Select the account that would be increased to show each of the following costs.
a.Land
b.Land Improvements
c.Buildings
d.Machinery and Equipment
e.An Expense Account
The transportation charges related to the acquisition costs of a new piece of machinery.
Which of the following is not classified as a noncurrent liability?
a.Mortgage payable
b.Current portion of long-term debt
c.Bonds payable
d.Capital lease obligations
Choose from the following list of account titles the one that most accurately fits the
description of that account or is an example of that account. An account title may be
used more than once or not at all.
a.Cash
b.Prepaid Asset
c.Investments
d.Taxes Payable
e.Preferred Stock
f.Accounts Receivable
g.Land
h.Accounts Payable
i.Retained Earnings
j.Notes Receivable
k.Buildings
l.Notes Payable
m.Common Stock
A written obligation to repay a fixed amount, with interest, at some time in the future
The key to the classification of an amount as cash is that it be readily available to pay
debts.
a.True
b.False
Identify whether the following investor questions are associated with (a) primary or (b)
secondary financial reporting objectives.
a.primary financial reporting objective
b.secondary financial reporting objective
How much revenue will Apple generate during the time period in which I own the
shares?
Identify whether the following investor questions are associated with (a) primary or (b)
secondary financial reporting objectives.
a.primary financial reporting objective
b.secondary financial reporting objective
Based on the financial information, should I buy shares of Apple?
Kim Chen Corporation is a wholesaler of scuba gear. During 2016, Chen expanded its
retail business by adding over 50 dive shops. The following information is obtained
from the comparative financial statements included in the company’s 2016 annual report
(all amounts are in thousands of dollars):
1) Using the information provided above, compute the following for 2016 and 2015:
A.Debt-to-equity ratio (at each year-end)
B.Times interest earned ratio
2)Comment briefly on the company’s solvency.
3)What other ratios will help you assess the solvency? What information will they
provide that you do not already have concerning the company’s solvency?
Maxim Company sells auto parts. The company employs a periodic inventory system.
Identify all the effects on the accounting equation.
a.Increase in assets
b.Decrease in assets
c.Increase in liabilities
d.Decrease in liabilities
e.Increase on owners’ equity
f.Decrease in owners’ equity
g.Increase in assets and increase in owners’ equity
h.Decrease in assets and decrease in owners’ equity
i.Increase in liabilities and decrease in owners’ equity
j.Decrease in liabilities and increase in owners’ equity
Granted a customer a credit on its balance due for goods that were returned.
Amortized premium is computed annually when a bond is issued for other than its face
value. For a bond issued at a premium, how will this component change as the bond
approaches maturity?
a.Decrease
b.Increase
c.Remain constant
d.Not enough information given to decide.
Flannery Company uses a worksheet to prepare its statement of cash flows. The
company also uses the indirect method for the Operating Activities section of its
statement. For each of the following changes in the balance sheet, indicate what activity
it affects and whether it is an addition or deduction.
a.Deducted from Operating activity
b.Added to Operating activity
c.Deducted from Investing activity
d.Added to Investing activity
e.Deducted from Financing activity
f.Added to Financing activity
Income taxes payable increased
The normal balance of revenue is a(n).
Use the following Assets section of Hu Corporation’s balance sheets for the years ended
December 31, 2015 and
2014 to answer the questions that follow.
Refer to the information for Hu Corporation.
(1)Explain the impact on net income and cash flows of Hu using straight-line
depreciation for financial reporting and accelerated depreciation methods for income
tax purposes.
(2)In the notes to the financial statements, Hu indicates that it uses different
depreciation methods for different types of plant and equipment assets. Explain why Hu
might follow this policy.
Read the information about Fasoli, Inc.
REQUIRE:
Prepare the Assets section of the classified balance sheet.
The following balance sheet items from Fasoli, Inc. are listed for December 31, 2015:
Read the information about Fasoli, Inc.
Present the Current Assets section (including the total) of a classified balance sheet.
Use the following Assets section of Hu Corporation’s balance sheets for the years ended
December 31, 2015 and
2014 to answer the questions that follow.
Refer to the information for Hu Corporation.
(1) Which items on Hu’s balance sheet could be considered intangible assets? Explain
the nature of each of these.
(2) Explain why it is important that Hu disclose the amounts expended on research and
development each year.