Balance sheet accounts are also known as which of the following?
a. nominal accounts
b. permanent accounts
c. temporary accounts
d. closing accounts
Invoice price paid for resale goods.
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. (Choices may be used more than once.)
a. Add to inventory cost c. Not an inventory cost
b. Subtract from inventory cost
“You Decide” Essay You have just accepted a part-time job at one of the campus
eateries. During your training the manager was called away to deal with some crisis and
asked one of your co-workers to complete your training on using the cash register. The
co-worker proceeds to tell you that if the money in the register drawer doesn’t equal the
total on the cash register tape, you will be responsible for the difference. If there is a
cash shortage, you must make up the shortage out of your own pocket but if there is
excess cash, you may keep the overage. Proudly, with the wink of an eye, she states, “I
was short one time, right after I started working here. But I made sure, if you know
what I mean, that I would never be short again.” A) Evaluate this control. Is it strong or
weak? What kind of behavior will it encourage? B) Do you have a professional
obligation to report your co-worker to management? Explain.
Refer to Red Oak Manufacturing. DuPont analysis return on equity (ROE) is
Red Oak Manufacturing
The following information is available for the year ended December 31, 2015:
a. 32.8%.
b. 34.1%.
c. 35.8%.
d. 38.9%.
Each of the following items is considered a cash equivalent except
a. a 30-day certificate of deposit.
b. 60-day corporate commercial paper.
c. a 75-day U.S. Treasury bill.
d. a 180-day note issued by a local government.
An appropriation of retained earnings is best described as a(n)
a. reserve established for a specific business purpose.
b. allowance for future treasury stock transactions.
c. allowance for future preferred stock redemptions.
d. reserve for possible declines in the market value of the corporation’s capital stock.
The university satellite office operates five days per week with a daily payroll of
$5,000. Employees are paid every Saturday for the workweek just completed (Monday
through Friday). The last day of the month is Wednesday, October 31. What is the effect
of the correct adjustment at October 31?
a. Increases Stockholders’ equity and Wages Payable by $15,000.
b. Increases Wages Payable and decreases Cash by $10,000.
c. Decreases Stockholders’ equity and increases Wages Payable by 15,000.
d. Increases Wages Payable and increases Wages Expense by $25,000.
The payment of employee salaries has what effect on the accounting equation?
a. assets and stockholders’ equity decrease
b. liabilities and stockholders’ equity decrease
c. assets decrease and liabilities increase
d. assets increase and liabilities decrease
Refer to Holiday Marina. Assume that the incorrect journal entries have been posted to
the general ledger. For each incorrect journal entry, explain why the error would or
would not be discovered by preparing a trial balance.
Income from operations
Select the ratio that would include each amount or account in its calculation. (Choices
may be used more than once.)
a. Times interest earned ratio
b. Operating cash flow ratio
c. Debt-to-equity ratio
d. Return on equity
All American Storage Corporation sold merchandise with credit terms of 2/10, n/30, for
$100,000 to a customer on January 01, 2013. Nine months later, on October 1, 2013 the
company accepted a 12%, 6-month note receivable in settlement of the account. The
customer paid the maturity value of the note on the due date. Prepare the following
journal entries: A) Record the sale of merchandise January 1, 2013. B) Record the
receipt of the note receivable on October 1, 2013.C) Record the adjusting entry to
accrue interest on December 31, 2013.
D) What is the due date of the note?
E) Record the collection of the note on the due date.
The _________________ preference is a preferred stock feature that provides for the
current stated dividends to be paid to preferred stockholders before they are paid to
common stockholders.
Both net income and dividends can be found on this financial statement:
____________________.
Refer to Mary Kay Cosmetics. Prepare the financing activities section of the company’s
statement of cash flows for 2014.
Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented
below:
Additional information:
A company that is considering selling goods or providing services to another company
wants to know whether its customer will provide: competitive salary and benefits;
experiences that will prepare employees to assume increased responsibility; and a
secure job for the foreseeable future.
Refer to Fabulous Creations. In the notes to the financial statements, the company
indicates that it uses different depreciation methods for different types of plant and
equipment assets. Explain why the company might follow this policy.
Petty Cash is NOT considered to be a cash equivalent.
No formal journal entry is required to record a stock split.