Each account has a normal balance. For the following list of accounts, indicate whether
the normal balance of each is a debit or a credit.
a.Debit
b.Credit
Wages and Salaries Payable
If current assets amount to $150, total assets $350, current liabilities $65, and total
liabilities $100, then the current ratio is
a.3.03 to 1
b.2.12 to 1
c.2.31 to 1
d.3.50 to 1
Select where the following accounts would be reported on CocaCola’s
financial statements. (Select all that apply.)
Cash received from the sale of a plant asset (focus on just the cash received)
a.Balance Sheet – Property, Plant, and Equipment
b.Balance Sheet – Intangible Assets
c.Balance Sheet – Current Assets
d.Balance Sheet – Other Assets
e.Income Statement – Operating Section
f.Income Statement – Other Revenue and Expense Section
g.Statement of Cash Flows
Select the financial statement on which the user would most likely find the answer to
the question given.
a.Income statement
b.Balance sheet
c.Statement of cash flows
d.Statement of retained earnings
What amount of cash was used for to purchase property, plant, and equipment during
the year?
A trial balance can be as informal as an adding machine tape with the account titles
penciled in next to the debit and credit amounts.
a.True
b.False
Presented below are selected data from the financial statements of Carnival Corp. for
2016 and 2015.
The dividend yield ratio for 2016 is
a. 1.9%
b. 2.1%
c. 36.3%
d. 38.1%
A company has $8,000 in cash, $9,250 in accounts receivable, and $19,500 in
inventory. If current liabilities are
$14,350, then the quick ratio would be
a.2.6 to 1
b.2.0 to 1
c.1.2 to 1
d.5.0 to 1
When a liability is accrued, the account decreased in the transaction is a stockholders’
equity account.
a.True
b.False
Dividends are a determinant of net income.
a.True
b.False
The direct write-off method estimates the amount of bad debts before they occur.
a.True
b.False
Identify which of the following would be recorded as external events, recorded as
internal events, or not recorded.
a.Internal event
b.External event
c.Not recorded
A vendor for a company’s supplies is paid an amount owed on account.
For each of the following items, indicate whether it would appear on a statement of
cash flows prepared using the Direct method (a) or the Indirect method (b).
a.Direct
b.Indirect
Payments on accounts payable
Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1,
2015. The amounts below are related to the equipment purchase. Match the items below
and explain why each revenue expenditure is not capitalized.
a.This item should be included as part of the cost of the equipment.
b.This item should be considered a revenue expenditure.
Terms of the purchase were 2/10, net 30. Edison paid for the purchase on March 8.
For each item listed below, identify how it will be reported on the Statement of Cash
Flows under the indirect method.
a.Operating activity
b.Investing activity
c.Financing activity
d.Not reported separately on the cash flow statement
Decrease in accounts receivable
For each of the following accounts, indicate whether it is a balance sheet account or an
income statement account.
a.Balance sheet account
b.Income statement account
Common Stock
On November 1, 2014, Chancellor Co. borrowed $80,000 from State Bank and signed a
12%, six-month note payable, all due at maturity. The interest on this loan is stated
separately. At December 31, 2014, Chancellor Co.’s overall liability for this loan
amounts to:
a. $83,200
b. $84,800
c. $80,000
d. $81,600
Given below are several ratios. Select the accounts or amounts that would be used in
order to calculate the ratio. You will have more than one response to each ratio. Some
accounts or amounts may not be used at all. (Select all that apply.)
Return on assets ratio
a.Market price per share
b.Net sales
c.Gross profit
d.Average total assets
e.Interest expense, net of tax
f.Net income
g.Total liabilities
h.Total assets
Match each of the following terms pertaining to liabilities to their definitions.
a.Current liability
b.Accounts payable
c.Notes payable
d.Discount on notes payable
e.Current maturities of long-term liabilities
f.Accrued liabilities
g.Contingent liability
h.Estimated liability
A liability that involves an existing condition for which the outcome is not known with
certainty and depends on some future event.
For which of the following is the current ratio most useful?
a.In evaluating a company’s liquidity.
b.In evaluating a company’s solvency.
c.In evaluating a company’s profitability.
d.In evaluating a company’s leverage.
Match the selected items from a classified balance sheet and multiple-step income
statement to the section in which they would appear on the classified balance sheet or
the income statement.
a.Current Assets (balance sheet)
b.Property, Plant, & Equipment (balance sheet)
c.Current Liabilities (balance sheet)
d.Long-term Liabilities (balance sheet)
e.Stockholders’ Equity (balance sheet)
f.Operating Revenue (income statement)
g.Operating Expenses (income statement)
h.Other Revenue & Expenses (income statement)
i.Income Taxes (income statement)
Accounts receivable
What numerators are used in the computation of the following ratios?
The is the file or book that contains all of a company’s accounts.
Carlton, Inc. reported the following information for 2015 and 2014:
Refer to the information for Carlton, Inc.
What amount is cost of goods available for sale for 2015?
Estimated Uncollectible Accounts
Refer to the data for Slammer Sports.
Determine the effect on Slammer Sports’ accounting equation of the yearend adjustment
of bad debts using the
aging approach.
Bing’s Export Co. purchased a new delivery truck at the beginning of 2015. The truck
has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of
$7,000. A full year’s depreciation expense is to be recorded in 2015. The truck was
driven 20,000 miles during 2015 and 24,000 miles during 2016. The number of
expected miles over five years is 100,000.
Refer to information about Bing’s Export Co.
Utah Corp.
Use the following selected data and additional information from the records of Utah
Corp. to answer the questions that follow.
Additional information:
(1)Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000
during 2016.
(2)Common stock was issued to retire bonds payable during 2016.
(3)The only items affecting retained earnings in 2016 were net income and dividends
declared and paid.
Review the data for Utah Corp.
REQUIRED:
Prepare the operating activities section of a statement of cash flows for Utah Corp. for
2016 if the indirect method is used to determine net cash flow from operating activities.
Improv Corporation decides to redeem its $100,000 face value bonds when the carrying
value is $107,019.48. The bonds are redeemed on December 31, 2015, at 102.
REQUIRED:
1)Calculate Improv Corporation’s gain or loss on the early redemption of the bonds.
2) Identify the accounting equation effects to be recorded at the time of bond
redemption.