1) Discuss some of the information items normally included in a corporation’s articles
of incorporation.
2) As of December 31, 2012, Walton Corporation had a current ratio of 1.84, quick ratio
of 1.45, and working capital of $18,000. The company uses a perpetual inventory
system and sells merchandise for more than it cost. Indicate how the given transaction,
if it occurred in January 2013, would affect Walton’s current ratio, quick ratio, and
working capital. Use a + for an increase, a – for a decrease, and 0 for no effect.
Walton issued $500,000 of 20-year bonds payable for cash
3) For what types of assets is the recognition of expense called “amortization?”
4) The accountant for Higham Industries could not prepare the following budgets
because an item of information is missing for each one:
5) What is the primary difference between manufacturing companies and service
companies?
6) What is meant by a “basket purchase” and what method is normally used to
determine the cost?
7) Halley Company has just received a special order for 1,000 deck chairs. Halley has
sufficient idle capacity to accept the order. Indicate whether the given cost is a sunk
cost, opportunity cost, relevant or not relevant to the decision to accept the special
order, variable or fixed, by placing X’s below the headings as appropriate. A variable
cost is one that varies with the number of chairs that Halley makes.
8) What kinds of costs are a service company likely to incur related to providing
services to customers? How do these categories of costs compare to those incurred by a
manufacturer in making goods?
9) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
Hardin Company collected a receivable due from a credit card company (from a sale to
a customer who paid with a credit card). Show the effect of collection of the credit card
receivable on Ulmer’s financial statements.