If bonds were initially issued at a discount, the interest expense on the bonds calculated
using the effective interest method will
a. decrease as the bonds approach their maturity date.
b. increase as the bonds approach their maturity date.
c. remain constant throughout the bonds’ life.
d. fluctuate throughout the bonds’ life.
What is the purpose of an income statement?
If the stated cash dividend on cumulative preferred stock has been unpaid for a period
of one year or more, it is referred to as a dividend ____________________.
The market value of a bond is determined by calculating its present value, which is
based on the face amount, the number of periods, and the market rate of interest.
Refer to Baker’s Pride Bakery. Was the company profitable both years? What are the
amounts of the total revenues and total expenses, respectively, for 2013? Which
financial statement provides this information to you?
Under the indirect method, the first line in the operating activities section of the
statement of cash flows is the net income or loss for the period.
In ____________________ analysis, each financial statement line item is expressed as
a percent of the largest amount on the statement, which is net sales for the income
statement and total assets for balance sheet.
Refer to Mary Kay Cosmetics. What amount was recorded as depreciation expense
during 2014?
To revise depreciation expense, the accountant should compute depreciation expense
using the asset’s remaining book value and useful life and its new residual value.
Public companies file their quarterly reports on Form ____________________.
What adjustments are often necessary after the reconciliation of a bank account?
Refer to Regency Lighting. Complete a common size vertical analysis of the current
assets section of the balance sheet for 2015. Your answers should be expressed as
percentages and rounded to one decimal place.
Maritime Marine Services
Selected data from the financial statements for the years ended December 31, 2014 and
2013, are presented below:
(In millions) 2014 2013
Property, plant and equipment $14,100 $12,200
Accumulated depreciation 4,900 4,700
Investments 450 240
Short-term debt 55 57
Long-term debt 1,500 1,200
Common stock 597 567
Treasury–common stock (21) (21)
Retained earnings 3,522 3,426
Net income 770 713
The following additional information was obtained from the company’s records:
1. Cash additions to property, plant, and equipment during 2014 were $2,300. An
additional $250 of plant assets were acquired through debt in a noncash transaction.
Depreciation expense for 2014 was $400. Gains on disposals of property, plant and
equipment during 2014 were $40.
2. The cash proceeds from the sale of investments in 2014 was $120. There was a $30
gain on the sale of the investments.
3. Proceeds from long-term debt issued during 2014 was $200.
4. The issuance of common stock totaled $30 in 2014.
Refer to Maritime Marine Services. What was the cost of the property, plant and
equipment which was disposed of during 2014?
The cost of goods sold for Uzzi Corp. totaled $750,000. Sales returns and purchase
returns were $3,000 and $5,000, respectively. Purchases totaled $800,000. Purchase
discounts totaled $7,000, while sales discounts totaled $9,000. Beginning inventory was
$100,000. Determine the amount of ending inventory to be reported on the company’s
balance sheet.
Treasury stock is stock that has been issued but is no longer outstanding.
The stock repurchase payout ratio is calculated by adding the dividend payout ratio to
the total payout ratio.
When a company records the gross wages paid to its employees, the accounts to be
credited include various taxes payable and ____________________.
If an analysis of the balance sheet shows that Accounts Payable increased during the
period, then the increase would have to be _______________ to net income to convert
net income to cash.