1) All of the following statements are true about a 3-for-1 split, except:
A.Total contributed capital increases
B.The market price will probably decrease
C.Par value per share is reduced to one-third of what it was before the split
D.A stockholder with twenty shares before the split owns sixty shares after the split
2) Some of the steps in the accounting cycle are listed below. Select the choice that
places these steps in the correct order.
1> Close the accounts.
2> Post transactions to accounts in the ledger.
3> Journalize daily transactions.
4> Record and post adjustments.
5> Prepare financial statements.
A.2, 3, 4, 5, 1
B.3, 2, 4, 5, 1
C.3, 2, 4, 1, 5
D.3, 2, 5, 4, 1
3) Hopper, Inc.
Use the information from Hopper Inc. to answer the following question(s).
Read the information about Hopper. Inc. Which statement best represents Hoppers
performance?
A.Hoppers profit margin ratio decreased
B.Hopper has become more profitable
C.Hoppers increase in operating revenues increased the companys net income
D.Hoppers operating expenses as a percentage of operating revenues remained the same
4) Double-entry accounting is best characterized as:
A.The number of debit entries posted to the ledger equals the number of credit entries
B.The number of ledger accounts with debit balances is equal to the number with credit
balances
C.Every transaction affects both an asset account and either a liability account or a
stockholders equity account
D.The total dollar amount of debit entries posted to the ledger is equal to the dollar
amount of the credit entries
5) Canyon Corporation
The accountant for the Canyon Corporation prepared the following list from the
companys accounting records for the year ended December 31, 2014:
Read the information for Canyon Corporation. Determine the following amounts for
Canyon Corporation:
A) Stockholders equity at the end of 2014.
B) Retained earnings at the end of 2014.
C) Name two events that might cause stockholders equity to decrease.
6) What should a company do to improve its accounts receivable turnover rate?
A.Lower its selling prices
B.Increase its sales force
C.Give customers credit terms of 2/10, n/30 rather than 1/10, n/30
D.Reduce the number of employees working in the credit department
7) Actuarial, Inc. recorded $97,000 in salary expense for January, 2013. Its beginning
balance in salaries payable was $3,000 and its ending balance was $4,000. How much
was paid in cash for salaries during January, 2013?
A.$96,000
B.$97,000
C.$98,000
D.$99,000
8) Which combination of ratios will best analyze Stetsons income statement
performance?
A.Earnings per share, gross profit, and profit margin ratio
B.Gross profit ratio, return on common stockholders’ equity ratio, debt-to-equity ratio
C.Debt-to-equity ratio, gross profit ratio, and profit margin ratio
D.Current ratio, gross profit ratio, and return on common stockholders’ equity ratio
9) Using the straight-line depreciation method will cause a company to incur ____ tax
expense in the early years of an assets life than they would experience using an
accelerated method of depreciation.
A.more
B.less
C.equal
D.This cannot be determined from the information given.
10) Leary Corporations end-of-year balance sheet consisted of the following amounts:
What is Learys total liabilities balance at the end of the current year?
A.$3,000
B.$110,000
C.$63,000
D.$173,000
11) Guinther & Sons, Inc.
Guinther & Sons, Inc. a retailer of mens clothing, earned a net profit of $77,000 for
2014. The balance sheet for Guinther & Sons includes the following items:
Read the information for Guinther & Sons, Inc. Calculate the current ratio for Guinther
& Sons.
A.2.58 to 1
B.2.75 to 1
C.3.00 to 1
D.2.00 to 1
12) Comparative income statements for Gregson Inc. are as follows:
Required
The president and management believe that the company performed better in 2014 than
it did in 2013. Write the presidents letter to be included in the 2014 annual report.
Explain why the company is financially sound and why shareholders should not be
alarmed by the $120,000 loss in a year when gross profit increased significantly.
13) On January 2, 2014, Viva Stores decided to set up a petty cash fund. The treasurer
established the fund by writing and cashing a $250 check and placing the coin and
currency in a locked petty cash drawer. Conrad Boswell was designated as the
custodian for the fund. During January, the following receipts were given to Boswell in
exchange for cash from the fund:
Express Delivery Service $74.50
Vintage Print Shoppe (employee party) 55.75
U.S. Post Office (stamps) 44.00
Office Supplies Pronto (pencils, paper) 23.00
A count of the cash in the drawer on January 31 revealed a balance of $53.25. The
treasurer wrote and cashed a check on the same day to restore the fund to its original
balance of $250.
REQUIRED:
Identify and analyze the effects of the transactions required for January. Assume that all
stamps and office supplies were used during the month.
14) The following items are available from the records of Ramos Corporation at the end
of its fiscal year, June 30, 2014:
Required
(1) Prepare a balance sheet.
(2) For each non-balance-sheet item, indicate where it should appear.
15) On the statement of cash flows, the ______________________________ section
involves the issuance and repayment of long term liabilities and stock transactions.
16) Digital Marvels
Selected data from the financial statements for Digital Marvels is presented below.
Refer to the financial statement information for Digital Marvels.
What portion of every dollar is available to cover operating costs and to contribute to
profits for 2014?
17) What financial statement items are investors and creditors most interested in and
why?
18) A friend of yours says: Its easy to look at the statement of cash flows and see that a
company has been profitable, because positive cash flows are equal to profitability. Is
your friend right? Explain.
19) List the four financial statements. Explain the connection between these four
statements.
1> Balance sheet
2> Income statement
3> Statement of retained earnings
4> Statement of cash flows
20) If the market rate of interest is greater then the face rate, then the bonds are issued
at a(n) ________________________.