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Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method : a. Operating b. Investing c. Financing d. Not separately reported on […]

Hsu Company purchased a truck on May 31, 2012 for $70,000. The equipment has an estimated useful life of five years. What amount will appear on Hsu Company’s balance sheet for total accumulated depreciation at May 31, 2015? a. $14,000 […]

Accountants are the main reason financial statements are prepared. a. True b. False Each account has a normal balance. For the following list of accounts, indicate whether the normal balance of each is a debit or a credit. a. Debit […]

Prairie Charters reported the following information at December 31, 2015: The average recorded value per share of common stock at December 31, 2015 is a. $1.00 b. $1.75 c. $1.25 d. $2.50 In the statement of cash flows, a decrease […]

The operating cycle for all businesses is one year. a. True b. False Under the double-entry system of accounting, every transaction is entered in at least two accounts on opposite sides of T accounts. a. True b. False Answer: True […]

Which of the following terms does not describe the interest rate printed on the bond certificate? a. Coupon rate b. Effective rate c. Face rate d. Stated rate Because of its objective nature, historical cost is the attribute used to […]

When a company declares a stock dividend, which of the following occurs? a. A liability is created. b. Retained earnings is reduced. c. Stockholders’ equity is decreased. d. The financing section of the statement of cash flows is decreased. Long-term […]

If cost of goods sold does not equal the cost of merchandise purchased during the period, an adjustment must be made to correct the error. a. True b. False Identify which of the following would be recorded as external events, […]

Finished goods are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale. a. True b. False When a lease is classified as an operating lease, the lease liability […]

Information taken from the accounting records of Airways, Inc., for the year ended December 31, 2015, appears in the table below. In the space provided, indicate in which section of the statement of cash flows (investing or financing) each item […]

On December 1, 2014, Xeon Company bought land and an accompanying warehouse from Yen Company for $800,000. The fair market values of the land and the building at the time of purchase were $700,000 and $300,000, respectively. How much of […]

Which of the following statements is false regarding U.S. GAAP versus IFRS financial statement presentation? a. U.S. GAAP does not require the presentation of a classified balance sheet. b. IFRS requires the classification of assets and liabilities as current and […]

A company is not required to prepare both a(n) a. Income statement and statement of stockholders’ equity. b. Income statement and statement of retained earnings. c. Statement of stockholders’ equity and statement of retained earnings. d. Statement of cash flows […]

Which one of the following items is reported as a current asset on a classified balance sheet? a. Inventory b. Accounts payable c. Land d. Common stock If Ash Company had sales during the year of $10,000,000, an average accounts […]

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 […]

Which of the following is a total dollar measure of liquidity? a. accounts receivable turnover ratio b. cash to cash operating cycle c. number of days’ sales in inventory d. working capital Refer to the data for Benton Corporation. What […]

Select the term from the list below that matches each of the following six descriptions. a. Interest b. Maturity value c. Principal d. Payee e. Discounting f. Term g. Recourse h. Implicit i. Maker The difference between the principal amount […]

Identify each of the following items as operating (O), investing (I), or financing (F) activities on the statement of cash flows(assuming the indirect method). If an item is not on the statement, please mark it as none of these (N). […]

Presented below are selected data from the financial statements of Carnival Corp. for 2016 and 2015. The acid-test ratio is a stricter test of a company’s ability to pay its current debts as they are due than the current ratio […]

Tracy, Inc. Tracy, Inc. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows: Refer to the trial balance for Tracy, Inc.According to contracts, […]

According to the Sarbanes-Oxley Act of 2002, only external auditors can provide bookkeeping services for the clients they audit. a. True b. False Which one of the following documents is used in the control of cash disbursements? a. Income Statement […]

There is a standard format in various countries for the statement of financial position. a. True b. False Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. a. Add to […]

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 […]

A cancelled check would be a source document for which of the following? a. recording a purchase of inventory on credit b. recording cash received on an customer account c. recording accrued payroll d. recording a cash payment to a […]

a. A liability resulting from the signing of a promissory note. b. A measure of how long it takes to collect receivables. c. A written promise to repay a definite sum of money on demand or at a fixed or […]

For the statement of cash flows, companies are required to classify their cash activities into three categories: operating, investing, and borrowing. a. True b. False To review the current market price of the stock, one should review the a. balance […]

The asset account, Supplies, has a balance of $700 on January 1. During January, the company purchased $16,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance […]

Identify whether the following investor questions are associated with (a) primary or sec ondary financial reporting objectives. a. primary financial reporting objective b. secondary financial reporting objective How much revenue will Apple generate during the time period in which I […]

The accountant for Darden Corp. was preparing a bank reconciliation as of April 30, 2014. The following items were identified: In addition, Darden made an error in recording a customer’s check; the amount was recorded in cash receipts as $150; […]

Gross margin as a percentage of sales is a common analytical tool for service companies. a. True b. False Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period? a. […]

Which of the following would not appear on an income statement? a. Sales revenue b. Cost of goods sold c. Accounts receivable d. Insurance expense The FASB has allowed certain items to be reported directly to stockholders’ equity in an […]

When stock is issued for a noncash asset, the par value of the stock is the best indicator of the value of the asset. a. True b. False Select the letter of the term each statement best describes. a. authorized […]

Which one of the following is not an external user of financial information? a. Company management b. Internal Revenue Service c. Creditors d. Stockholders In the statement of cash flows, an increase in a current liability will appear as an […]

For 2015, Wasabi Company has accounting revenues of $6,000. However, because of temporary differences between tax and accounting, $1,000 of this is not subject to tax. If expenses are $3,000 for both tax and accounting, and the tax rate is […]

Checks received from customers are considered to be cash in the company’s books. a. True b. False Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a […]

The net assets of a company are equal to a. current assets less current liabilities. b. total assets less current assets. c. long-term assets less accumulated depreciation. d. the stockholders’ equity. Identify whether the following investor questions are associated with […]

Moss Company Moss Company has provided the following information from its accounting records for the current year: Read the information for Moss Company. What are Moss’ current liabilities? a. $ 50,000 b. $ 125,000 c. $ 200,000 d. $ 230,000 […]

The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Cory and Ginger want to buy an airplane. They find one that will cost […]

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital? a. The issuance of stock decreases several important financial ratios. b. Issuing bonds dilutes the voting power of the stockholders. c. […]

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 […]

Every accounting transaction affects both the balance sheet and the income statement. a. True b. False From the following list, select the proper section from the statement of cashflows in whi ch it would beclassified. a. Operating Activities b. Investing […]

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 […]

Employees earn $5,000 per day, work five days per week, Monday through Friday, and get paid every Friday. If the previous payday was January 26 and the accounting period ends on January 31, what amount is the ending balance in […]

Select the letter of the term each statement best describes. a. authorized shares b. issued shares c. outstanding shares d. par value e. additional paid-in capital f. retained earnings g. cumulative feature h. participating feature i. callable stock j. treasury […]

Use the information below for Barton Shipping Corp. for 2015 and 2016 to answer the following question. How much cash did Barton Shipping pay for dividends during 2016? a. $ 95,000 b. $105,000 c. $115,000 d. $140,000 Plant assets, current […]

Significant differences exist in terms on financial statements around the world. For example, another name for what we know as Additional Paid-In Capital in the U.S. is: a. Share Capital b. Capital Reserves c. Provisions for Other Risks d. Deferred […]

Match the following bond and long-term liability related terms to the appropriate definition. a. Long-term liability b. Face value c. Debenture bonds d. Serial bonds e. Callable bonds f. Face rate of interest g. Market rate of interest h. Bond […]

When a liability is accrued, the account debited in the transaction is a stockholders’ equity account. a. True b. False Which one of the following is the last step in the accounting cycle? a. Journalizing business transactions b. Recording and […]

Pierce Corp. identified the following data in preparing a bank reconciliation on October 31, 2014. Bank statement balance $29,600 Pierce’s book balance (before adjustments) ? Outstanding checks 3,100 NSF checks 300 Service charges 200 Deposits in transit 2,200 Interest earned […]

When did the SEC drop its long-standing rule that required foreign companies that filed financial statements with it to adjust those statements to conform with U.S. GAAP and allow them to use IFRS? a. 2001 b. 2007 c. 2009 d. […]