Which of the following is a measure of liquidity?
a. operating cash flows ratio
b. earnings per share
c. accounts receivable turnover ratio
d. return on common equity
Which of the following statements regarding accounts payable is false?
a. Accounting for accounts payable is really just the flip side of accounts receivable.
b. Accounts payable arise when a business purchases goods or services on credit.
c. Accounts payable arise when a business promises to purchase goods or services in the
future.
d. Accounts payable seldom require the payment of interest.
The Allowance for Doubtful Accounts represents:
a. Bad debt losses incurred in the current period
b. The amount of uncollected accounts written off to date
c. The difference between total sales made on credit and the amount collected from
those credit sales
d. The difference between the recorded value of accounts receivable and the net
realizable value of accounts receivable
Risks associated with how the company allocates its resources to meet its objectives
Match the following terms with their correct definitions.
a. Accounting system e. Internal control system
b. Business process risks f. Safeguarding
c. Control activities g. Segregation of duties
d. Control environment h. Strategic risks
Liabilities created by adjusting entries Match the following terms with the appropriate
definition.
a. Accrued liabilities f. Payroll taxes
b. Contingent liabilities g. Sales taxes
c. Current liabilities h. Warranty
d. Interest rate i. Withholdings
e. Liabilities
A measure of the proportion of dividends to earnings.
Match the terms to the definitions.
Mustard Seed Gifts had the following results for December 31, 2013 and 2014,
respectively:
What was the amount of cash flows from investing activities for 2014?
a. Cash inflow of $290,000
b. Cash outflow of $290,000
c. Cash outflow of $10,000
d. Cash outflow of $30,000
Refer to Fabian Woodworks. Based on the information presented above, what method
of depreciation will maximize depreciation expense in 2012?
Fabian Woodworks This company purchased a truck at a cost of $12,000. The truck
has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000
hours of operation. The truck was purchased on January 1, 2012, and was used 27,000
hours in 2012 and 26,000 hours in 2013. a. straight-line
b. double-declining-balance
c. units-of-production
d. All methods produce the same expense in 2012.
Which one of the following is a correct fundamental accounting equation?
a. Assets + Liabilities = Stockholders’ Equity
b. Assets + Retained Earnings = Stockholders’ Equity
c. Assets + Stockholders’ Equity = Liabilities
d. Assets = Liabilities + Stockholders’ Equity
The following items were obtained from the financial records:
How would the change in accounts receivable be reported in the operating activities
section of the statement of cash flows under the indirect method?
a. As an addition to sales.
b. As a deduction from sales.
c. As an addition to net income.
d. As a deduction from net income.
Which internal control activity is violated when the cashier at a cash register in a retail
store also records the daily receipts in a journal?
a. segregation of duties
b. adequate documents and records
c. independent checks on recorded amounts
d. safeguards over assets and records
P Company paid $500,000 for 100% of the net assets (assets less liabilities) of S
Company. The current value of S Company’s net assets was only $475,000. As a result
of this acquisition, P Company must recognize
a. negative goodwill.
b. goodwill.
c. gain.
d. loss.
Refers to the process of assigning the cost of an asset such as a building to expense over
the asset’s useful life
Match each statement to the item listed below
a. Accrual basis accounting f. Depreciation
b. Adjusted trial balance g. Matching principle
c. Adjusting entries h. Revenue recognition principle
d. Cash basis accounting i. Time period assumption
e. Contra accounts j. Worksheet
Select the incorrect statement from the following:
a. Adjustments are required to eliminate any transactions between Parent and Sub (e.g.,
selling or other transfer of assets).
b. Even when the parent owns less than 100% of the subsidiary’s stock, 100% of the
subsidiary’s assets and liabilities are included in the consolidated balance sheet.
c. Any consolidated net income attributable to minority interest must be clearly
identified and shown on the consolidated income statement.
d. Consolidated net income is equal to the sum of the parent’s net income and the sub’s
net income.
A company issued 10-year bonds with a par value of $20,000,000 and an 8% annual
face rate of interest on January 2, 2013. The issue price of the bond issue was
$19,866,397 which reflected an 8.1% effective interest rate. Interest payments are made
annually. Required: A) Give the journal entry to record the issuance of the bonds.
B) Give the journal entry to record the recognition of interest expense at December 31,
2013. Any premium or discount should be amortized using the effective interest rate
method.
C) Give the journal entry to record the interest paid to the bondholders on January 2,
2014.
D) Give the journal entry to record the recognition of interest expense at December 31,
2014. Any premium or discount should be amortized using the effective interest rate
method.
Rent owed to the less or under an operating lease would appear on the balance sheet as
a. current liability.
b. long-term liability.
c. current asset.
d. owners’ equity.
On December 31, 2014, a restaurant purchased a $19,000 truck to be used for catering.
It made a down payment of one-fourth of the purchase price. What combination of
amounts would affect the 2014 income statement and statement of cash flows for the
purchase of the truck? Statement of Cash FlowIncome Statement
a. $ -0- $19,000
b. $19,000 $ -0-
c. $ 4,750 $19,000
d. $ 4,750 $ -0-
Cost of material, labor, and other production-related costs incurred to date in unfinished
goods.
Match the inventory-related accounts to costs that may be included in inventories for
retailers and manufacturers.
a. merchandise inventory d. finished goods
b. raw materials e. cost of goods sold
c. work-in-process
Time series (or trend) analysis is analysis in which
a. dollar changes and percentage changes in a company’s financial statement lines are
compared over several years.
b. all items are presented as a percentage of one selected item on a 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.
The amount of earnings distributed to stockholders can be found in the income
statement as an expense.
What are adjusting entries and what is their purpose?
Under the double-entry system of accounting, a debit is always a negative entry.
____________________ is the name of the account credited when a corporation issues
common stock for a price greater than par.
A corporation had several transactions affecting its stockholders’ equity accounts during
the year. In the space provided, show the impact on the accounting equation by placing
a plus sign (+) for an increase, a minus sign (-) for a decrease, or N/A for no impact or
no total net impact.
The accountant must make journal entries for all items in the book section of the bank
reconciliation.
The longer a customer’s account balance remains outstanding, the greater the likelihood
that it will be collected in the near future.