Which of the following would appear on the balance sheet as a current liability?
a. A loss that could be expected upon the occurrence of a strike by employees.
b. Potential damages from the risk of explosions in a fireworks factory.
c. Payments that are likely to occur for pension benefits to employees.
d. A possible loss from a threatened lawsuit.
A sporting goods chain purchased supplies at a cost of $11,000 during the year. At
January 1, the beginning balance in the supplies account was $3,000. At December 31,
supplies on hand are $800. Determine supplies expense for the year.
a. $ 3,000
b. $13,200
c. $11,000
d. $11,800
Refer to Hesson Properties. How much is still owed to the company by its customers at
the end of the month?
Hesson Properties, Inc.
The following transactions occurred during June:
a. $0
b. $500
c. $1,000
d. $1,500
The following information was included in a note to the 2015 financial statements of
Romeo Productions: The company has a loan agreement with First National Bank that
states:
The company’s ratios are: current ratio, 2.3; debt-to-equity ratio, 0.6; times interest
earned ratio, 7.1; and inventory turnover ratio, 3.7. Based on this information, the
company was in default of its loan agreement because of the
a. current ratio.
b. debt-to-equity ratio.
c. times interest earned ratio.
d. inventory turnover ratio.
How is the Balance Sheet linked to the other financial statements?
a. The amount of retained earnings is reported on the Balance Sheet as a liability.
b. Retained earnings is added to total assets and reported on the Balance Sheet.
c. Retained earnings is reported on the Balance Sheet.
d. There is no link between the Balance Sheet and other statements, as each contains
different accounts and provides different information.
The depreciation on machinery used during the current year is recorded
For each transaction select the type of adjustment that would be required. (Choices
may be used more than once.)
a. Deferred (prepaid) expense
b. Deferred (unearned) revenue
c. Accrued expense
d. Accrued revenue
Include costs such as legal fees, stock issue costs, accounting and promotional fees
Match these terms with their correct definition.
a. Franchise e. Organizational costs
b. Intangible operating assets f. Property, plant, and equipment
c. Natural resources g. Trademark
d. Operating assets h. Voluntary disposal
A company that uses leverage is attempting to earn an overall return that is higher than
the cost of funds received from
a. preferred and common stockholders.
b. common stockholders only.
c. customers.
d. borrowing.
On January 1, 2011, P Company purchased all of the outstanding common stock of S
Company. The consolidation of the two balance sheets requires a
a. credit adjustment to eliminate P Company’s “Investment in S Company’ account.
b. debit adjustment to eliminate S Company’s “Investment in P Company’ account
c. debit adjustment to eliminate P Company’s “Investment in S Company’ account
d. credit adjustment to eliminate S Company’s “Investment in P Company’ account
Tipper Company acquires Tacoma Company for $1,000,000. On the acquisition date,
Tacoma has the following balances: Assets
A) Record the entry Tipper Company will make to acquire Tacoma Company under
each of the following assumptions:
1) Tacoma Company sells Tipper Company its net assets and goes out of existence as a
corporation; and
2) Tacoma Company sells Tipper Company its stock but continues as a legal entity. B)
Explain the difference in the consolidated financial statements for the two companies.
Any transaction or set of transactions that brings together two or more previously
separate entities to form a single accounting entity is called a
a. business plan.
b. business combination.
c. corporation.
d. joint venture.
The stockholders’ equity section of a balance sheet at December 31, 2015 is provided
below:
How many shares of stock are issued?
a. 18,000
b. 19,800
c. 20,000
d. 20,200
Social security 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
The equity section of a balance sheet at December 31, 2015 is provided below:
No dividends were paid during 2013 and 2014, but the company plans to issue a cash
dividend of $2,000 on December 31, 2015. Determine the total dividend for each class
of stock under each of the following assumptions:
This assumption states that each company will be accounted for separately from its
owners.
Match the following principles with their correct definition.
Match the following principles with their correct definition.
a. Comparability g. Historical cost
b. Conservatism h. Matching
c. Double-entry accounting i. Monetary unit
d. Economic entity j. Revenue recognition
e. Going concern k. Time period
f. Full disclosure
The equity method of accounting for an investment is used when a company purchases
a. more than 20% of the debt securities of another company.
b. 100% of the debt securities of another company.
c. 15% of the equity securities of another company.
d. between 20-50% of the equity securities of another company.
Operating assets with no physical properties are called
a. current assets.
b. intangible assets.
c. plant assets.
d. property, plant, and equipment.
Allows companies to artificially divide their operations into periods for ease of
communication
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
Which statement is true concerning operating assets?
a. Operating assets have no physical properties.
b. A company’s operating assets are important to its short-term liquidity.
c. Operating assets are used over two or more periods to generate revenues.
d. All operating assets are reported on the income statement
Net Income from the Income Statement increases ____________________.
Wanda Ward makes an investment of $11,800, which pays 8% interest that is
compounded quarterly. How much interest will have accrued at the end of 48 months?
Since stock dividends are paid with shares of stock instead of cash, no reduction in
Retained Earnings is recorded.
____________________ is a liquidity measure that is calculated by subtracting current
assets from current liabilities.
Debenture bonds are backed by specific collateral of the issuing company.
____________________ analysis compares a single corporation across time.
No special internal control procedures are necessary with a petty cash fund because the
amount is so small.
Some companies use a work sheet approach as a tool to aid in preparing the statement
of cash flows.
Bonds are generally issued in denominations of $1,000.
Business process risk assessment is designed to identify, analyze, and manage possible
threats to the organization’s success concerning ____________________ forces such as
resource allocations.