Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Which of the following factors would cause the least amount of concern about a
company's ability to continue as a going-concern?
A) Excessive reliance on debt financing
B) Loss of key personnel without comparable replacement
C) Inadequate maintenance of long-lived assets
D) Declining profit margins
Your company orders and receives supplies in January, pays for them in February,
provides services to customers that use those supplies in March, and is paid by its
customers for the services in April. Using the accrual basis of accounting:
A) expenses are recorded in February and revenues are recorded in April.
B) expenses are recorded in February and revenues are recorded in March.
C) expenses and revenues are recorded in March.
D) expenses are recorded in January and revenues are recorded in April.
On April 6, Lopez Co. purchased $5,000 of inventory, terms 1/15, n/30. Lopez Co. uses
a perpetual inventory system. The company paid for the purchase on April 26. The entry
to record the payment on April 26 includes which of the following?
A) A credit to Inventory for $50
B) A debit to Accounts Payable for $4,900
C) A credit to Accounts Payable for $5,000
D) A credit to Cash for $5,000
If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid
Insurance are $1,500 and $2,000, respectively, the cash paid for insurance is:
A) $7,000.
B) $6,500.
C) $5,000.
D) $7,500.
Pinkney's Inc. had income before income tax of $164,000 last quarter and a 34% tax
rate. What is the company's net income?
A) $55,760
B) $108,240
C) $219,760
D) $482,353
The T-account approach:
A) may be used with the direct method.
B) creates one big T-account for cash that replaces separate schedules to show all the
changes in the cash account.
C) shows cash provided as credits and cash used as debits.
D) does not determine the change in each balance sheet account.
The financial information below presents selected information from the financial
statements of Pelican Company. Sales revenue during the current year was $13,700,300
and cost of goods sold was $8,905,195. All of Pelican's sales are made on account and
are due within 30 days.
Required:
Part a. Current ratios as of the end of the current and prior year.
Part b. Calculate the receivables turnover ratio for the current year.
Part c. Calculate the days to collect for the current year.
Part d. Calculate the inventory turnover ratio for the current year.
Part d. Calculate the days to sell for the current year.
Part e. Evaluate the company's liquidity position at the end of the current year. Cite any
additional information not given in the problem that would be helpful in evaluating the
company's liquidity.
Round all ratios to two decimal places.
If a perpetual inventory system is in use, which of the following statements about
transactions with customers is correct?
A) When a customer pays within the discount period, Accounts Receivable is credited
for the full amount.
B) If a customer pays within the discount period, Sales Discounts is credited.
C) A sales return is recorded with entries that include a credit to Sales Returns &
Allowances.
D) Sales of inventory are recorded by entries that include a credit to Cost of Goods
Sold.
A company issues 1 million shares of common stock with a par value of $0.02 for $15 a
share. The entry to record this transaction includes a debit to Cash for:
A) $20,000 and a credit to Common Stock for $20,000.
B) $15,000,000 and a credit to Common Stock for $15,000,000.
C) $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional
Paid-in Capital for $14,980,000.
D) $20,000, a debit to Capital Receivable for $14,980,000, a credit to Common Stock
for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.
At the end of the month, the adjusting journal entry to record the use of supplies would
include a debit to:
A) Supplies and a credit to Supplies Expense.
B) Supplies Expense and a credit to Supplies.
C) Supplies and a credit to Service Revenue.
D) Supplies and a credit to Cash.
