Given below is information for Xu Corporation and Yang Computers, Inc. at the end of
2016.
1) Using the information provided above, compute the following for each company at
December 31, 2016:
A. Current ratio
B. Acid-test ratio 2) Comment briefly on the liquidity of each of these two companies.
Which appears to be more liquid? 3) What other ratios would help you to more fully
assess the liquidity of these companies?
Which statement is true concerning operating assets?
a. Operating assets have no physical properties.
b. A company’s operating assets are important to its shortÂterm liquidity.
c. Operating assets are used over two or more periods to generate revenues.
d. All operating assets are reported on the balance sheet
For each item listed below, identify how it will be reported on the Statement of Cash
Flows under the indirect method.
a. Operating activity
b. Investing activity
c. Financing activity
d. Not reported separately on the cash flow statement Decrease in accounts receivable
Which of the following statements regarding serial bonds is true?
a. They are likely to be issued by food companies.
b. They have shorter lives than term bonds.
c. They are strongly backed by the issuer’s collateral.
d. The bonds do not all mature on the same date.
When using the direct method, how is the payment of a cash dividend shown on the
statement of cash flows?
a. Operating activity
b. Investing activity
c. Financing activity
d. Noncash investing and financing activity
When the board of director’s declares a cash or stock dividend, this action decreases
Retained Earnings.
a. True
b. False
Mitchell Company prepares monthly financial statements and will record.a prepaid
account for each of the following except :
a. Mitchell paid for three months of window washing services in advance.
b. Mitchell purchases a four-year casualty insurance policy.
c. A tenant that pays Mitchell for six months of rent in advance.
d. Mitchell purchases office supplies to last for several months.
Most experts now agree that there has been a tendency to rely far too heavily on net
income and its companion, earnings per share, and in many cases to ignore a company’s
cash flows.
a. True
b. False
On July 1, 2014, Falcon Company received a $20,000 promissory note from Jordyn
Company. The annual interest rate is 5%. Principal and interest are paid in cash at the
maturity date of June 30, 2015. If Falcon’s fiscal year ends September 30, 2014, an
adjusting entry is needed to:
a. Increase interest revenue by $1,000
b. Increase notes receivable by $250
c. Increase interest receivable by $250
d. Increase notes receivable by $1,000
The three forms or states in the development of inventory for a manufacturer are direct
materials, direct labor, and finished goods.
a. True
b. False