Refer to Happy Heights Country Club. On which date did the country club collect golf
lessons revenue in advance?
Happy Heights Country Club
Selected accounts at July 31 are provided below:
a. July 2nd
b. July 3rd
c. July 5th
d. July 7th
The preferred stock feature which provides the right to dividend in arrears.
A stated amount of capital that cannot be returned to the stockholders unless the
corporation is liquidated. Match the terms to the definitions.
This principle states that users should be able to make meaningful comparisons of
different companies.
Match the following principles with their correct definition.
Match the following principles with their correct definition.
a. Comparability g. Historical cost
b. Conservatism h. Matching
c. Double-entry accounting i. Monetary unit
d. Economic entity j. Revenue recognition
e. Going concern k. Time period
f. Full disclosure
Which one of the following is an internal user of financial information?
a. company management
b. governments
c. creditors
d. investors
On December 31, 2013, a company signed a one-year contract to provide services to a
particular customer for $12,000. The customer will pay for the services during January
2014. Using the accrual basis of accounting, when should the company recognize
revenue?
a. In January 2014, when the cash is received.
b. On December 31, 2014, after all services have been provided.
c. Equally throughout 2014, as the revenue is earned.
d. On December 31, 2013, when the contract is signed.
Which of the following accounts is decreased by a debit entry?
a. unearned revenue
b. prepaid insurance
c. cash
d. insurance expense
The following stockholders’ equity appeared on a balance sheet at December 31, 2014:
A) Has the company been profitable since its inception? How do you know?
B) What is the meaning of the balance in a retained earnings account? What causes this
balance to change from period to period?
C) Can you tell from the balance sheet whether a company paid a dividend during the
current period?
D) How many shares of common stock are issued and outstanding and how can these
amounts be determined?
Amounts are earned, but not yet received from customers
For each transaction select the type of adjustment that would be required. (Choices
may be used more than once.)
a. Deferred (prepaid) expense
b. Deferred (unearned) revenue
c. Accrued expense
d. Accrued revenue
Refer to Fabian Woodworks. If the company uses the double-declining-balance
depreciation method, what amount is the depreciation expense for 2013?
Fabian Woodworks This company purchased a truck at a cost of $12,000. The truck
has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000
hours of operation. The truck was purchased on January 1, 2012, and was used 27,000
hours in 2012 and 26,000 hours in 2013. a. $4,800
b. $2,880
c. $1,728
d. $2,000
Using different depreciation methods for book purposes versus tax purposes for the
same asset is
a. not allowed since the amount can only be calculated one way or the other, not both
b. the direct result of the differing goals of financial and tax accounting.
c. contrary to GAAP.
d. against the Internal Revenue Code, and as such, against the law.
Which of the following statements is false?
a. The inventory account is updated after every sale and after every merchandise
purchase under the perpetual inventory system.
b. The inventory account is updated only at the end of the accounting period under the
periodic inventory system.
c. A cost of goods sold account is updated after each sale of merchandise under the
periodic inventory system.
d. A purchases account is used only under the periodic inventory system.
Refer to Labor Finders, Inc. The company’s 2015 return on common equity is reported
as
Labor Finders, Inc.
Selected data from the company’s financial statements are presented below:
a. 7.58%.
b. 7.90%.
c. 8.43%.
d. 8.78%.
A particular balance sheet includes the following information within the stockholders’
equity section:
Assume that common stock is the only class of stock that has been issued and that there
have been two issues of stock since the corporation began business. What is the average
issue price per share of stock?
a. $ 5.00
b. $ 6.80
c. $29.00
d. $34.00
During 2014, the operations of a shipping company provided net cash flows of
$600,000. The company made capital expenditures of $270,000 and paid dividends of
$130,000.
Which of the following are Noncurrent assets?
a. machinery and equipment
b. accounts receivable
c. inventories
d. unearned revenues
An accounting department employee records cash receipts from customers and prepares
the bank deposit slips. 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
Refer to King Cotton Company. What is the percent increase/decrease of long-term
liabilities from 2012 to 2013? Which liability appears to have caused the greatest
change?
King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is
provided below:
____________________ is the name given to revenue, expense, and dividend accounts
because they are closed at the end of the period.
The debt-to-equity ratio is defined as total liabilities divided by total stockholders’
equity.
Under the periodic inventory system, Net purchases = Purchases + ______________ –
Purchase Discounts – Purchase Returns and Allowances.
When using vertical analysis of the income statement, the base upon which all items are
compared is net income.