FE 146 Quiz 3 | Course Paper

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Identify the classifications of the following accounts as either current or long-term

liabilities for the December 31, 2014 balance sheet.

a.Current liability

b.Long-term liability

When borrowing money to be repaid in regular future payments, the payment is based

on the present value of the loan, the interest rate and the length of the loan.

a.True

b.False

Read the information on Parachute Country Club.

On which date did the company make cash sales for daily golf and swimming fees?

a.August 2

b.August 3

c.August 5

d.August 7

Sunshine Farm Supply

Following are selected data from the financial statements of Sunshine Farm Supply:

Refer to the data for Sunshine Farm Supply.

Which of the following would result from a horizontal analysis of its income statement?

a.Cost of goods sold is 45.5% of net sales for 2016.

b.Gross profit is 42.1% of net sales for 2016.

c.Cost of goods sold decreased $50,000 or 23.8% during 2016.

d.Accounts receivable total 13.3% of total assets for 2016.

Use the information below for Alpha Inc. for 2015 and 2016 to answer the following

question.

During 2016, Alpha Inc. sold equipment with a cost of $30,000 and accumulated

depreciation of $25,000. A gain of

$3,000 was recognized on the sale of the equipment This was the only equipment sale

during the year.

What amount would be reported as the cash proceeds from the sale of equipment?

a. $2,000

b. $3,000

c. $5,000

d. $8,000

Interest expense is computed annually when a bond is issued for other than its face

value. For a bond issued at a discount, how will this component change as the bond

approaches maturity?

a.Decrease

b.Increase

c.Remain constant

d.Not enough information given to decide.

Fennel Flooring purchased office supplies for its showroom during the month of April

for $2,600. The supplies were paid for during April. On April 1, the Supplies account

had a balance of $350. On April 30, supplies on hand amounted to $200.

A)What is the effect on the accounting equation of the adjusting journal entry necessary

at April 30th?

B)How much will be reported on the balance sheet at April 30 for Supplies?

C)How much will be reported on the income statement for the month of April for

supplies expense?

D)If the adjustment in part A is not recorded, by what amount will net income be over

or understated at April 30?

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

Notes payable–due within one year

When using the indirect method, how is the issuance of stock to retire a long-term debt

shown on a statement of cash flows?

a.Operating activity

b.Investing activity

c.Financing activity

d.Noncash investing or financing activity

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

Writeoff of a customer’s account receivable under the allowance method

Pinecrest Company

Use the selected data from Pinecrest Company’s financial statements to answer the

following question.

Refer to the data for Pinecrest Company.

Competitors in Pinecrest Company’s industry have an average accounts receivable

turnover of 10.8 times. Pinecrest reported accounts receivable at December 31, 2016 of

$42,000 and has normal credit terms requiring payment within 30 days. Pinecrest’s

accounts receivable turnover for 2016 is:

a.probably indicating that the company probably has stricter credit terms and policies

than the industry as a whole, which may repel potential buyers.

b.of no value to bankers and other creditors.

c.less efficient in its collection policies in 2016 than the industry as a whole.

d.less than the industry, which means that its customers are paying on their accounts in

a more timely manner than are customers reflected by the industry average.

Use the following codes to indicate how the cash flow effect, if any, of each transaction

would be reported on a statement of cash flows if the operating activities section is

prepared using the direct method.

a.Inflow from operating activity

b.Outflow from operating activity

c.Inflow from investing activity

d.Outflow from investing activity

e.Inflow from financing activity

f.Outflow from financing activity

g.Noncash investing and financing activity

h.Not reported on statement of cash flows

Received payments from credit sales.

For each transaction select the letter of the type of adjustment that would be required.

a.Deferred expense

b.Deferred revenue

c.Accrued liability

d.Accrued asset

The depreciation on office equipment used during the current year is recorded

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)

Cost of goods sold

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

The company hires a new marketing firm for their new product