Goodwill
Identify where each of the following accounts would be reported on the financial
statements. (Choices may be used more than once.)
a. Balance Sheet-Property, Plant, and Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
In order for accounting information to be useful in making informed decisions, it must
be
a. internal.
b. relevant.
c. reliable.
d. both relevant and reliable.
A bank reconciling item that must be subtracted from the unadjusted book balance
when preparing a bank reconciliation
Match the following terms with their correct definition.
a. Bank reconciliation d. Outstanding check
b. Deposit in transit e. Service charges
c. Non-sufficient funds check
The equity method of accounting for an investment is used when a company purchases
a. more than 20% of the debt securities of another company.
b. 100% of the debt securities of another company.
c. 15% of the equity securities of another company.
d. between 20-50% of the equity securities of another company.
A Day Spa accepted a check from a customer as payment for services. Unfortunately,
the customer’s check bounced. The journal entry required on the company’s books as a
result of this bank reconciliation item will
a. decrease total assets.
b. decrease stockholders’ equity.
c. Both a and b.
d. have no net impact on total assets.
With the Effective Interest Method of Amortization, the amortization of a bond
premium results in a(n)
a. increase in liabilities.
b. decrease of stockholders’ equity.
c. increase in interest expense.
d. decrease in interest expense.
Which of the following is not considered to be a Cash Equivalent?
a. corporate commercial paper due in 60 days after purchase
b. U.S. Treasury bills with an original maturity of six months
c. a money market account with a stock brokerage firm
d. a certificate of deposit with a term of 75 days when acquired
Refer to Dance Town Academy. Determine the amount of the company’s adjusted cash
balance.
Dance Town Academy The items listed below were identified while preparing a bank
reconciliation for the company’s checking account as of March 31, 2013.
a. $16,800
b. $20,200
c. $ 1,700
d. Cannot be determined.
Which of the following adjusting entries involves the cash account?
a. Deferred Revenues
b. Accrued Expenses
c. Deferred Liabilities
d. None of these.
A company reported the following amounts in its financial statements:
From 2014 to 2015, the company’s efficiency in managing inventory was
a. declining, because the inventory turnover ratio is decreasing.
b. improving, because the inventory turnover ratio is increasing.
c. declining, because the inventory turnover ratio is increasing.
d. improving, because the inventory turnover ratio is decreasing.
Form 10-K for a public company is required to include the following financial
statements for the most recent period of time including: Income Statements and
Statement of Cash FlowsBalance Sheets
a. 2 years 3 years
b. 2 years 2 years
c. 3 years 3 years
d. 3 years 2 years
Accounts receivable
Several items from the financial statements of Fireside Tires are listed. Use the
following choices to identify the type of account for each item listed. (Choices may be
used more than once.)
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Stockholders’ Equity
Measures how quickly merchandise is purchased and sold.
Match the terms with the descriptions provided.
a. Average days to sell inventory d. Inventory turnover ratio
b. Gross margin e. Freight-in
c. Gross profit ratio f. Freight-out
Taxes and other amounts deducted from gross pay Match the following terms with the
appropriate definition.
a. Accrued liabilities f. Payroll taxes
b. Contingent liabilities g. Sales taxes
c. Current liabilities h. Warranty
d. Interest rate i. Withholdings
e. Liabilities
Occasionally, companies engage in important investing and financing activities which
do not affect cash. If the amount of the transaction is significant, how should it be
disclosed when financial statements are prepared?
a. In a separate section in the cash flow statement with a corresponding zero balance.
b. In investing activities.
c. In a note to the financial statements or in a supplemental schedule.
d. In both investing and financing activities.
Which of the following will decrease the quick ratio?
a. collection of accounts receivable
b. sale of inventory on credit
c. sale of inventory for cash
d. purchase of a computer with cash
____________________ bonds may be retired by the issuing company before their
specified due date.
A flour mill orders grain sacks from a local farmer. When the company places an order
for grain on account, the corresponding journal entry includes a debit to Supplies and a
credit to ____________________.
Under the _______________ inventory system, the inventory account is updated after
each purchase or sale.
Refer to Maritime Marine Services. What was the amount of cash dividends paid during
2014?
Maritime Marine Services
Selected data from the financial statements for the years ended December 31, 2014 and
2013, are presented below:
The following additional information was obtained from the company’s records:
Refer to Atlantis Tropicals. Determine the effect on the company’s accounting equation
of the year-end adjustment of bad debts using the aging approach.
Atlantis Tropicals
The following information was taken from the company’s records at the end of 2013.
Refer to Mary Kay Cosmetics. What amount was paid to acquire equipment during
2014?
Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented
below:
Additional information: