The relationship between dividends and the market price of a company’s stock. Select
the ratio that each definition most properly satisfies.
a. Dividend yield ratio
b. Operating cash flow ratio
c. Debt-to-total assets ratio
d. Return on common equity ratio
e. Times interest earned ratio
f. Asset turnover ratio
g. Debt-to-equity ratio
h. Dividend payout ratio
Under accrual accounting when is revenue recognized?
a. When cash is received, and expenses when cash is paid
b. When cash is received, and expenses when the costs are incurred.
c. When earned, and expenses when incurred.
d. When earned, and expenses when cash is paid.
Issued shares represent the
a. number of previously issued shares that have been repurchased by the corporation.
b. number of shares that the corporation has sold.
c. number of shares that are currently held by stockholders.
d. maximum number of shares that can be sold by the corporation.
On August 1, 2013, Genuine Services accepted a $6,000 advance payment from a
customer for services to be provided in the future. The contract requires the company to
review operations at each of the customer’s six locations over the next 6 months. What
is the impact on the accounting equation of recording this transaction on August 1st?
a. assets and liabilities increase
b. assets and liabilities decrease
c. liabilities decrease and stockholders’ equity increases
d. liabilities increase and stockholders’ equity decreases
Which of the following transactions is not a significant noncash investing and financing
activity?
a. Land is purchased by issuing a 20-year mortgage note payable.
b. Bonds are issued to purchase a building.
c. Cash equivalents are purchased.
d. Buildings are acquired by issuing common stock.
You are a potential creditor and are concerned that a particular company you are ready
to give a loan to might have too much debt. Which financial statement would provide
you information needed in order to evaluate your concern?
a. Balance Sheet
b. Income Statement
c. Statement of Retained Earnings
d. Statement of Public Accounting
Two years insurance premium was paid in advance
Match the following types of adjusting entries to the listed situation. (Choices may be
used more than once.)
a. a deferred (prepaid) expense
b. a deferred (unearned) revenue
c. an accrued expense
d. an accrued revenue
Refer to A-One Construction. If the aging approach is used to estimate bad debts, what
amount should be recorded as bad debt expense for 2013?
A-One Construction
The following data are from the company’s records for 2013:
a. $ 2,100
b. $27,100
c. $29,200
d. $31,300
A company issued additional shares of stock. Which of the following is true with regard
to the effect of the stock issuance transaction on the company’s ratio computations?
a. Earnings per share decreased.
b. The debt-to-equity ratio increased.
c. The asset turnover ratio decreased.
d. Return on equity remained unchanged.
Recorded cash sales for the day.
Deeter Company, which sells auto parts, uses a perpetual inventory system. Identify the
effects on the accounting equation. (Choices may be used more than once.)
a. Increase in assets and liabilities
b. Decrease in assets and liabilities
c. Increase in assets and stockholders’ equity
d. Decrease in assets and stockholders’ equity
e. Increase in liabilities and decrease in stockholders’ equity
f. Decrease in liabilities and increase in stockholders’ equity
A _________________ is the right to produce or sell a published work.
The issuance of common stock in exchange for a building would appear both as a cash
inflow in the financing activities section of the cash flow statement and also as a cash
outflow in the investing activities section.
A contingent liability must be recognized in the accounting records if it
____________________ and a reasonable estimate of the loss can be made.
Airport Support Company reported its accounts receivable turnover ratio at 10 times. Its
credit terms are 2/10, n/20. What does this ratio tell you about this company?
What importance is placed on a company’s stock price in the ratio analysis of a
company? Explain.