Ruiz Company provided services for $15,000 cash during the 2013 accounting period.
Ruiz incurred $12,000 expenses on account during 2013, and by the end of the year,
$3,000 of that amount had been paid with cash. Assuming that these are the only
accounting events that affected Ruiz during 2013.
A.The amount of net income shown on the income statement is $3,000.
B.The amount of net income shown on the income statement is $9,000.
C.The amount of net loss shown on the income statement is $3,000.
D.The amount of net cash flow from operating activities shown on the statement of cash
flows is $6,000.
Evergreen Company has two investment opportunities. Both investments cost $5,000
and will provide the same total future cash inflows. The cash receipt schedule for each
investment is given below:
Select the correct statement.
A.Evergreen should choose Investment I because of the time value of money.
B.Evergreen should choose Investment II because it generates more immediate cash
inflows.
C.Evergreen should be indifferent between the two investments because they provide
the same total cash inflows.
D.Time value of money techniques are not useful for comparing these investments.
Which of the following securities offerings is not exempt from registration prior to their
sale?
A.offerings of more than $5 million.
B.securities issued by governments.
C.securities issued by banks.
D.securities issued by savings and loan associations.
E.offerings of no more than $1 million made to any number of investors within a
12-month period.
During its first year of operations, Silverman Company paid $14,000 for direct
materials and $19,000 for production workers’ wages. Lease payments and utilities on
the production facilities amounted to $17,000 while general, selling, and administrative
expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a
price of $15.00 a unit.
What is Silverman’s cost of goods sold for the year?
A.$50,000
B.$24,600
C.$30,000
D.$41,000
Which of the following is not classified as manufacturing overhead?
A.Product delivery costs
B.Supervisory labor
C.Factory insurance
D.Production supplies
What information is required in proxy statements?
(1) Five-year summary of operations.
(2) Five-year summary of industry segments.
(3) Listing of company directors and executive officers.
(4) Management discussion and analysis (MD&A).
A.1, 2 and 3
B.2, 3 and 4
C.1, 3 and 4
D.1, 2 and 4
E.1, 2, 3, and 4
Regulation S-K:
A.controls the listing of securities by stock exchanges.
B.establishes requirements for nonfinancial information to be filed with the SEC.
C.prescribes the form of financial statements to be filed with the SEC.
D.describes the internal controls a publicly traded company must maintain.
E.prescribes the financial disclosure information that must be included in filings with
the SEC.
All of the following are capital investment decisions except:
A.acquiring $100,000 of common stock.
B.buying a $5,000,000 manufacturing plant.
C.purchasing equipment for $80,000.
D.paying $600,000 to renovate a restaurant.
Which ratio compares the earnings per share of a company to the market price for a
share of the company’s stock?
A.Price-earnings ratio
B.Dividend yield
C.Book value per share
D.Return on equity
A partnership began its first year of operations with the following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary assigned to
Thurman.
Each partner was to be attributed with interest equal to 10% of the capital balance as of
the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman,
respectively.
Each partner withdrew $13,000 per year.
Assume that the net loss for the first year of operations was $26,000 with net income of
$52,000 in the second year.
What was the balance in Thurman’s Capital account at the end of the first year?
A.$120,900.
B.$118,300.
C.$126,100.
D.$80,600.
E.$111,500.
Gongman Corp. owned the following assets when it came out of a Chapter 11
bankruptcy:
Gongman Corp. had a fresh start reorganization value of $1,000,000. What amount of
goodwill should have been recognized in recording the reorganization?
A.$20,000.
B.$100,000.
C.$60,000.
D.$210,000.
E.$98,000.
During its first year of operations, Silverman Company paid $14,000 for direct
materials and $19,000 for production workers’ wages. Lease payments and utilities on
the production facilities amounted to $17,000 while general, selling, and administrative
expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a
price of $15.00 a unit.
What was Silverman’s net income for the first year in operation?
A.$7,000
B.$12,000
C.$28,000
D.$37,000
Indicate whether each of the following statements about the closing process and the
accounting cycle is true or false.
_____ a) The closing process transfers certain account balances to retained earnings at
the end of the accounting cycle.
_____ b) Only accounts that appear on the income statement are closed at the end of
each accounting cycle.
_____ c) Another name for permanent accounts is “nominal accounts.”
_____ d) The permanent accounts contain information that is cumulative in nature.
_____ e) The retained earnings balance at the end of any given year is equal to that
year’s net income.
Which of the following costs should not be recorded as an expense?
A.Insurance on factory building
B.Sales commissions
C.Product shipping costs
D.Product advertising
Grant Company purchased a delivery van for cash. The cash flow from this event
should be shown on the statement of cash flows as
A.an operating activity that increases cash.
B.a financing activity that decreases cash.
C.an investing activity that decreases cash.
D.an operating activity that decreases cash.
Which ratio would you use to examine a company’s ability to pay its debts in the short
term?
A.Earnings per share
B.Acid-test ratio
C.Debt to assets ratio
D.Return on equity
Costs such as transportation-out, sales commissions, uncollectible accounts receivable,
and advertising costs are sometimes called:
A.upstream costs.
B.downstream costs.
C.direct costs.
D.indirect costs.
On January 1, 2014, Hanson Manufacturing Company purchased equipment for
$95,000. Hanson paid $2,000 to have the machine installed. The equipment is expected
to have a 5 year useful life and a salvage value of $7,000.
In 2008, Burton Company purchased equipment with an expected useful life of 5 years.
The initial cost of the equipment was $160,000. Burton’s cost of capital is 12%; when it
purchased the equipment, Burton computed a net present value of $15,824 for the
investment. In 2013, the equipment reached the end of its useful life. Burton determined
that, over the 5-year life, the equipment had generated annual cash inflows of $46,000.
Required:
Conduct a post-audit to determine whether the equipment achieved the net present
value the company had expected. Based on the results actually achieved, was the asset
in fact an acceptable investment?
What are some of the common elements that can be included in a reorganization
proposal?
What are accredited investors?
Name the group that has the primary authority for establishing U.S. GAAP.
Montana Company reported the following operating results for 2013 and 2014:
Required:
Express each income statement component for each year as a percentage of sales.
Round your answer to one decimal place (i.e. 22.5%)
The Ruiz Company began operations on January 1, 2013 and on that date issued
$30,000 of common stock for cash. In addition, the company borrowed $20,000 from
the bank. It provided services to its customers during 2013 and received $36,000 cash.
During the year, it paid $40,000 cash for land, $10,000 for salaries, and $6,000 in cash
dividends to the owners.
Required:
1) Write an accounting equation and record the effects of each transaction under the
appropriate heading. (Use specific accounting titles below the statement elements)
2) Prepare an income statement and a balance sheet for the 2013 accounting period.
Hampton Company is trying to decide whether to seek liquidation or reorganization.
Hampton has provided the following balance sheet:
Additional information is as follows:
– The investments are currently worth $13,000.
– It is estimated that $32,000 of the accounts receivable are collectible.
– The inventory can be sold for $74,000.
– The prepaid expenses and the intangible assets have no net realizable value.
– The land and building are currently valued at $250,000.
– The equipment can be sold for $60,000.
– Administrative expenses (not yet recorded) are estimated to be $12,500.
– Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and
$3,000 each to two other employees).
– Accrued expenses include $7,000 of unpaid payroll taxes.
How much will be paid to the holder of the note payable secured by the land and
building?
(Round your payout percentage to the nearest whole number.)