Strategic risk assessment is primarily concerned with
a. possible external threats to the company’s success in accomplishing its objectives.
b. allocation of the company’s resources to accomplish its internal processes.
c. safeguarding of the company’s computerized assets and records.
d. achieving operating efficiencies in the areas of production and human resources.
GTO Division has $14,000 in current assets, $2,000 in accounts payable, and $2,000 in
unearned sales revenue. What is the division’s current ratio?
a. 1.75
b. 2.25
c. 3.00
d. 3.50
A petty cash fund for $300 was established on May 1. By the end of the month, the
petty cash custodian requested reimbursement of $222 for the following expenditures
from the fund:
Record the entries to a) establish the petty cash fund; b) replenish the fund as of the end
of May and c) increase the fund balance to $500.
During the installation, the equipment was damaged and repair costs of $2,000 were
incurred. 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.)
Received cash from the sale of securities.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
or event would be reported on a statement of cash flows if the operating activities
section is prepared using the indirect method. (Choices may be used more than once.)
a. Operating activity-add to net income
b. Operating activity-deduct from net income
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Chastain Park Entertainment paid salaries expense of $350,000 during 2013. However,
additional salaries of $20,000 had been earned by employees, but not paid or recorded
at December 31, 2013. A) What adjusting entry is necessary at December 31, 2013?
B) Under which basis, cash, accrual, or both, would the adjustment in part A be
prepared? Explain.
C) Under the accrual basis of accounting, what is the total amount of salaries expense
for the year ended December 31, 2013?
D) Under the accrual basis of accounting, what is the total amount of salaries payable to
be reported at December 31, 2013?
E) Under the cash basis of accounting, what is the total amount of salaries expense for
the year ending December 31, 2013?
F) Under the cash basis of accounting, what is the total amount of salaries payable at
December 31, 2013?
For Heaven Scapes purchased a trademark at the beginning of 2013 for $200,000. The
trademark’s legal life is 10 years. How much total amortization expense would have
been recorded by January 2014?
a. $0
b. $20,000
c. $40,000
d. $60,000
Refer to Dance Town Academy. How will the deposits in transit be handled on a bank
reconciliation?
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. add to the balance from the company records
b. subtract from the balance from the company records
c. add to the bank statement balance
d. subtract from the bank statement balance
Dividends are declared and paid to the company’s stockholders. What effect does this
transaction have on the company’s accounting equation?
a. Assets and liabilities decrease.
b. Assets and retained earnings decrease.
c. Liabilities decrease and retained earnings increases.
d. Liabilities increase and contributed capital decreases.
When should a shipping company recognize revenue from its delivery service?
a. On the date the customer places a order.
b. On the date the customer’s packages are delivered.
c. On the date the invoice is mailed to the customer.
d. On the date the customer’s payment is received.
What should a company do to improve its accounts receivable turnover rate?
a. Lower its selling prices.
b. Increase its sales force.
c. Give customers credit terms of 2/10, n/30 rather than 1/10, n/30.
d. Reduce the number of employees working in the credit department.
A company’s bottom line stated on a per share basis.
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
Refer to Lake Lanier Grill, Inc. If all of the 1,000 shares that Lake Lanier Grill
repurchased on March 1 were later reissued for $4.00 per share, the journal entry to
record this transaction includes a debit to what account and for what amount?
Lake Lanier Grill
The stockholders’ equity section of the December 31, 2014, balance sheet is provided
below: Assume that all 2,000 shares of stock were issued as of December 31, 2014 for
$3.50 per share. On March 1, 2015, the company reacquired 1,000 shares of its
common stock for $4.50 per share. a. $4,000 to paid-in capital from treasury stock
transactions
b. $2,000 to treasury stock
c. $500 to retained earnings
d. $4,500 to cash
The return on assets ratio
a. considers the investments made by all creditors and stockholders of the company.
b. reflects investments made only by creditors of the company.
c. is based on average stockholders’ equity as compared to net income for the period.
d. is a measure of the company’s liquidity.
Refer to Metalcrafts, Inc. What was depreciation expense for 2014?
Metalcrafts Inc.
Selected information from the company’s financial records is presented below:
During 2014, the company sold equipment with a cost of $50,000 and accumulated
depreciation of $30,000. A gain of $10,000 was recognized on the sale of the
equipment. This was the only equipment sale during the year. a. $30,000
b. $10,000
c. $40,000
d. $50,000
Maytag Corporation’s balance sheets for the last 2 years are provided below:
The company’s income statement for 2013 is provided below:
*The company sold equipment for $57 which had a cost of $60. A) Prepare the
company’s Statement of Cash flows for 2013. Use the direct method of computing cash
flows from operating activities. B) Prepare the Cash Flows from Operating Activities
section of the cash flow statement using the indirect method.
For a given level of sales, the higher the cost of goods sold, the lower this measure.
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
A(n) ____________________ revenue results when cash is received before it is earned
and reported on the income statement.
Distinguish between tangible and intangible operating assets.
The amount to which an account will grow when interest is compounded is the
______________ value.
Refer to Home Accent Interiors. Identify the postings to the general ledger that were
made incorrectly. Describe how each incorrect posting should have been made. For this
problem, assume that the journal entries have been correctly recorded.
The general ledger is often used for the initial recording of repetitive transactions.
The International Accounting Standards Board (IASB) was created in order to develop
worldwide accounting standards that are required for all financial statements, regardless
of the country where the financial statements were prepared.
Both the indirect and direct method arrive at an identical amount of net cash provided
(used) by operating activities.
An example of a current liability is a note payable that is due in 8 months.