Refer to Rapid Sign Corporation. What is the dividend payout ratio for 2015?
Rapid Sign Corporation
Selected data from the financial statements are presented below:
a. 30.0%
b. 30.9%
c. 36.3%
d. 38.2%
The cost of salaries earned by employees, but not paid at the end of the accounting
period, 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
Granted a customer a credit on its balance due for goods that were returned.
Deeter Company, which sells auto parts, uses a perpetual inventory system. Identify the
effects on the accounting equation. (Choices may be used more than once.)
a. Increase in assets and liabilities
b. Decrease in assets and liabilities
c. Increase in assets and stockholders’ equity
d. Decrease in assets and stockholders’ equity
e. Increase in liabilities and decrease in stockholders’ equity
f. Decrease in liabilities and increase in stockholders’ equity
The Dividend account is known as which of the following?
a. temporary account
b. closing account
c. real account
d. Both b and c.
All of the following accounts have normal credit balances except
a. accounts payable.
b. unearned revenue.
c. common stock.
d. inventory.
Include cash sales to customers and cash dividends received.
Match these terms with their correct definition.
a. Cash flow adequacy ratio
b. Cash flows from financing activities
c. Cash flows from investing activities
d. Cash flow from operating activities
e. Direct method
f. Free cash flow
g. Income statement
h. Indirect method
i. Noncash investing & financing activities
j. Statement of cash flows
Dow Electronics established a petty cash fund in the amount of $250 to pay for small,
incidental expenditures incurred at the office. The fund is handled by a trustworthy
custodian. At the end of the month, the fund is replenished. On September 30, the petty
cash fund contained $13 in cash and the following recei
Record journal entries to: a) establish the petty cash fund of $250; b) replenish the fund
and recognize expenses at the end of September; and c) increase the fund balance to
$300.
Which one of the following adjustments increases net income for the period?
a. Recognition of the amount of supplies used.
b. Recognition revenue earned, but not recorded.
c. Recognition of wages earned, but not paid to employees.
d. Recognition of rent costs that had been paid to the landlord in advance.
Refer to Aardvark Resale. Assume that the company estimates bad debts at 2% of net
credit sales.
Aardvark Resale
This company sells merchandise only on credit. For the year ended December 31, 2013,
the following data are available:
The difference between a company’s net sales and its cost of goods sold.
Match the terms with the descriptions provided.
a. Average days to sell inventory d. Inventory turnover ratio
b. Gross margin e. Freight-in
c. Gross profit ratio f. Freight-out
Prices are rising; cost of goods sold is lower with this method.
Identify which inventory costing method achieves the effect listed in the following items.
(Choices may be used more than once.)
a. FIFO method c. Average cost method
b. LIFO method d. Specific identification method
Select the correct statement from the following:
a. Consolidation worksheet adjustments are not entered on the accounting records of
either Parent or Sub.
b. Consolidation worksheet adjustments are entered on the accounting records of the
Parent but not the Sub.
c. Consolidation worksheet adjustments are entered on the accounting records of the
Sub but not the Parent.
d. Consolidation worksheet adjustments are entered on the accounting records of both
the Parent and the Sub.
Refer to the Ace Computing Company. The entry to recognize the write-off of the
specific uncollected accounts will act to
Ace Computing Company
On January 1, 2013, the Accounts Receivable and the Allowance for Doubtful Accounts
carried balances of $40,000 and $1,500 respectively. During the year, the company
reported $80,000 of credit sales. There were $500 of receivables written off as
uncollected in 2013. Cash collections of receivables amounted to $78,200. The
company estimates that it will be unable to collect 4% of the year-end accounts
receivable balanc
a. increase total assets and stockholders’ equity.
b. increase total assets and decrease stockholders’ equity.
c. decrease total assets and stockholders’ equity.
d. not affect total assets or stockholders’ equity.
A company reported net income of $950,000. Cash from operations
a. will always be more than $950,000.
b. will always be less than $950,000.
c. will be equal to $950,000.
d. cannot be determined without more information.
Refer to Falling Leaves Lawn Care. What is the amount by which
double-declining-balance depreciation exceeds straight-line depreciation over the
5-year life of the equipment?
Falling Leaves Lawn Care This company purchased new excavating equipment at the
beginning of 2013. The equipment has a cost of $37,000, an estimated life of 5 years,
and an estimated residual value of $7,000. A full year’s depreciation expense is to be
recorded in 2013. The equipment was used 20,000 hours during 2012 and 24,000 hours
during 2013. The number of expected hours over 5 years is 100,000. a. $ -0-
b. $ 7,000
c. $37,000
d. $ 6,000
Which pair of accounts has the same set of procedures for debit and credit entries?
a. service revenue and rent expense
b. dividends and retained earnings
c. equipment and salary expense
d. accounts receivable and accounts payable
Which method of accounting for investments recognizes income when income is earned
by the investee?
a. fair value method
b. amortized cost method
c. trading method
d. equity method
All of the following are criteria that the SEC requires to be met before revenue is
considered realized (or realizable) and earned EXCEPT:
a. Delivery has occurred or services have been provided.
b. The seller’s price to the buyer is fixed and determinable.
c. Collection is possible.
d. Persuasive evidence of an arrangement exists.
Which of the following activities is most likely to have a cash flow effect?
a. investing in money market funds
b. declaring cash dividends
c. reissuing treasury stock
d. issuing stock to acquire a patent
A(n) ____________________ lease is recorded on the lessee’s balance sheet as an asset
and related liability.
The inventory of a(n) ____________________ consists of three categories: raw
materials, work-in-process, and finished goods.
The accounting equation must balance before and after every accounting transaction.
“You Decide” Essay
You own a thriving book store in a major college town. You have been talking with
your CPA about borrowing $5,000,000 to finance a larger and more modern building.
One option is to issue 20-year bonds with a fixed rate of 8% while another option is to
issue 20-year bonds with a variable rate of one-year LIBOR (London Interbank Offered
Rate) plus 5%. For the first year, this will result in a 6.2% rate, but the rate will be
adjusted annually. The current market interest rate is 8%. What things should you
consider in making the decision about which borrowing option is better for your
company?
Refer to Korn Business Solutions. Does the note disclosure show evidence of the two
types of leases?
Korn Business Solutions
The following footnote accompanied the company’s 2013 financial statements: The
Corporation leases office, warehouse and showroom space, retail stores, and office
equipment under operating leases, which expire no later than 2025. The Corporation
normalizes fixed escalations in rental expense under its operating leases. Minimum
annual rentals under non-cancelable operating leases, excluding operating cost
escalations and contingent rental amounts based upon retail sales, are payable as
follows: Fiscal year ending March 31,
Rent expense was $12,551,000; $8,911,000; and $5,768,000 for the years ended March
31, 2013, 2012, and 2011, respectively.
The Statement of Cash Flows, like the Income Statement, reports only operating
activities and other activities of a company.
External users and outside decision makers use ____________________ accounting.