Gross profit is 57.9% of net sales for 2016.
c. Cost of goods sold increased $50,000 or 23.8% during 2016.
d. Net sales increased $110,000 or 28.9% during 2016.
Which of the following statements regarding amortization is true?
a. Amortization of the premium causes the premium on bonds payable account to
increase.
b. Amortization of the premium causes the amount of interest expense to increase.
c. Cash interest payments on bonds equals interest expense on the income statement
when there is amortization of bond premium.
d. Amortization of premium continues over the life of the bond until the balance in the
account is reduced to zero.
The all-inclusive income approach requires that all events and transactions that affect
income should be reported on the income statement to help prevent the manipulation of
income.
a. True
b. False
Which one of the following adjustments will increase assets?
a. Interest incurred on money borrowed during the period but not yet paid to the bank is
accrued.
b. Rent revenue is recorded for amounts owed by a tenant but not yet paid.
c. The use of supplies is recorded.
d. Depreciation for the period is recorded.
All of the following events (transactions) would be identified from standard source
documents except for
a. freight charges for merchandise purchased from suppliers.
b. the amount to be paid to settle a lawsuit for discrimination in hiring employees.
c. wages to be paid to hourly employees.
d. commissions earned by sales employees.
Given the following list of methods of depreciation, select the method that is best for
the situation or purpose given. Some answers may be used more than once, while others
may not be used at all.
a. Straight-line
b. Units-of-production
c. Double-declining-balance
d. MACRS
This method is the best for management bonus plans.
From the following list, select the proper section from the statement of cashflows in whi
ch it would beclassified.
a. Operating Activities
b. Investing Activities
c. Financing Activities
Received cash from selling goods to customers
When one company purchases less than 50% of equity securities in a second company,
which of the following statements is true?
a. The purchaser is referred to as the parent.
b. The purchaser is referred to as the subsidiary.
c. The company whose securities are purchased is the subsidiary.
d. The company whose securities are purchased is the investee.
Double-declining-balance depreciation is most commonly used by businesses for
financial reporting purposes.
a. True
b. False
Stock dividends reduce the par value of the stock.
a. True
b. False
Measurement in accounting requires choosing an attribute and a unit of measure. is the
attribute used for many of the assets included in the financial statements.
Under thebasis of accounting, revenues are recognized when earned and expenses when
incurred.
What is the purpose of an accounts receivable subsidiary ledger?
What is the difference between par value and market value? Which is the better
indicator of the true worth of the stock?
Fasoli, Inc. The following balance sheet items from Fasoli, Inc. are listed for December
31, 2015:
Read the information about Fasoli, Inc.
Prepare the Stockholders’ Equity section of the classified balance sheet, including the
total stockholders’ equity amount.