A debtor of Adams Company owes $500,000 but does not have enough cash to repay
the debt. Following lengthy negotiations, the parties agreed that the debtor will issue
200,000 shares of common stock to settle the debt. This transaction will be reported in
the investing activities section of the statement of cash flows for Adams Company.
A current ratio that has increased from the prior period indicates an improvement in the
company’s ability to pay its current debts.
When a plant asset is sold for less than its book value, a gain is recorded.
Employer FICA is paid by the employer and recorded as a payroll tax expense.
The income statement shows whether or not a business can generate enough cash to pay
its liabilities.
The rate of return on total assets is calculated by first subtracting interest expense from
net income and then dividing the result by average total assets.
Exchanges of plant assets that have commercial substance require any gain or loss on
the transaction to be recognized.
Which of the following accounts is credited by the seller when tax is collected on retail
sales?
A) Accounts Payable
B) Payroll Tax
C) Sales Tax Payable
D) Unearned Revenue
The following is summary of information presented on the financial statements of a
company on December 31, 2017.
With respect to current liabilities, a horizontal analysis reveals ________. (Round your
answer to two decimal places.)
A) that current liabilities are 37.93% of total equity
B) a 45.28% increase in current liabilities
C) a current ratio of 0.88
D) a 31.17% increase in current liabilities
Which of the following is an accounting information system activity that can be
classified as a payroll business transaction?
A) approval of new employees
B) receipt of customer payment
C) processing of vendor invoices
D) payment for goods or services
On June 1, 2017, Zander Services issued $39,000 of 15% bonds that mature in five
years for $64,000. The bonds pay semiannual interest payments on June 30 and
December 31 of each year. On December 31, 2017, what is the total amount paid to
bondholders?
A) $2,925
B) $5,850
C) $4,800
D) $9,600
Which of the following journal entries would be recorded if a business purchased $800
of office supplies on account?
A)
B)
C)
D)
Which of the following is not included in the purchases journal?
A) purchases of merchandise inventory for cash
B) purchase of merchandise inventory on account
C) purchase of office supplies on credit
D) purchase of equipment on account
Pastel Paints Company uses the direct method for preparing its statement of cash flow.
Pastel reports the following information regarding 2017:From the income statement:
Sales Revenues, $267,000
Cost of Goods Sold, $210,000
Operating Expenses, $37,000From the balance sheet:
What amount will be shown for collections from customers?
A) $263,200
B) $270,800
C) $267,000
D) $32,800
Aventis Company distributes cash dividends. How does this transaction affect the
accounting equation?
A) The assets, liabilities, and equity remain the same.
B) The assets decrease and equity decreases.
C) The assets increase and liabilities decrease.
D) The assets decrease and equity increases.
The two basic sources of stockholders’ equity are ________.
A) common stock and bonds
B) common stock and preferred stock
C) paid-in capital and retained earnings
D) no-par and stated value stock
Which of the following amounts would be reported as Merchandise Inventory on the
balance sheet of a company if the cost of an item is $110 and the current replacement
cost is $90?
A) $200
B) The average of $90 and $110
C) $110
D) $90
Which of the following inventory costing methods yields the lowest net income during
a period of rising inventory costs?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
A corporation has 14,000 shares of 13%, $104 par noncumulative preferred stock
outstanding and 22,000 shares of no-par common stock outstanding. At the end of the
current year, the corporation declares a dividend of $220,000. What is the dividend per
share for preferred stock and for common stock? (Round your answer to the nearest
cent.)
A) The dividend per share is $13.52 to preferred stock and $1.40 to common stock.
B) The dividend per share is $8.26 to preferred stock and $1.40 to common stock.
C) The dividend per share is $13.52 to preferred stock and $13.52 to common stock.
D) The dividend per share is $13.52 to preferred stock and $27.50 to common stock.
What are the two basic components of a computerized accounting information system?
A) sales journal and purchase journal
B) hardware and software
C) cash payments journal and cash receipts journal
D) network and cloud computing