Archives: Quiz

Which of the following considerations is most important for a stockholder when evaluating whether to purchase stock in a company? a. Will earnings per share be distributed to stockholders? b. Will the company earn a fair return on the amount […]

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 […]

Givens Corp. Givens Corp. is a merchandising company that uses the periodic inventory system. Selected account balances are listed below: Refer to the information for Givens Corp. Calculate the gross profit. a. $241,000 b. $275,000 c. $289,000 d. $425,000 Which […]

The current portion of long-term debt is a balance sheet item for Flavorful Products Company. How would it most likely be classified on the balance sheet? a. Current liability b. Long-term liability c. Current asset d. Long-term liability Use the […]

For users of financial statements, the current liability classification in the balance sheet is important because it is most closely tied to the concept of profitability. a. True b. False Carlton, Inc. presented the following information in a note to […]

When a company uses coupon or premium offers in conjunction with the sale of its products, there is no need to record any contingent liability. a. True b. False What five-member body created by the Sarbanes-Oxley Act was given authority […]

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 […]

Among the assets listed below, which one is considered the most liquid? a. Cash b. Accounts receivable c. Merchandise inventory d. Prepaid expenses Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred […]

All of the following statements are true except: a. The criteria to determine whether a lease contract should be considered a capital lease are applied in a more rigid way under U.S. GAAP than IFRS. b. The criteria to determine […]

Choose from the following list of account titles the one that most accurately fits the des cription of that account or is an example of that account.An account title may be used m ore than once or not at all. […]

The present value is the value today of a single amount to be paid or received at a specific date in the future. a. True b. False Royal Company purchased a dump truck at the beginning of 2012 at a […]

Tampa Corporation’s balance sheet showed the following amounts for their liabilities and stockholders’ equity accounts: Current Liabilities, $20,000; Bonds Payable, $60,000; Lease Obligations, $12,000; and Deferred Income Taxes, $2,000. Total stockholders’ equity was $42,000. The debt-to-equity ratio is a. 0.45 […]

Cost of goods sold represents a. Expired costs during a period and is reported on the income statement. b. Unexpired costs and is reported on the balance sheet as an asset. c. The cost of goods that will be purchased […]

There is a universal chart of accounts that is applicable to all businesses. a. True b. False Marcus Roberts operates a small retail establishment. The following unadjusted amounts were taken from Roberts’ accounting records at December 31, 2015: Determine the […]

The payment of employee salaries has what effect on the accounting equation? a. Assets decrease and stockholders’ equity decreases. b. Liabilities decrease and stockholders’ equity decreases. c. Assets decrease and liabilities increase. d. Assets increase and liabilities decrease. In the […]

Which of the following organizations is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements? a. Financial Accounting Standards Board (FASB) b. Securities and Exchange Commission (SEC) c. Public Company Accounting Oversight […]

The preparation of financial statements requires that the information be understandable a. Only to CPAs. b. To those willing to spend the time to understand it. c. Only to those who take an accounting course. d. Only to financial analysts […]

The recognition of cost of goods sold expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the a. matching principle b. full disclosure principle c. revenue realization principle d. […]

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called a. Accumulated Amortization b. Accumulated Depreciation c. Amortization Expense d. Depreciation Expense What does the phrase, “Revenue is recognized at the […]

Below are the transactions for the Louisville Company: Based on these transactions, what is the net cash flow from financing activities? a. $285,000 net cash provided by financing activities. b. $275,000 net cash used for financing activities. c. $0, because […]

In considering equity and debt financing, which of the following statements is true? a. Compared to equity financing, debt is a more expensive source of funding. b. Interest and dividends payments are required to be made by the issuing corporation. […]

a. A receivable arising from the sale of goods or services with a verbal promise to pay. b. A form used to categorize the various individual accounts receivable according to the length of time each has been outstanding. c. A […]

All changes in long-term liabilities are reflected in the financing activities category of the statement of cash flows. a. True b. False Match the selected items from a classified balance sheet and multiple-step income state ment to the section in […]

Stockholders’ equity is composed of three parts: contributed capital, earnings retained in the business, and dividends paid. a. True b. False The correct term for an entry made to the left side of an account is a. Double-entry system b. […]

Pharma Corp. The data presented below for Pharma Corp. is for the year ended December 31, 2015: See the data for Pharma Corp. If Pharma Corp. uses the aging of accounts receivable approach to estimate its bad debts, what amount […]

The term “chronological order” is best associated with: a. a journal. b. a trial balance. c. credit entries. d. capital stock. Match the following bond and long-term liability related terms to the appropriate definition. a. Long-term liability b. Face value […]

Carl and Stefanie each invest $15,000 in a business and are given shares of stock in Thibeau Industries as evidence of their ownership interests. For this transaction, identify the effect on the accounting equation. a. Assets increase and liabilities increase. […]

Under current accounting principles, how is net income on the income statement measured? a. Net change in owners’ equity during the period b. Excess of revenues over expenses during the period c. Net change in the cash balance during the […]

Depreciation does not describe the increase or decrease in the market value of the asset. a. True b. False Floors, Inc. offers terms of 2/10, n/30 to credit customers. Tile Magic Corp. purchased 100 tile cutters with a list price […]

During May, Aniston, Inc. purchased office supplies for cash. The supplies will be used in June. What effect does this purchase transaction have on the accounting equation? a. Assets increase and stockholders’ equity decreases. b. Assets increase and liabilities increase. […]

Marshland Company uses the straight-line depreciation for financial reporting purposes and an accelerated depreciation method for tax purposes. As a result, Marshland will record: a. a deferred tax asset. b. a deferred tax liability. c. a permanent difference. d. tax-exempt […]

The set of items below was identified in preparing a bank reconciliation for Heath Corp. as of August 31, 2014. Bank statement balance $18,500 Heath’s book balance (before adjustments) ? Outstanding checks 2,700 Customer’s NSF checks 350 Service Charges 100 […]

The income statement is sometimes called the statement of financial position. a. True b. False A check written by a company but not yet presented to the bank for payment is called a check in transit. a. True b. False […]

Which of the following generally indicates a positive change? a. Earnings per share decreases b. The debt service coverage decreases c. The acid-test ratio decreases d. The number of days’ sales in inventory decreases If a company purchases equipment by […]

Which of the following transactions does not affect the total assets of Horizon Sailing Corp.? a. A bill is received for the telephone service used by Horizon Sailing during the past month. b. Dividends are paid by Horizon Sailing. c. […]

If the amount assigned to ending inventory is incorrect , a. The balance sheet is affected, but the income statement is not. b. The income statement is affected, but the balance sheet is not. c. The balance sheet is affected, […]

If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000, how much is working capital? a. $ 6,000 b. $ 24,000 c. $ 27,000 d. $ 45,000 Which of the following statements is […]

Which of the following operating activities results in a cash outflow? a. Paying creditors for merchandise b. Collecting accounts receivable c. Making cash sales d. Receiving deposits recorded as unearned revenue An outstanding check is a check that: a. Has […]

Match the action with the category of internal control procedures a. One department should check on another b. Internal audit staff ensure all is working as intended c. Accounting and cash collection is properly separated d. Blank checks are locked […]

You are comparing three companies that use different depreciation methods. Which of the following would help you the most in making a comparison of the companies? a. The average earnings per share for the quarter. b. Prospective cash receipts. c. […]

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing. a. True b. False Under the periodic inventory system, a physical inventory must be taken at the end of […]

Miguel Foods, Inc. purchased a patent at the beginning of 2013 for $350,000. Economic benefits were expected for 7 years, but the patent’s legal life was 20 years. Also during 2013, the company incurred research and development costs of $270,000. […]

The equity method of accounting for an investment is used when a company purchases a. More than 20% of the debt securities of a second company. b. 100% of the debt securities of a second company. c. 15% of the […]

A company should choose a depreciation method that a. best allocates the original cost of the asset to the periods benefited by the use of the asset. b. saves the most taxes. c. minimizes net income d. shows the highest […]

What is the effect of a stock dividend on stockholders’ equity? a. Stockholders’ equity is decreased. b. Retained earnings is increased. c. Additional paid-in capital is decreased. d. Total stockholders’ equity stays the same. All assets are tangible in nature. […]

Assuming the indirect method for preparing the statement of cash flows is used, indicate whether these items should be added to net income (A), deducted from net income (D), or not be reported in the operating section of the statement […]

From the following list, select the proper section from the statement of cashflows in whi ch it would beclassified. a. Working capital will increase b. Working capital will decrease c. Working capital will not change Borrowed cash using a six-month […]

Which of the following statements is false? a. A balance sheet reports a company’s cash balance at a specific date. b. An income statement reports the amounts of revenue and expense on an accrual basis, not the amount of cash […]

If a company’s asset turnover ratio decreased from 2014 to 2015, which of the following conclusions can be made? a. The company was more efficient during 2015 in using its assets to produce profits. b. The company produced less sales […]

The concept of conservatism is the capacity of information to make a difference in a decision. a. True b. False Which of the following statements is correct? a. Bonds are issued at a price that reflects the stated rate of […]