Which of the following is not included in Cash and Cash Equivalents on a company’s
balance sheet?
a. a savings account at the bank
b. a checking account at the bank
c. a bank certificate of deposit for one year
d. petty cash
A schedule that facilitates preparation of the financial statements
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
The cash purchase was made on March 8 with terms of 2/10, net 30. A construction
company purchased a piece of equipment with a price of $100,000 on March 1, 2013.
The amounts are related to the equipment purchase. Match the items and explain how
each item should be accounted for. (Choices may be used more than once.)
Which of the following statements is true?
a. An entry in a general ledger account can be traced to the trial balance by referring to
the page listed in the posting reference column of that ledger account.
b. The posting of an amount recorded in the general ledger can be verified by referring
to the account number listed in the posting reference column on that line in the general
journal.
c. Business transactions are recorded first in the general ledger, then that information is
transferred to the general journal.
d. No explanation is needed for each entry in the general ledger.
Accumulated net income of the corporation that has not been distributed as dividends.
Match the terms to the definitions.
An investor expects to receive 10 payments of $5,000 each made at the end of each
period. If interest is compounded at 5% annually, what is the future value of these
payments?
a. $3,069.55
b. $7,387.30
c. $38,608.65
d. $62,889.45
Turnover ratios differ from the current and quick ratios in that they
a. are based on net sales instead of cash.
b. are based on a point in time rather than a period of time.
c. measure the efficiency with which a company uses its assets.
d. measure the profitability of a company instead of its liquidity.
A company needs to record 6 months of accrued interest on a 4-year, 12%, $12,000
promissory note payable. How much interest expense should be accrued?
a. $2,160
b. $1,440
c. $1,080
d. $720
A list of all asset, liability, stockholders’ equity, revenue, expense, and dividend
accounts which are used by the company is called a(n)
a. General Ledger.
b. General Journal.
c. Chart of Accounts.
d. Trial Balance.
Dovetail Company is preparing its bank reconciliation for July 31, 20 Its bank
statement and general ledger T-account for its checking account are presented below:
A) Prepare a bank reconciliation in proper form for July. Note that the beginning
balance was correctly reconciled at the end of the previous month, and that all
outstanding checks (numbered 744, 745, and 746) and deposits in transit from last
month cleared the bank this month.
B) How much cash would the company report on its July 31 balance sheet?
C) What adjusting entries will the company record as a result of this bank reconciliation
process? Assume that the bank correctly reported all transactions, and that any errors
noted in the reconciliation process involve transactions on credit.
Money due from customers purchasing inventory in the ordinary course of business
Match each statement to the item listed below
a. Bad debt expense d. Percentage of credit sales
b. Net sales revenue e. Profitability ratios
c. Nontrade receivables f. Trade receivables
Refer to Accelerated Solutions. What is the balance of Accounts Receivable at
December 31, 2013?
Accelerated Solutions
The following data are from the company’s records for 2013:
a. $700,000
b. $340,000
c. $690,000
d. $710,000
Income statement accounts are also known as which of the following?
a. temporary accounts
b. real accounts
c. permanent accounts
d. asset accounts
A company is referred to as a parent if it owns
a. 33% of the debt securities of another company.
b. 100% of the debt securities of another company.
c. 15% of the stock of another company.
d. more than 50% of the stock of another company.
Using debt to help the company earn a higher return.
For each of the following sentences, select the phrase or group of words that best
completes the statement.
a. Debt-to-equity ratio
b. Dividend payout ratio
c. Dividend yield ratio
d. Earnings per share
e. Leverage
f. Return on assets ratio
g. Return on common equity ratio
h. Stock repurchase payout
A manufacturing company reported total inventory of $75,000. Assuming the following
account balances, what is this company’s work in process inventory?
a. $10,000
b. $20,000
c. $60,000
d. $65,000
Checks are signed by the clerk in the accounting department. The following set of items
describes activities completed by a company in purchasing and paying for merchandise
and in collecting cash for merchandise sales. For each activity, identify whether or not
the activity adheres to or violates sound internal control procedures. (Choices may be
used more than once.)
a. Adheres to sound internal controls
b. Violates sound internal controls
c. Neither strengthens nor violates internal control
If a corporation desires to reacquire some of its issued shares of stock, how would it
accomplish this, i.e., how would the corporation determine which of its shares to buy
back or from which stockholders?
A company has a note payable that is due on December 31, 2013. In its December 31,
2012, balance sheet, this note payable should be classified as a(n)
____________________.
Under the indirect method, instead of reporting cash receipts and payments, net income
is reconciled with net cash from operating activities.
Refer to Atlantis Tropicals. If the aging approach is used to estimate bad debts, how
much bad debts expense will the company report for 2013?
Atlantis Tropicals
The following information was taken from the company’s records at the end of 2013.
If the December 31, 2014, balance of accounts receivable is lower than the January 1,
2014, balance, then the amount of cash collections will be more than the sales on
account for the year.
The payment of a dividend increases both cash and stockholders’ equity of the
distributing entity.