Archives: Quiz

Financial intermediaries such as banks typically have assets that are riskier than their liabilities. The stated commission on a load mutual fund is not an accurate depiction of the commission (load). True False Answer: True An unsecured bond that has […]

The ongoing accumulation of foreign currency reserves by foreign monetary authorities contributed to the dollar’s drop in 2006. Everything else equal, the interest rate required on a callable bond will be less than the interest rate on a convertible bond. […]

Wholesale CDs obtained from an investment house rather than directly from a customer are referred to as brokered deposits. A country with lower interest rates than another country is likely to see its currency appreciate if parity holds. Answer: TRUE […]

If the United States has inflation of 3 percent and Europe has inflation of 5 percent, the value of the euro should increase, ceteris paribus. Forward contracts are marked to market daily. Answer: FALSE Switching between mutual funds in the […]

In a service-type business, revenue is recognized: a.at the end of the month. b.at the end of the year. c.when the service is performed. d.when cash is received. Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and […]

A company has the following assets: The total amount reported under Property, Plant, and Equipment would be a.$27,500,000. b.$22,000,000. c.$24,500,000. d.$23,000,000. Anderson Inc. sells $900 of merchandise on account to Baltic Company with credit terms of 2/10, n/30. If Baltic […]

American Importers reports net income of $50,000 and cost of goods sold of $450,000. If the company’s gross profit rate was 40%, net sales were a.$750,000. b.$1,125,000. c.$1,175,000. d.$825,000. Use the following information to calculate for the year ended December […]

Porter Company has just purchased equipment that requires annual payments of $22,500 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15%. What is the present value of the payments? a.$64,237 […]

If Pratt Company issues 5,000 shares of $5 par value common stock for $210,000, the account a.Common Stock will be credited for $185,000. b.Paid-in Capital in Excess of Par Value will be credited for $210,000. c.Paid-in Capital in Excess of […]

Andrea’s Fashions sold merchandise for $95,000 cash during the month of July. Returns that month totaled $2,000. If the company’s gross profit rate is 40%, Andrea’s will report monthly net sales revenue and cost of goods sold of a.$95,000 and […]

The following information is from the Income Statement of the Dirt Poor Laundry Service: The entry to close the Income Summary includes a: a.credit to Income Summary for $2,450. b.debit to Income Summary for $2,450. c.debit to Retained Earnings for […]

If a corporation issued $8,000,000 in bonds which pay 5% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%? a.$4,000,000 b.$120,000 c.$400,000 d.$280,000 The cash records of Landis Company show […]

The journal entry to record a credit sale ignoring cost of goods sold is a.Cash Sales Revenue b.Cash Service Revenue c.Accounts Receivable Sales Returns and Allowances d.Accounts Receivable Sales Revenue On January 15, Nifty Company sells merchandise on account to […]

The following information is available from the annual reports of Reser Company and Trent Company Instructions (a)Based on the preceding information, compute the following values for each company: 1)Asset turnover ratio 2)Return on assets (b)What conclusion concerning the management of […]

Which of the following is not a satisfactory statement of the accounting equation? a.Assets = Stockholders’ Equity – Liabilities b.Assets = Liabilities + Stockholders’ Equity c.Assets – Liabilities = Stockholders’ Equity d.Assets – Stockholders’ Equity = Liabilities Tina’s Boutique has […]

The Scarlet Pages, a semi-professional hockey team, prepare financial statements on a monthly basis. Their season begins in October, but in September the team engaged in the following transactions: (a)Paid $150,000 to Oklahoma City as advance rent for use of […]

In the table below the information for four companies is provided. If Garner’s net credit sales are $290,000, what are its average net accounts receivable? a.$11,508 b.$20,000 c.$42,050 d.$73,080 Forcum Company reports the following information (in millions) during a recent […]

The current assets of Orangette Company are $227,500. The current liabilities are $130,000. The current ratio expressed as a proportion is a.175%. b.1.75:1. c..57:1. d.$210,000 / $120,000. Aber Company buys land for $145,000 on 12/31/13. As of 3/31/14, the land […]

A machine that was purchased on January 1 for $45,000 has an estimated salvage value of $9,000. If the machine’s depreciation rate is 20%, its annual depreciation is a.$9,000. b.$36,000. c.$7,200. d.$10,800. La Vida Corporation issued 24,000 shares of no-par […]

Ed’s Drive-In $175,000 of current assets and $80,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Ed’s Drive-In’s current ratio? a.The ratio remained unchanged. b.The change […]

BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $400,000 in 2014. The weighted average number of shares outstanding in 2014 was 500,000 shares. BVI Corporation’s common stock is selling for $50 per share on […]

Identify the internal control procedures applicable to cash receipts for Colorado Company in each of the following situations. Financial information is presented below: The amount of net sales on the income statement would be a.$154,000. b.$150,000. c.$160,000. d.$156,000. Answer: B […]

In 2014 Wilkinson Company had net credit sales of $1,500,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $36,000. During 2014, $60,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance […]

The trial balance for Greenway Corporation appears as follows: If, on December 31, 2014, supplies on hand were $20, the adjusting entry would contain a: a.debit to Supplies for $20. b.credit to Supplies for $20. c.debit to Supplies Expense for […]

The board of directors of Bosco Company declared a cash dividend on November 15, 2014, to be paid on December 15, 2014, to stockholders owning the stock on November 30, 2014. Given these facts, the date of November 30, 2014, […]

On March 1, Cooper Company borrows $80,000 from New National Bank by signing a 6-month, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Cooper Company. (a)Prepare the entry on March […]

IFRS allows companies to revalue plant assets to fair value. Which of the following statements is correct regarding revaluation? a.At the time a company purchases an asset it must decide whether to follow revaluation procedures for the asset; once the […]

Machinery was purchased for $170,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $30,000 salvage value at the end […]

All of the following statements are true regarding the average collection period except: a.it is a popular variant of the accounts receivable turnover . b.it is used to assess the effectiveness of a company’s credit and collection policies. c.it should […]

A plant asset was purchased on January 1 for $45,000 with an estimated salvage value of $5,000 at the end of its useful life. The current year’s Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of […]

Kilmer Corporation began the year with retained earnings of $620,000. During the year, the company issued $840,000 of common stock, recorded expenses of $2,400,000, and paid dividends of $160,000. If Kilmer’s ending retained earnings was $660,000, what was the company’s […]

ABC Company accepted a national credit card for a $7,000 purchase. The cost of the goods sold is $5,600. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income? a.Increase by […]

Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation’s common stockholders’ equity at the beginning and end of 2014 was $450,000 and $550,000, respectively. Herman […]

Hoover Company had beginning inventory of $15,000 at March 1, 2014. During the month, the company made purchases of $55,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of […]

Which of the following items is not considered to be a cash equivalent? a.Short-term highly liquid investments maturing in 30 days b.Commercial paper c.Restricted cash funds d.Money market funds Land costing $125,000 was sold for $325,000 cash. The gain on […]

What is a difference between the profit margin and the gross profit rate? a.None, these are interchangeable terms. b.The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net […]

Several investors are anticipating an investment in a company that has performed quite well over the past few years. Which of the following income statement amounts will likely be the best indicator of the company′s future performance? a.Gross profit b.Sustainable […]

Marvin Services Corporation had the following accounts and balances: If total stockholder’s equity was $57,000, what would be the balance of the Buildings Account? a.$21,000 b.$81,000 c.$87,000 d.$27,000 Given the following data for the King Company: How would common stock […]

The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on […]

The following amounts were taken from the financial statements of Ando Company: The profit margin ratio for 2014 is a.20.6%. b.21.0%. c.20%. d.40.9%. Fornelli Corporation borrowed $480,000 from Central Bank on May 31, 2013. The three-year, 7% note required annual […]

Classic Floors has the following inventory data: Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July? a.$465.60 b.$702.00 c.$354.00 d.$236.40 The interest charged on a $250,000 note payable, […]

The following totals for the month of March were taken from the payroll records of Kern Company. The entry to record accrual of employer’s payroll taxes would include a a.debit to Payroll Tax Expense for $7,263 b.debit to Payroll Tax […]

The following totals for the month of March were taken from the payroll records of Kern Company. The entry to record the payment of net payroll would include a a.debit to Salaries and Wages Expense for $34,074. b.debit to Salaries […]

SCI Company deposits $15,000 in a fund at the end of each year for 7 years. The fund pays interest of 3% compounded annually. The balance in the fund at the end of 7 years is computed by multiplying a.$15,000 […]

Whitman Corporation sells six different products. The following information is available on December 31: When applying the lower of cost or market rule to each item, what will Whitman’s total ending inventory balance be? a.$173,000 b.$166,200 c.$166,550 d.$166,400 If a […]

A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $252,000, what is […]

The corporate charter of Torres Corporation allows the issuance of a maximum of 4,000,000 shares of $1 par value common stock. During its first three years of operation, Torres issued 2,080,000 shares at $15 per share. It later acquired 80,000 […]

Shannon Company issued $1,000,000, 8%, 10-year bonds on December 31, 2013, for $960,000. Interest is payable annually on December 31. Shannon uses the straight-line method to amortize bond premium or discount. Instructions Prepare the journal entries to record the following […]

The quality of consistency enhances a.relevance. b.materiality. c.comparability. d.faithful representation. A common measure of profitability is the a.current ratio. b.current cash debt coverage. c.return on common stockholders’ equity. d.debt to assets. Answer: C Use the following data to calculate the […]

A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the a.legal capital is $2,780,000. b.number of shares issued is 80,000. c.number of shares outstanding […]