When using the indirect method, how is the issuing of stock for cash shown on the
statement of cash flows?
a. Operating activity
b. Investing activity
c. Financing activity
d. Non cash investing and financing activity
For each item listed, select the section of the balance sheet in which the item would be r
eported.
a. Current Assets
b. Property, Plant, and Equipment
c. Current Liabilities
d. Long-term Liabilities
e. Stockholders’ Equity
Computer available for resale
Credit entries are used to
a. increase asset accounts.
b. increase liability accounts.
c. decrease revenue accounts.
d. decrease liability accounts.
One reason management may choose the straight-line method of depreciation is because
it is easy to compute.
a. True
b. False
Supplementary disclosures required by GAAP that help explain detail behind the
accounting treatment of certain items in the financial statements is most likely found in
which of the following sections of a corporate annual report?
a. Report of the Independent Accountants
b. Notes to the Financial Statements
c. Management’s Discussion and Analysis
d. Balance Sheet
Identify the classifications of the following accounts as either current or long-term
liabilities for the December 31, 2014 balance sheet.
a. Current liability
b. Long-term liability
Estimated warranty payable by June 30, 2015.
You are interested in accumulating $10,000 so that you can take a cruise in 3 years. If
you trying to solve for the amount that you need to invest each year, earning 6% interest
compounded annually, the $10,000 represents:
a. The amount to invest.
b. An annuity.
c. A present value.
d. A future value.
Match each of the following terms related to interest and time value of money
calculations to their appropriate definition.
a. Time value of money
b. Simple interest
c. Compound interest
d. Future value of a single amount
e. Present value of a single amount
f. Annuity
g. Future value of an annuity
h. Present value of an annuity
The amount needed at the present time to be equivalent to a series of payments and
interest in the future.
Park, Inc. purchased merchandise from Jay Zee Music Company on June 5, 2015. The
goods were shipped the same day. The merchandise’s selling price was $15,000. The
credit terms were 1/10, n/30. The shipping terms were FOB shipping point. Park
received the merchandise on June 10, 2015. Park paid the amount due on June 13, 2015.
If Park uses the periodic inventory system, the effect of recording the payment on June
13, 2015, will include
a. a decrease to Purchases for $15,000.
b. an increase to Inventory for $14,850.
c. a decrease to Cash for $15,000.
d. a decrease to Accounts Payable for $15,000.
A debit entry increases assets, decreases liabilities, or decreases stockholders’ equity.
a. True
b. False