Refer to Rio Imports. Which of the following statements is true concerning the
company’s debt management activities?
Rio Imports
Information from the financial statements are provided below:
a. The company has a smaller percentage of capital from stockholders at the end of
2015 than at the end of 2014.
b. The company relied more on creditors for financing during 2015 than in 2014.
c. The company improved its debt-to-equity ratio.
d. Relative to 2014, the company is in a weaker position at the end of 2015 to finance
capital expenditures from cash flow generated by operating activities.
Below is some information taken from the income statements of RPG and RPM Co.
Refer to Landmark Company. What is the number of shares of common stock issued
and outstanding?
Landmark Company
This company reported the following information in the stockholders’ equity section of
its December 31, 2014, balance sheet:
a. 50,000
b. 100,000
c. 6,000
d. 5,000
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.
Supplies Expense
From the list of accounts, determine whether the account is a temporary or permanent
account. (Choices may be used more than once.)
Issued stock to buy a building.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
or event would be reported on a statement of cash flows if the operating activities
section is prepared using the indirect method. (Choices may be used more than once.)
a. Operating activity-add to net income
b. Operating activity-deduct from net income
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
A company paid off a $100,000 2-year note payable. The effect of this transaction is
that the
a. current ratio decreased.
b. earnings per share increased.
c. working capital increased.
d. debt-to-equity ratio increased.
An intangible asset arising from attributes that are not separable from the business-such
as customer satisfaction, product quality, skilled employees, and business location
Match the following terms to their correct definition:
a. equity security j. held-to-maturity securities
b. debt security k. amortized cost method
c. passive l. fair value method
d. significant influence m. unrealized gains and losses
e. control n. equity method
f. parent o. consolidation worksheet
g. subsidiary p. minority interest
h. trading securities q. business combination
i. available-for-sale securities r. Goodwill
The process of ensuring that the company’s accounting records are consistent with the
bank’s accounting records
Match the following terms with their correct definition.
a. Bank reconciliation d. Outstanding check
b. Deposit in transit e. Service charges
c. Non-sufficient funds check
The time-period assumption is necessary because
a. inflation exists and causes confusing swings in financial statement amounts over
time.
b. external users of financial statements want accurately-reported net income for a
specific period of time.
c. financial statements users expect full disclosure of all economic events throughout
the entire time period.
d. it is required by the federal government.
Chicago Works employs 20 workers. Each employee is paid wages of $25 per hour and
works an 8-hour workday, Monday through Friday. Employee wages are paid every
Friday for the workweek just ending.
Accumulated depreciation is a contra asset account.
On the worksheet, the retained earnings balance that gets transferred from the retained
earnings statement section of the worksheet to the balance sheet section is the beginning
retained earnings balance.
Compare and contrast stock dividends and stock splits.
The use of the allowance method is an attempt by accountants to match bad debts as an
expense with the revenue of the period in which a sale on credit takes place.
A T-account for Cash cannot contain any credits.
The excess of the investor’s acquisition cost over the current value of the investee’s
identifiable net assets is recorded as an intangible asset called ____________________.
Show the effect of each of the transactions below on total liabilities and the
debt-to-equity ratio by using one of the symbols in each box to complete the table. If
the numerator and denominator of a ratio both increase or both decrease by the same
amount, the effect of the event on the ratio is “O” or no effect.