Which of the following statements about the par value of common stock is not correct?
A) The par value is not the same as the market value of the stock.
B) The par value is a nominal amount identified in the corporate charter.
C) The par value is the amount credited to the common stock account when the stock is
issued.
D) The par value is the amount credited to common stock when treasury stock is
reissued.
A company reported sales revenue, all of which arose from credit sales, of $40,000 on
the income statement. Balance sheet information includes the following:
How much cash was collected from customers during the year?
A) $11,450.
B) $51,450.
C) $43,700.
D) $38,200.
Expenses include all of the following except:
A) using supplies.
B) making a payment on account.
C) paying for electricity used during the current period.
D) paying wages for production workers for work performed during the current period.
Which of the following would be in the raw materials inventory of a company making
cheese?
A) Milk and cream used to make the cheese
B) Cheese that has been made but is curing before being ready to sell
C) Cured cheese that is waiting to be shipped to retailers
D) Partially processed cheese
If the market rate of interest is 6%, a $10,000, 10-year bond with a stated annual
interest rate of 8% would be issued at an amount:
A) less than face value.
B) equal to the face value.
C) greater than face value.
D) equal to the face value minus a discount.
Which of the following journal entries would decrease stockholders’ equity?
A) Debit Prepaid Insurance and credit Cash
B) Debit Unearned Revenue and credit Service Revenue
C) Debit Supplies and credit Accounts Payable
D) Debit Insurance Expense and credit Cash
What is the annual rate of interest being charged on a 9-month note receivable of
$50,000 if the total interest is $3,000?
A) 6%
B) 8%
C) 12%
D) 10%
Which of the following items on a bank reconciliation would require a journal entry?
A) An error by the bank
B) Outstanding checks
C) A bank service charge
D) A deposit in transit
Use the information above to answer the following question. What is the amount of the
total assets to be reported on the balance sheet?
A) $150,000.
B) $160,000.
C) $90,000.
D) $80,000.
Use the information above to answer the following question. What is the inventory
turnover ratio?
A) 12.5 times
B) 13.4 times
C) 14.7 times
D) 2.2 times
A system used to reimburse employees for expenditures they have made on behalf of
the organization is referred to as a:
A) electronic funds transfer.
B) voucher system.
C) petty cash system.
D) internal control system.
On February 16, a company declares a 34¢ dividend to be paid on April 5. There are
1,900,000 shares of common stock issued and outstanding. The entry recorded by the
company on February 16 includes a debit to:
A) Dividends Payable and a credit to Cash for $680,000.
B) Dividends and a credit to Dividends Payable for $646,000.
C) Dividends Payable and a credit to Cash for $646,000.
D) Dividends and a credit to Dividends Payable for $680,000.
The management team of Wickersham Brothers Inc. is preparing its annual financial
statements. The statements are complete except for the statement of cash flows. The
completed comparative balance sheets and income statements are summarized.
Other information from the company’s records includes the following:
Bought equipment for cash, $50,000.
Paid $10,000 on long-term note payable.
Issued new shares of common stock for $20,000 cash.
Cash dividends of $16,000 were declared and paid to stockholders.
Accounts Payable arose from inventory purchases on credit.
Income Tax Expense ($4,000) and Interest Expense ($3,000) were paid in full at the end
of both years and are included in Other Expenses.
Required:
Part a. Prepare the statement of cash flows using the indirect method. Include any
supplemental disclosures.
Part b. Interpret the statement of cash flows by explaining the main sources and uses of
cash during the year.
In a period of falling prices, the inventory costing method that assigns a value to
inventory that approximates current cost is:
A) FIFO
B) LIFO.
C) Specific identification.
D) Weighted average