For liabilities, stockholders’ equity, and revenue accounts, debits will _____________
the account balance.
If a corporation desires to reacquire some of its issued shares of stock, how would it
accomplish this, i.e., how would the corporation determine which of its shares to buy
back or from which stockholders?
When a corporation issued stock to stockholders, explain the use of the account for
paid-in capital in excess of par value.
____________________ is a liquidity measure that is calculated by subtracting current
assets from current liabilities.
Show the effect of each of the transactions below on total assets and the current ratio by
using one of the 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 “O” or no effect.
Effect Symbol
Increase +
Decrease –
No effect N
Insufficient Data O
Effect on Effect on the
Total Assets Current Ratio
Cash received from customers for accounts receivable balances due
Cash sales of long-term assets for an amount in excess of cost
Declaration and payment of cash dividends
Payment of interest expense
Purchase of long-term assets for cash
Purchase of office supplies for cash
Explain the relationship between the valuation of inventory and income measurement as
it related to the balance sheet and income statement.
The number of shares sold to stockholders are ____________________ shares.
You are the owner and operator of a growing small business. You would like to expand
your product offerings but need $25,000 in short-term financing in order to do so. You
have an appointment to see your banker tomorrow. The banker has asked you to bring
certain financial information with you to the meeting. That information is provided
below:
at December 31,
2013 2012
Balance Sheet Information
Total current assets $66,000 $75,000
Accounts payable 2,610 1,500
Short-term notes payable 12,010 8,885
Income taxes payable 380 560
Income Statement Information
Sales $842,000 $765,000
Net income 10,275 4,670
Use your financial information to make a case for the loan.
Refer to Mary Kay Cosmetics. What amount was paid to retire bonds payable during
2014?
Identify where each of the following accounts would be reported on the financial
statements. (Choices may be used more than once.)
a. Balance Sheet–Property, Plant, and Equipment
b. Balance Sheet–Intangible Assets
c. Balance Sheet–Current Assets
d. Balance Sheet–Other Assets
e. Income Statement–Operating Section
f. Income Statement–Other Revenue and Expense Section
17/ Depreciation expense
18/ Gain on disposal of plant asset
19/ Building
20/ Copyright
21/ Land improvements
22/ Research and development costs
23/ Accumulated depreciation
24/ Amortization expense
25/ Loss on disposal of plant asset
26/ Patents
27/ Goodwill
A check written by a company but notyet presented to the bank for payment is called
a(n) ____________________.
A fast food restaurant sells gift cards which may be redeemed at any time; however,
they expire in one year. At the time these gift cards are sold, the account to be credited
is called ____________________.
What impact does materiality have on the determination of how a cost related to a plant
asset is reported on the financial statements?
California Condos
California Condos uses the accrual basis of accounting, and had the following account
balances on its financial statements at December 31, 2013.
Refer to California Condos. The company reported interest receivable of $2,500 at
December 31, 2013, and $0 at the beginning of 2013. How much cash did the company
collect for interest during the year?
If the yield rate of interest is greater then the stated rate, then the bonds are issued at a
____________________.
A franchiser is permitted to recognize the revenue from the sale of a franchise whenever
they wish under accrual-basis accounting.