The number of issued shares actually in the hands of stockholders rather than held as
treasury stock. Match the terms to the definitions.
Companies that sell to other retailers.
Match the terms with the descriptions provided.
a. Manufacturers d. Wholesalers
b. Merchandisers e. Service companies
c. Retailers
Which of the following invests funds into a business and is considered an owner?
a. stockholders
b. creditors
c. bankers
d. lenders
A novelties company makes cash sales to customers. What effect does this transaction
have on the accounting equation?
a. Liabilities and retained earnings increase.
b. Assets and liabilities increase.
c. Assets and retained earnings increase.
d. There is no effect on the accounting equation, as one asset account increases while
another asset account decreases.
Relies on a count of inventory on the last day of the year to determine the amount on
hand.
Match the terms with the descriptions related to merchandise sales and purchases.
a. Transportation-in e. Cost of goods available for sale
b. Perpetual inventory system f. Periodic inventory system
c. Net purchases g. FOB shipping point
d. FOB destination h. Delivery expense
Which of the following is not a reason to revise the amount of depreciation expense?
a. change in estimated useful life
b. permanent decline of an asset’s fair market value below book value
c. change in estimated residual value
d. incurrence of a capital expenditure associated with a plant asset
Refer to Fantasy Cruise Lines. Compute the amount of depreciation expense for the
year ended December 31, 2013.
Fantasy Cruise Lines On January 1, 2013, the company purchased a ship for
$1,000,000. It has a 10-year useful life and a residual value of $100,000. The company
uses the double-declining-balance method. a. $ 90,000
b. $100,000
c. $180,000
d. $200,000
A company reported the following information:
Assuming all merchandise purchases were on account, how much cash was paid to
suppliers for merchandise purchases during 2014?
a. $1,005,000
b. $1,050,000
c. $ 995,000
d. $1,020,000
Safeguards over assets and records
Choose the proper category of internal control activities that best matches the
following actions. Each action should be matched with a different numbered item
within the internal controls list.
a. One employee or department should verify the work of another.
b. Specific approval is given by management for the performance of activities.
c. Accounting and cash collections should be properly separated.
d. Blank checks should be stored in a locked location.
e. Initial entry into the accounting system should be from a consistent source with
complete information.
Refer to Labor Finders, Inc. The company’s 2015 dividend yield is reported as
Labor Finders, Inc.
Selected data from the company’s financial statements are presented below:
a. 2.67%.
b. 2.80%.
c. 26.67%.
d. 28.00%.
State unemployment taxes For each of the types of payroll taxes and other
payroll-related items listed, indicate whether it is paid by the employee through a
paycheck withholding, by the employer, or both. (Choices may be used more than once.)
a. Employee
b. Employer
c. Both
Cash flows from operations
Select the ratio that would include each amount or account in its calculation. (Choices
may be used more than once.)
a. Times interest earned ratio
b. Operating cash flow ratio
c. Debt-to-equity ratio
d. Return on equity
Under the indirect method, the first line in the operating activities section of the
statement of cash flows is the net income or loss for the period.
A debt security exists when another entity owes the security holder some combination
of interest and principal.
A franchiser is permitted to recognize the revenue from the sale of a franchise whenever
they wish under accrual-basis accounting.
An example of vertical analysis is that the cost of goods sold for 2015 is 129% of the
amount from 2014.
In a stock option plan, the price at which employees can buy the stock.
Contingent liabilities must be recorded in the accounting records if they are probable
and the amount can be reasonably estimated.
____________________ is the name given to balance sheet accounts because their
balances are carried forward from the current accounting period to future accounting
periods.
An advantage of financing with debt rather than stock is that interest expense is
____________________ for tax purposes.
Publicly traded companies must prepare an additional financial statement called The
Worksheet.
Tusk Company acquired all of the assets of Tinsel Company for $1,000,000. With the
approval of Tinsel’s stockholders and creditors, Tinsel transferred all of its assets and
liabilities to Tusk Company and distributed the cash to Tinsel’s stockholders. On the
acquisition date, Tinsel’s stockholders’ equity was $500,000. Tusk Company determined
that Tinsel’s liabilities of $500,000 are correctly valued, but its identifiable assets are
worth $300,000 more than their book value of $1,000,000. Determine the amount of
goodwill to be recognized by Tusk Company as a result of its acquisition of Tinsel
Company.