A(n) ____________________ is the process used by an accountant to ensure
consistency between the balance shown on the bank statement for a particular account
and the balance shown on the accounting records.
Show the effect of each of the transactions below on total liabilities and the
debt-to-equity ratio by using one of the symbols in each box to complete the table. If
the numerator and denominator of a ratio both increase or both decrease by the same
amount, the effect of the event on the ratio is “O” or no effect.
Effect Symbol
Increase +
Decrease –
No effect N
Insufficient Data O
Effect on Effect on the Debt-
Total Liabilities to-Equity Ratio
Cash received from customers for accounts receivable balances due
Declaration and payment of cash dividends
Purchase of long-term assets for cash
Stated capital is the amount of capital that, under law, cannotbe returned to the
corporation’s owners except upon liquidation.
The general ledger is an example of a book of original entry.
The _______________ treats the present value as a liability that will be paid through a
series of equal payments.
Refer to Mary Kay Cosmetics. Prepare the investing activities section of the company’s
statement of cash flows for 2014.
The __________________ dividend preference is a preferred stock feature that
provides for the current stated dividends plus dividends in arrears before any dividends
are paid to the common stockholders.
To be classified as a cash equivalent, an item must be readily convertible to a known
amount of cash and have an original maturity to the investor of 3 months or more.
On the worksheet, the retained earnings balance that gets transferred from the retained
earnings statement section of the worksheet to the balance sheet section is the beginning
retained earnings balance.
What is the difference between comparability and consistency?
A full disclosure policy stipulates that all information that would make a difference to
financial statement users should be revealed.
What is conservatism and why is it important in accounting?
Under the ____________________ Act, management of publicly-traded corporations
has increased responsibility for a system of internal controls that ensures reliability of
financial statements.
A(n) ____________________ lease is recorded on the lessee’s balance sheet as an asset
and related liability.
____________________ is the name given to balance sheet accounts because their
balances are carried forward from the current accounting period to future accounting
periods.
According to the ____________________ principle, bad debt expense must be recorded
in the period in which the sale was made.