Expired costs are called assets.
a.True
b.False
See the transactions to Morton & Associates. The journal entry to record the May 9
transaction will include an increase of $1,220 to
a.Accounts Receivable
b.Cash
c.Accounts Payable
d.Administrative Expenses
Given below is a list of items that may be reported on a statement of cash flows.
Identify each as one of the following using the indirect method:
a.Operating
b.Investing
c.Financing
d.Not separately reported on a statement of cash flows
Purchase of equipment for cash
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method.
a.Inflow from operating activity
b.Outflow from operating activity
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
Paid employee salaries and wages.
Presented below are several accounts from the financial statements of Eagle, Inc. for the
year ended December 31, 2015:
1>Cash
2>Accounts Receivable
3>Prepaid Expenses
4>Accounts Payable
5>Common Stock
6>Sales
7>Selling Expenses
8>Administrative Expenses
9>Interest Expense
10>Income Taxes Expense
Each of these accounts has been assigned an identification number which you will use
as answers for the transactions described below. Enter the account number(s) in the
blank spaces under the headings DEBIT and CREDIT to indicate the accounts debited
and credited when each transaction is recorded in a general journal.
DEBIT CREDIT
A) The company issues common stock at par value. ________ ________
B) A bill is received for advertising placed by the company’s ad agency; payment is due
in 30 days. ________ ________
C) Interest due on long-term debt is paid. ________ ________
D) Received an invoice from their insurance company for next year’s coverage and
payment was made. ________ ________
Assuming the indirect method for preparing the statement of cash flows is used,
indicate whether these items should be added to net income (A), deducted from net
income (D), or not be reported in the operating section of the statement under the
indirect method (NR).
a.Added (A)
b.Deducted (D)
c.Not reported (NR)
Exchange of a note for equipment
Assume that the current ratio is 2:1 for the company in question. Show the effect of
each of the transactions below on total assets and the current ratio by using one of the
following symbols in each box to complete the table. If the numerator and denominator
of a ratio both increase or both decrease by the same amount, the effect of the event on
the ratio is “insufficient data.”
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
Advertising Fees Earned
Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1,
2015. The amounts below are related to the equipment purchase. Match the items below
and explain why each revenue expenditure is not capitalized.
a.This item should be included as part of the cost of the equipment.
b.This item should be considered a revenue expenditure.
During the installation, the equipment was damaged and repair costs of $2,000 were
incurred.
Match the following bond and long-term liability related terms to the appropriate
definition.
a.Long-term liability
b.Face value
c.Debenture bonds
d.Serial bonds
e.Callable bonds
f.Face rate of interest
g.Market rate of interest
h.Bond issue price
i.Premium
j.Discount
k.Effective interest method of amortization
l.Carrying value
m.Gain or loss on redemption
An obligation that will not be satisfied within one year.
Santana Company issued additional shares of common stock. The effect of the
transaction is
a.the earnings per share increased.
b.the debt-to-equity ratio increased.
c.the earnings per share decreased.
d.the asset turnover ratio decreased.
Match the following choices to the listed situation.
a.a deferred expense
b.a deferred revenue
c.an accrued liability
d.an accrued asset
Depreciation on a delivery truck is recorded
Which of the following statements is true concerning the matching principle?
a.All costs can be directly matched with revenue.
b.All costs can be indirectly matched with periods in which they provide a benefit.
c.The association of assets for a period with the liabilities necessary to generate the
assets is known as the matching principle.
d.Cost of goods sold matched with sales revenue is a classic example of direct matching
under the matching principle.
Dino’s Pizza employs 10 workers in its plant. Each employee is paid $8 per hour and
works 8 hours per day, Monday through Friday. Employees are paid every Wednesday
for the previous Monday through Friday workweek. The last payday was Wednesday,
May 28.
A)Compute the dollar amount of the weekly payroll.
B)What is the effect on the accounting equation of the adjusting entry required on
Friday, May
30, the last day of Dino’s Pizza fiscal period?
C)What special precautions are necessary upon recording the payment of wages to
employees on the next payday, June 4?
Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1,
2015. The amounts below are related to the equipment purchase. Match the items below
and explain why each revenue expenditure is not capitalized.
a.This item should be included as part of the cost of the equipment.
b.This item should be considered a revenue expenditure.
$3,000 freight costs were paid to ship the equipment from the manufacturer,
There are some liabilities, such as income tax payable, for which the amounts must be
estimated. Failure to estimate these amounts and record them would be a violation of
the
a.convention of conservation.
b.concept of historical cost.
c.practice of consistency.
d.matching principle.
A(n)is a numerical list of all of the accounts used by an entity.