Interest earned on the checking account for May
The accountant for a local manufacturing company is reconciling the company’s bank
account for May. For each item listed, state how it would be handled on a bank
reconciliation. (Choices may be used more than once.)
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to company balance
d. Subtraction from company balance
e. Not included on the reconciliation
Which of the following accounts is decreased by a debit entry?
a. cash
b. prepaid insurance
c. accounts payable
d. insurance expense
Use the following selected financial data from the balance sheet at the end of 2015 and
2014:
Net income for 2015 and 2014 was $120,000 and $460,000, respectively. No stock was
issued during either year, but dividends of $20,000 and $16,000 were paid in 2015 and
2014, respectively. A) What is return on common equity ratio for 2015?
B) What is the dividend payout ratio for 2015?
C) What is the earnings per share measure for 2015?
D) What other stockholder ratios would be helpful in assessing information of interest
to stockholders?
Check written on the company’s account in May and paid by the bank is returned with
the bank statement
The accountant for a local manufacturing company is reconciling the company’s bank
account for May. For each item listed, state how it would be handled on a bank
reconciliation. (Choices may be used more than once.)
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to company balance
d. Subtraction from company balance
e. Not included on the reconciliation
Which of the following statements is true with regard to 7% cumulative, participating
preferred stock?
a. Stockholders who hold this type of stock are guaranteed a dividend each year.
b. The issue price of this stock is reported in the preferred stock account on the balance
sheet.
c. If the corporation pays a per share dividend in excess of 7% of the preferred stock’s
par value and there are no dividends in arrears, the preferred shares will receive a share
of the amounts available for distribution as dividends to other classes of stock.
d. If dividends are not declared, they accumulate and a liability must be reported on the
balance sheet for any amount in arrears that is owed to the preferred stockholders.
An investor expects to receive payments of $3,000 every 6 months for the next 7 years.
If the market rate of interest is 4% per year compounded semi-annually, what is the
future value of these payments?
a. $22,302.84
b. $23,694.87
c. $47,921.82
d. $54,875.73
Earnings per share
Indicate the type of each ratio listed. (Choices may be used more than once.)
a. Liquidity ratio
b. Debt management ratio
c. Asset efficiency ratio
d. Profitability ratio
e. Stockholder ratio
Which of the following is considered a measure of short-term liquidity?
a. gross profit percentage
b. quick ratio
c. dividend yield ratio
d. return on assets ratio
Freight costs incurred by the buyer to ship goods to its place of business.
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. (Choices may be used more than once.)
a. Add to inventory cost c. Not an inventory cost
b. Subtract from inventory cost
The portion of the stock’s issue price that exceeds par.
Current liabilities require a transfer of assets or performance of services within the
longer of ____________________ or one operating cycle.
each financial statement line item is expressed as a percentage of the largest statement
amount, for example, net sales on the income statement.
Match these terms to their correct definition
Cumulative preferred dividends that have not been paid.
Refer to H&R Clock Company. Use the following format to indicate the economic
effects of each transaction above on the expanded accounting equation. 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.
The bookkeeper for City Rentals closed the books before the accountant had had a
chance to prepare the financial statements. Use the bookkeeper’s closing entries to
prepare, in good form, a statement of retained earnings for the year ended December 31,
2012, the first year of operations for this company. Closing Entries:
There are more corporations than sole proprietorships and partnerships in the United
States.