Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment.
a.Add to inventory cost
b.Subtract from inventory cost
c.Not an inventory cost
Cost of insurance during transit to acquire inventory items
Match the following characteristics with the statements about each qualitative
characteristic’s importance.
a.Consistency
b.Materiality
c.Conservatism
d.Comparability
e.Reliability
f.Relevance
g.Understandability
This quality allows users to analyze two or more companies and look for similarities
and differences.
Which one of the following best defines an external event in terms of accounting?
a.A measured event that must be recognized.
b.An event recognized in a set of financial statements.
c.A happening of consequence to an entity.
d.An interaction between an entity and its environment.
Latahmer Corporation is reconciling its May bank account. For each item listed, state
how it would be handled on the bank reconciliation.
a.Addition to bank balance
b.Subtraction from bank balance
c.Addition to book balance
d.Subtraction from book balance
e.Would not appear on the May reconciliation
Check written in May that does not appear on the bank statement
The lower the inventory turnover ratio, the less time inventory resides in storage.
a.True
b.False
Iowa Industries Inc.
Selected data from the financial statements of Iowa Industries Inc. for the years ended
December 31, 2016 and 2015, are presented below. Also, certain assumptions are
presented. Use these data and assumptions to answer the questions that follow.
Assumptions
(1)Cash additions to property, plant, and equipment during 2016 were $550.0. An
additional
$86.2 of plant assets were acquired through debt in a noncash transaction. Depreciation
expense for 2016 was $343.3. Gains on disposals of property, plant and equipment
during 2016 were $27.7.
(2)The cash proceeds from the sale of investments in 2016 were $82.7. There was a
$17.8 gain on the sale of the investments.
(3)Proceeds from long-term debt issued during 2016 were $167.7.
(4)The issuance of common stock totaled $28.6 in 2016.
(5)During 2016, $389.4 in cash was used to purchase and retire common stock. A total
of
(6)Net income, dividends declared/paid, and the $365.4 amount in (5) were the only
items that affected reinvested income during 2016.
Review the data and assumptions for Iowa Industries Inc.
REQUIRED:
(A)What was the cost of the property, plant and equipment which was disposed of
during 2016?
(B)What was the amount of accumulated depreciation on the property, plant and
equipment disposed of during 2016?
(C)Assuming that the book value of the property, plant and equipment disposed of
during 2016 was $76.9, what were the cash proceeds from the disposal of property,
plant and equipment for 2016?
Maxim Company sells auto parts. The company employs a periodic inventory system.
Identify all the effects on the accounting equation.
a.Increase in assets
b.Decrease in assets
c.Increase in liabilities
d.Decrease in liabilities
e.Increase on owners’ equity
f.Decrease in owners’ equity
g.Increase in assets and increase in owners’ equity
h.Decrease in assets and decrease in owners’ equity
i.Increase in liabilities and decrease in owners’ equity
j.Decrease in liabilities and increase in owners’ equity
Gave a customer a cash refund.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method.
a.Inflow from operating activity
b.Outflow from operating activity
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
Repaid a long-term bank loan.
For the following items Questions 220-227, indicate whether each should be (a)
included or (b) excluded from the line item titled Cash and cash equivalents on the
balance sheet.
a.Included
b.Excluded
Checking account
Given below is a list of items that may be reported on a statement of cash flows.
Identify each as one of the following using the indirect method:
a.Operating
b.Investing
c.Financing
d.Not separately reported on a statement of cash flows
Loss of the sale of equipment
Carpet World Inc. reported the following information for 2015 and 2016.
If Carpet World uses the indirect method to prepare the operating activities section of
the statement of cash flows, what amount will be reported as net cash inflow from
operating activities for 2016?
a. $64,000
b. $66,000
c. $68,000
d. $70,000
The selection of a particular inventory valuation method has a significant effect on
certain key ratios.
a.True
b.False
Refer to the transactions for Krenshaw Rentals.
Based on the above transactions, how much is still owed to Krenshaw on October 31
from its customers? a. $ -0-
b.$ 250
c.$ 500
d.$ 750
For each item listed, select the section of the balance sheet in which the item would be
reported.
a.Current Assets
b.Property. Plant, and Equipment
c.Current Liabilities
d.Long-term Liabilities
e.Stockholders’ Equity
Equipment
Match the following choices to the listed situation.
a.a deferred expense
b.a deferred revenue
c.an accrued liability
d.an accrued asset
One year’s premium on truck insurance was paid in advance
The following list contains several items that appear on an income statement.
Select the choice that lists the items in the order they would appear on a multi-step
income statement
a. 6, 1, 7, 4, 2, 3, 5
b. 7, 6, 1, 4, 2, 3, 5
c. 6, 4, 7, 1, 2, 3, 5
d. 6, 7, 4, 1, 2, 3, 5
20 Which method should be used?
a.Straight-line
b.Units-of-production
c.Double-declining-balance
d.All methods create the same income in 2015
For each of the following items, indicate whether it would appear on a statement of
cash flows prepared using the Direct method (a) or the Indirect method (b).
a.Direct
b.Indirect
Increase in accounts receivable