If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000,
how much is working capital?
a. $ 6,000
b. $ 24,000
c. $ 27,000
d. $ 45,000
Which of the following statements is false regarding a credit memorandum?
a. A credit memorandum is added to the balance per the company’s books
b. A credit memorandum could be issued for interest earned on checking balances
c. A credit memorandum is issued when the bank collects a note for the customer.
d. A credit memorandum is subtracted from the balance per the company’s books.
Which one of the following is not a major category for long-term assets?
a. Intangibles
b. Property, plant, and equipment
c. Receivables
d. Goodwill
Select the correct revenue recognition principle for each of the following.
a. Recognize revenue over the passage of time.
b. Recognize revenue when the customer takes possession of the product.
c. Recognize revenue when cash is collected.
d. Recognize revenue when service is performed.
Carpet cleaning
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
Bonds that may be redeemed or retired before their specified due date.
The inventory costing method is applied after each sale of merchandise to update the
Inventory account.
a. True
b. False
The payment of accounts payable results in a(n)
a. decrease in liabilities and a decrease in assets.
b. decrease in liabilities and an increase in assets.
c. increase in liabilities and a decrease in owners’ equity.
d. decrease in liabilities and an increase in owners’ equity.
Acquisition costs are also known as replacement costs.
a. True
b. False
One of the problems with the use of the allowance method to account for bad debts is
that it often violates the matching principle.
a. True
b. False
An accounting transaction is not recorded when a corporation declares and executes a
stock split.
a. True
b. False
Eversoll Inc. uses the periodic inventory system.
If Eversoll uses the FIFO inventory method, the amount assigned to the June 30
inventory would be
a. $1,354.00
b. $1,366.50
c. $1,590.42
d. $1,594.00
Match the terms to the definitions by selecting the letter of the term. Each term may be
used more than once or not at all.
a. cumulative feature
b. stock dividend
c. retired stock
d. retained earnings
e. callable feature
f. convertible feature
g. outstanding shares
h. treasury stock
i. participating feature
j. additional paid-in capital
Allows the holders of this stock to share in the distribution of dividends above the
predetermined per share amount.
The IASB is a branch of the FASB.
a. True
b. False
The base, or benchmark, on which all items on the income statement are compared is
net sales.
a. True
b. False