Refer to Fantasy Cruise Lines. What is the depreciation expense for the year ended
December 31, 2013?
Fantasy Cruise Lines On January 1, 2013, the company purchased a ship for
$1,000,000. It has a 10-year useful life and a residual value of $100,000. The company
uses the double-declining-balance method. a. $ -0-
b. $180,000
c. $160,000
d. $200,000
A regional chain of medical clinics had the following information pertaining to its
stockholders’ equity accounts at December 1, 2015:
No dividends were paid during 2015. On December 15, 2015, the clinic repurchased
3,000 shares of its common stock for $80 per share. On December 31, the bookkeeper
closed the books, reporting net income of $2,500,000. A) What amount will be reported
on the balance sheet for Treasury Stock at December 31, 2015.
B) How many shares of stock are outstanding at December 31, 2015?
C) Prepare the stockholders’ equity section of the balance sheet at December 31, 2015.
An insurance company received advance payments from clients during 2013 of
$12,000. At December 31, 2013, $10,000 of the advance payments still had not been
earned. After the adjustments are recorded and posted at December 31, 2013, what will
the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts?
Unearned Insurance RevenueInsurance Revenue
a. $10,000 $10,000
b. $0 $12,000
c. $2,000 $10,000
d. $10,000 $2,000
During January, a travel company sold forty cruise vacation packages for $147,960.
Customers are required to pay in advance, but the package price is refundable until the
date the cruise departs. The cruises begin in February.
The party that receives payment due from a note
Select the term that matches each of the following descriptions.
a. Interest
b. Maturity Value
c. Principal
d. Lender
e. Factoring
f. Fraction of year
g. Maturity date
h. Implicit
i. Maker
Common stock
Several items from the financial statements of Fireside Tires are listed. Use the
following choices to identify the type of account for each item listed. (Choices may be
used more than once.)
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Stockholders’ Equity
Which of the following statements is true with regard to equity capital?
a. The number of shares actually in the hands of stockholders are called outstanding
shares.
b. It is unusual for corporations to have more than one class of stock outstanding at any
point in time.
c. Preferred stock represents the shares of stock that have been permanently retired.
d. Outstanding shares represent the maximum number of shares that can be issued by a
corporation.
A fund used to pay for small amounts to avoid the time and expense of paying by check
Match the following terms with their correct definition.
a. Cash equivalents c. Operating cycle
b. Cash over and short d. Petty cash
During 2013, the accounts receivable balance increased.
a. This indicates that credit sales exceeded collections on account during the period.
b. This increase is added to net income in the operating activities section of a statement
of cash flows prepared under the indirect method.
c. This increase is added to credit sales to determine the collections on account during
the period.
d. This indicates that there were no cash sales during the period.
Paying utilities
Several transactions are listed. Use the choices to identify the effect on the accounting
equation for each transaction listed. (Choices may be used more than once.)
a. Assets and liabilities increase
b. Assets and contributed capital increase
c. Assets and retained earnings increase
d. Two asset accounts are impacted, but there is no net effect on total assets
e. Assets and liabilities decrease
f. Assets and retained earnings decrease
g. Liabilities increase and retained earnings decrease
h. Liabilities decrease and retained earnings increase
What does the phrase, “Revenue is recognized when earned” mean?
a. Revenue is recorded in the accounting records when the goods are received from a
supplier, and reported on the income statement when sold to the customer.
b. Revenue is recorded in the accounting records and reported on the income statement
when the cash is received from the customer.
c. Revenue is recorded in the accounting records when the goods are sold to a customer,
and reported on the income statement when the cash payment is received from the
customer.
d. Revenue is recorded in the accounting records and reported on the income statement
when goods are sold and delivered to a customer.
Carithers Cleaning Service received advance payments from customers during 2013 of
$24,000. At December 31, 2013, $5,000 of the advance payments still had not been
earned. After the adjustments are recorded and posted at December 31, 2013, the
balances in the Unearned Service Revenue and Service Revenue accounts will be:
Unearned Service RevenueService Revenue
a. $0 $24,000
b. $5,000 $19,000
c. $5,000 $24,000
d. $24,000 $5,000
Given below are the accounts from the ledger AFTER adjustments have been posted at
December 31, 2014.
Obligations that require the firm to pay cash or another current asset within one year
Match the following terms with the appropriate definition.
a. Accrued liabilities f. Payroll taxes
b. Contingent liabilities g. Sales taxes
c. Current liabilities h. Warranty
d. Interest rate i. Withholdings
e. Liabilities
States that revenues and expenses are recorded in the time period received or paid
Match each statement to the item listed below
a. Accrual basis accounting f. Depreciation
b. Adjusted trial balance g. Matching principle
c. Adjusting entries h. Revenue recognition principle
d. Cash basis accounting i. Time period assumption
e. Contra accounts j. Worksheet
Fresh n’ Fit Cuisine purchased land and a building for $320,000 so that it could open a
new restaurant. The building’s fair market value at the time of purchase was $220,000.
In addition, the following costs were incurred prior to the restaurant’s opening:
How much will be recorded as land improvements?
a. $25,000
b. $6,000
c. $106,000
d. $125,000
Interest may only be charged to a borrower by a bank.
Refer to California Condos. On January 1, there was a $0 balance in the salaries
payable account. How much cash did the company pay for salaries during the year?
California Condos California Condos uses the accrual basis of accounting, and had the
following account balances on its financial statements at December 31, 2013.
On March 31, 2013, Legends Entertainment, Inc. had common stock of $230,000,
paid-in capital in excess of par of $540,000, and retained earnings of $65,000. During
the following year, 500 shares of stock were sold for $60,000, of which $40,000
represented paid-in capital in excess of par. The company reported net income of
$140,000 for the year ended March 31, 2014. Also during the year, $80,000 of
dividends were declared and paid. Prepare the Statement of Stockholders’ Equity at
March 31, 2014.
Thomkin Enterprises purchased several investment securities on November 1, 2013.
Various transactions and market activities occurred regarding these investments
between acquisition and December 31st (the company’s year-end), as shown below:
Additional information:
Prepare journal entries to record the purchase of the securities, the receipt of dividends
and interest, the sale of the TRL stock, and the end-of-year mark-to-market adjustments.
For the end-of-year entries, indicate how the resulting gains or losses should be
recognized in Thomkin’s year-end financial statements.
The amount of working capital is more meaningful to users than the current ratio
because working capital provides information on the composition of the current
accounts.
If the investor holds 50% or more of the common stock of the investee, then the
investor is referred to as the ____________________ and the investee is referred to as
the ____________________.
A decrease in retained earnings represents dividends that were ____________________
during the period, not necessarily those that were paid.