Match each of the following terms related to interest and time value of money
calculations to their appropriate definition.
a. Time value of money
b. Simple interest
c. Compound interest
d. Future value of a single amount
e. Present value of a single amount
f. Annuity
g. Future value of an annuity
h. Present value of an annuity
Interest that is earned or paid on the principal amount only.
Which of the following is an internal event (transaction)?
a. Life guard salaries are paid by a swim club.
b. Dividends are distributed to shareholders.
c. Eggs used to make omelets in a restaurant are purchased.
d. Potato chips are transferred from the production line to the packaging area.
Latahmer Corporation is reconciling its May bank account. For each item listed, state
how it would be handled on the bank reconciliation.
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to book balance
d. Subtraction from book balance
e. Would not appear on the May reconciliation
Customer’s check which was deposited on May 31 is not listed on the bank statement
Carson Enterprises’ comparative balance sheets included accounts receivable of
$220,300 at December 31, 2014, and $200,900 at December 31, 2015. Sales reported on
Carson’s 2015 income statement amounted to $2,350,000. What is the amount of cash
collections that Carson will report in the Operating Activities category of its 2015
statement of cash flows assuming that the direct method is used? a. $2,369,400
b. $2,350,000
c. $2,771,200
d. $2,330,600
Provided below is a list of important users of accounting information.Below the list are
descriptions of a major need of each of the various users. Fill in the blank with the one
user group that is most likely to have the need described to the right of the blank. Some
user groups may be used more than once or not at all.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Property, plant, and equipment
Place Corp. purchased supplies at a cost of $12,000 during the year. At January 1,
supplies on hand were $2,000. At December 31, supplies on hand are $1,000.
Determine the amount of supplies expense for the year.
a. $ 10,000
b. $ 12,000
c. $ 13,000
d. $ 14,000
Which of the following statements is false?
a. The method of preparing the operating activities section of a statement of cash flows
which adjusts net income to remove the effects of deferrals and accruals for revenues
and expenses is the indirect method.
b. The method of preparing the operating activities section of a statement of cash flows
which reports major classes of gross cash receipts and cash payments for revenues and
expenses is the direct method.
c. The FASB prefers the direct method of preparing the operating activities section of
the statement of cash flows.
d. Most companies use the direct method of preparing the operating activities section of
the statement of cash flows.
The debit balance in Cash Short and Over at the end of an accounting period is reported
as
a. an expense on the income statement
b. income on the income statement
c. an asset on the balance sheet
d. a liability on the balance sheet
Which of the following statements is true?
a. Only the effects of internal transactions must be recognized and recorded in the
entity’s accounting system.
b. An internal event is a transaction between an entity and its environment.
c. Not all recognizable events are supported by a standard source document.
d. Only the effects of external events must be recognized, measured, and recorded in an
entity’s accounting system.
Match the following terms with the best definitions for questions 212 through 219. a.
Purchase requisition.
b. Receiving Report.
c. Vendor Invoice.
d. Check.
e. Control procedures.
f. Inventory count.
g. Segregation of duties.
h. Source document control.
Form sent by the seller to the buyer as evidence of a sale
The use of customer statements as a control device will be effective only if the
employees responsible for the custody of cash received through the mail, for record
keeping, and for authorization of adjustments to customers’ accounts are not allowed to
prepare and mail statements to customers.
a. True
b. False
20 Also determine the amount of amortization of intangible assets that Glitch should
record in 2014 and 2015.
How do most changes in long-term liabilities on the balance sheet appear on the cash
flow statement?
Mega Industries has an intangible asset is being amortized over a ten-year time period.
However, a competitor has just introduced a new product that will have a serious
negative impact on the asset’s value. Should the company continue to amortize the
intangible asset over the ten-year life? Explain.
A current ratio ofor better is usually considered a comfortable margin.
Assume that on December 31, 2016, Potaw Company has outstanding 8,000 shares of
$15 par, 6% cumulative, preferred stock and 40,000 shares of $5 par common stock.
Potaw was unable to declare a dividend in 2014 or 2015 but wants to declare a $75,000
dividend for 2016. REQUIRED: 1> How much cash is distributed to preferred
stockholders?
2> How much cash is distributed to common stockholders?
3> What is the dividend per share to preferred stock?
4> What is the dividend per share to common stock?
____________________ is the process of writing off the cost of tangible assets and
____________________ is the process of writing off the cost of intangible assets.