Exists when another entity owes the security holder some combination of interest and
principal
Match the following terms to their correct definition:
a. equity security j. held-to-maturity securities
b. debt security k. amortized cost method
c. passive l. fair value method
d. significant influence m. unrealized gains and losses
e. control n. equity method
f. parent o. consolidation worksheet
g. subsidiary p. minority interest
h. trading securities q. business combination
i. available-for-sale securities r. Goodwill
Refer to A-One Construction. What is the balance of Accounts Receivable at December
31, 2013?
A-One Construction
The following data are from the company’s records for 2013:
a. $545,000
b. $440,000
c. $515,000
d. $530,000
A physical count of inventory is required even though the company uses the perpetual
inventory system. This is an example of which of the following internal control
activities?
a. segregation of duties
b. safeguarding of assets and records
c. checks on recorded amounts
d. clearly defined authority and responsibility
Return on assets ratio
Indicate the type of each ratio listed. (Choices may be used more than once.)
a. Liquidity ratio
b. Debt management ratio
c. Asset efficiency ratio
d. Profitability ratio
e. Stockholder ratio
If bonds were initially issued at a discount, the interest expense on the bonds calculated
using the effective interest method will
a. decrease as the bonds approach their maturity date.
b. increase as the bonds approach their maturity date.
c. remain constant throughout the bonds’ life.
d. fluctuate throughout the bonds’ life.
An order is placed with a supplier for merchandise.
Select the choice that describes the type of transaction and whether it should be
recorded in the accounting system. (Choices may be used more than once.)
a. External event to be recorded as a transaction
b. Internal event to be recorded as a transaction
c. Event which should not be recognized in the accounting system
Purchasing equipment for cash
For each transaction provided, choose the appropriate account from the list that would
receive a debit entry as a result of the transaction. (Choices may be used more than
once.)
a. Cash
b. Accounts receivable
c. Supplies
d. Prepaid insurance
e. Land
f. Equipment
g. Accounts payable
h. Unearned revenues
i. Notes payable
j. Common stock
k. Retained earnings
l. Service revenue
m. Salary expense
n. Insurance expense
o. Utilities expense
p. Dividends
Shares repurchased and held by the corporation.
Match the terms to the definitions.
Refer to the Ace Computing Company. The amount of bad debts expense recognized in
the 2013 income statement will be:
Ace Computing Company
On January 1, 2013, the Accounts Receivable and the Allowance for Doubtful Accounts
carried balances of $40,000 and $1,500 respectively. During the year, the company
reported $80,000 of credit sales. There were $500 of receivables written off as
uncollected in 2013. Cash collections of receivables amounted to $78,200. The
company estimates that it will be unable to collect 4% of the year-end accounts
receivable balanc
a. $1,652
b. $ 652
c. $ 142
d. $1,450
Horizontal analysis is analysis in which
a. financial statement lines are expressed as a percent of the base (earliest) year.
b. all items are presented as a percentage of one selected item on the financial
statement.
c. a statistic is calculated for the relationship between two items on a single financial
statement or for two items on different financial statements.
d. ratio increases and decreases are presented for the past two accounting periods.
Consolidation is required when a parent acquires between 50% and 100% of the
subsidiary’s stock. Any voting stock not held by the parent is called the
____________________.
The effective interest method amortizes premium or discount in a manner that produces
a ____________________ rate of interest from period to period.
A trial balance is the listing of each active account and its corresponding debit or credit
balance at a particular point in time.
The names of the four major types of adjusting entries are ____________________,
____________________, ____________________, and ____________________.
The method of recording bad debts that results in a bad debt expense before the actual
default is the ____________________.
The inventory turnover ratio is defined as cost of goods sold divided by average
inventory.
Shipping terms of ____________________ mean that the buyer pays shipping costs.