Ashley Wilson’s grandparents want to give her some money when she graduates from
high school. They have
offered Ashley the following three choices:
a.Receive $25,000 immediately. Assume that interest is compounded annually.
b.Receive $3,200 at the end of each six months for four years. Ashley will receive the
first check in six months.
c.Receive $7,000 at the end of each year for four years. Assume that interest is
compounded annually.
Ashley wants to have money for a new car when she graduates from college in four
years. Assuming an interest rate of 8%, what option should she choose to have the most
money in four years? (Round your answers to the nearest dollar.)
Given the following list of methods of depreciation, select the method that is best for
the situation or purpose given. Some answers may be used more than once, while others
may not be used at all.
a.Straight-line
b.Units-of-production
c.Double-declining-balance
d.MACRS
This method is the easiest to use.
The accounting profession is currently experimenting with financial statements adjusted
for the changing value of the dollar since inflation is increasing.
a.True
b.False
See the transactions to Morton & Associates. The journal entry to record the May 15
transaction will include a decrease of $1,220 to
a.Accounts Receivable
b.Unearned Revenue
c.Prepaid Expenses
d.Accounts Payable
When Company X buys stock in Company Y, Company X is referred to as the investee.
a.True
b.False
Karen’s Flower Shop began business as a corporation in 2015. Several transactions
which occurred early in 2015 ar
below. Record each transaction in proper form, excluding written explanations, in the
general journal provided.
A)January 23, 2015: Stockholders invested cash of $70,000 in the business and
received 7,000 shares common stock as evidence of their ownership interest.
B)February 1, 2015: Rent of $1,600 was paid for the month of February.
C)February 7, 2015: Equipment with a cost of $3,000 was purchased on credit; payment
is due within 30 days.
D)February 14, 2015: Bills totaling $5,400 were presented to customers for flower
arrangements created and delivered; $2,900 was received in cash immediately; the
balance of $2,500 is due within 10 days.
E)February 18, 2015: Full payment was made for the equipment purchased on February
7.
F)February 22, 2015: Payment of $1,900 was received from customers with balances
due from February 14.
G)February 28, 2015: Employee salaries of $3,300 were paid.
From the following list, select the proper section from the statement of cash flows in
which it would be classified.
a.Operating Activities
b.Investing Activities
c.Financing Activities
Received cash from bond issuance
The cash flow adequacy ratio is defined as:
a.True
b. False
Using matching under the accrual method, expenses are recognized when revenue is
earned.
a.True
b.False
A decline in purchasing power is evidenced by all of the following except:
a.inflation.
b.a continuing rise in the general level of prices in an economy.
c.buying the same amount of goods or services for a higher price a year later.
d.current value is equal to historical cost.
For each item listed, select the section of the balance sheet in which the item would be
reported.
a.Current Assets
b.Property. Plant, and Equipment
c.Current Liabilities
d.Long-term Liabilities
e.Stockholders’ Equity
Interest payable
A bank loaned Darden Company $10,000 on a 1-year, 6% note, but deducted the
interest in advance. The journal entry made by Darden to record receipt of the cash
would include a
a.a decrease in Notes Payable for $9,400.
b.a decrease in Notes Payable for $10,600.
c.an increase in Cash for $600.
d.an increase in Cash for $9,400.
What is the minimum number of years for which publicly traded companies must
include the following statements in their annual report filed with the SEC?
Under theinventory system, the inventory account is updated after each purchase or
sale.
Refer to the Terry Company transactions.
Required: Indicate the economic effects of each transaction above on the accounting
equation. Use the following format for your answers. Show the dollar amounts in the
appropriate columns and use a “+” (plus) sign to indicate an increase and a “-” (minus)
sign to indicate a decrease.
What does this statement tell you that an income statement does not?
Hound Dog Bisquits reported the following financial data for 2014 and 2015:
