It is not possible for Cash to decrease from Yr. 1 to Yr. 2 if income rises over this
period.
a.True
b.False
An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30
means that the company should pay
a.$6,800 before January 16.
b.either $7,920 before January 16 or $8,000 before the end of the month.
c.$8,000 between January 2 and January 16.
d.$7,920 before the end of January.
Which of the following is the best description of the purpose of financial reporting?
a.To allow users to access to the daily detailed records of a business.
b.To help the users reach their decisions in an informed manner.
c.To provide users with an assessment of how long the company will continue as a
going concern.
d.To allow users access to a list of all the individuals who owe the company money.
Match the inventory-related accounts to costs that may be included in inventories for
retailers and manufacturers.
a.Merchandise Inventory
b.Raw Materials
c.Work in Process
d.Finished Goods
e.Cost of Goods Sold
Costs of direct materials, overhead, and direct labor used in unfinished goods.
Refer to the data for Music Corporation.
What is the balance of Accounts Receivable at December 31, 2015?
a. $336,000
b. $448,400
c. $458,000
d. $466,000
The total amount of simple interest calculated annually on a $6,000 note payable for 3
years at 11% is
a. $7,980
b. $1,980
c. $2,205
d. $6,600
Transportation-in is
a.an operating expense
b.a stockholders’ equity account
c.added to transportation-out as part of the calculation of cost of goods sold
d.part of cost of goods purchased
Maxim Company sells auto parts. The company employs a periodic inventory system.
Identify all the effects on the accounting equation.
a.Increase in assets
b.Decrease in assets
c.Increase in liabilities
d.Decrease in liabilities
e.Increase on owners’ equity
f.Decrease in owners’ equity
g.Increase in assets and increase in owners’ equity
h.Decrease in assets and decrease in owners’ equity
i.Increase in liabilities and decrease in owners’ equity
j.Decrease in liabilities and increase in owners’ equity
Sold merchandise on credit to customers.
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
The present value of $7,000 to be received in 7 years at 7% compounded annually is
a. $7,000
b. $3,430
c. $4,361
d. $6,657
When using the indirect method, the gain from selling a long-term investment is
recognized in which of the following?
a.In the operating activity section and the investing activity section of the statement of
cash flows.
b.In the financing activity section of the statement of cash flows.
c.In the noncash investing or financing activity supplemental section of the statement of
cash flows.
d.Gains are not recognized in the statement of cash flows under the indirect method.
Each account has a normal balance. For the following list of accounts, indicate whether
the normal balance of each is a debit or a credit.
a.Debit
b.Credit
Capital Stock
PatentCopyright
GoodwillRevenue expenditure
Natural resourcesResearch and development costs TrademarkCapital expenditure
___________________________is (are) the right to produce or sell a published work.
The following data is available for one of the products sold by Learning Tree, Inc.,
which uses the perpetual
inventory system:
Refer to the data for Learning Tree, Inc.
Explain why the amounts for ending inventory are different under the two average cost
methods–weighted average (periodic) and moving average (perpetual).
The gross accounts receivable less the allowance for doubtful accounts is known as the
______________________________.
Apply the time value of money in the following independent situations:
1>Margaret Carlson made a deposit in the bank on January 1, 2008. The bank pays
interest at the rate of 8% compounded annually. On January 1, 2015, the deposit has
accumulated to $40,000. How much money did Margaret originally deposit on January
1, 2008?
2>Claude Cooper deposited $15,600 in the bank on January 1 a few years ago. The
bank pays an interest rate of 10% compounded annually, and the deposit is now worth
$40,420. For how many years has the deposit been invested?
The following balance sheet items from Fasoli, Inc. are listed for December 31, 2015:
Read the information about Fasoli, Inc.
REQUIRE:
Prepare the Stockholders’ Equity section of the classified balance sheet, including the
total stockholders’ equity
amount.
On September 20, Mendes Inc. presents credit card drafts to its bank in the amount of
$10,000; the collection charge is 4%.
REQUIRED: Identify the effects on the accounting equation for Mendes’ books on
September 20, the date of deposit.
The following data is available for one of the products sold by Learning Tree, Inc.,
which uses the perpetual
inventory system:
Refer to the data for Learning Tree, Inc.
If the LIFO method is used, what is the amount assigned to cost of goods sold for the
2,500 units sold on May 10?
Estimated Uncollectible Accounts
Refer to the data for Slammer Sports.
Assume that the net realizable value is $170,000 after the adjustment for bad debts in
2014. How much is the net realizable value of accounts receivable after a customer’s
account of $2,500 is written off? Explain why.
The following balance sheet items from Fasoli, Inc. are listed for December 31, 2015:
Read the information about Fasoli, Inc.
REQUIRE:
Prepare the Liabilities section of the classified balance sheet, including total liabilities
balance.