A credit will increase ________, but decrease ________.
a.accounts receivable; accounts payable
b.accounts receivable; expenses
c.accounts payable; common stock
d.common stock; prepaid insurance
Bonds with a face value of $400,000 and a quoted price of 98½ have a selling price of
a.$393,000.
b.$392,200.
c.$392,020.
d.$394,000.
A common measure of liquidity is
a.return on assets.
b.accounts receivable turnover.
c.profit margin.
d.debt to equity.
Given the data below for a firm in its first year of operation, determine net income
under the cash basis of accounting.
a.$22,000
b.$31,000
c.$24,000
d.$15,000
The financial statements of the Phelps Manufacturing Company reports net sales of
$500,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year
and end of year, respectively. What is the accounts receivable turnover for Phelps?
a.8.3 times
b.12.5 times
c.6.3 times
d.4.2 times
Potter Company has purchased a patent that requires annual payments of $31,250 to be
paid at the end of each of the next 6 years. The appropriate discount rate is 12%. What
amount will be used to record the patent?
a.$187,500
b.$128,482
c.$172,679
d.$120,469
Seachest Company reports the following:
If cost of goods sold for the year is $190,000, the amount of cash paid to suppliers using
the direct method is
a.$195,000.
b.$185,000.
c.$155,000.
d.$230,000.
Which one of the following would be considered a long-term solvency ratio?
a.Accounts receivable turnover
b.Return on assets
c.Current cash debt coverage
d.Debt to assets ratio
Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on
January 1, 2013. The bonds had a face value of $600,000, pay interest annually on
December 31st, and have a call price of 101. Winrow uses the straight-line method of
amortization. Winrow Company decided to redeem the bonds on January 1, 2015. What
amount of gain or loss would Winrow report on its 2015 income statement?
a.$27,600 gain
b.$33,600 gain
c.$33,600 loss
d.$27,600 loss
Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on
January 1, 2013. The bonds had a face value of $400,000, pay interest annually on
December 31st, and have a call price of 102. Sparks uses the straight-line method of
amortization. Sparks Company decided to redeem the bonds on January 1, 2015. What
amount of gain or loss would Sparks report on their 2015 income statement?
a.$18,400 gain
b.$10,400 gain
c.$10,400 loss
d.$18,400 loss
Skypress Company collected $8,400 in May of 2013 for 4 months of service which
would take place from October of 2013 through January of 2014. The revenue reported
from this transaction during 2013 would be:
a.$0.
b.$6,300.
c.$8,400.
d.$2,100.
Lankston Company began the year by issuing $90,000 of common stock for cash. The
company recorded revenues of $825,000, expenses of $720,000, and paid dividends of
$45,000. What was Lankston’s net income for the year?
a.$60,000
b.$150,000
c.$105,000
d.$195,000
Quark Inc. just began business and made the following four inventory purchases in
June:
A physical count of merchandise inventory on June 30 reveals that there are 200 units
on hand. Using the FIFO inventory method, the amount allocated to ending inventory
for June is
a.$1,105
b.$1,100
c.$1,170
d.$1,180
The following information pertains to Benedict Company. Assume that all balance sheet
amounts represent average balance figures.
What is the payout ratio for Benedict?
a.40%
b.24%
c.16%
d.6%
Assume that the E-Zip Corporation uses the indirect method to depict cash flows.
Indicate where, if at all, common stock issued for cash would be classified.
a.Operating activities section.
b.Investing activities section.
c.Financing activities section.
d.Does not represent a cash flow.
Free cash flow is Net cash provided by operating activities
a.less capital expenditures.
b.less cash dividends.
c.less capital expenditures and cash dividends.
d.less capital expenditures and salaries expense.
Benedict Company compiled the following financial information as of December 31,
2014:
Benedict’s retained earnings on December 31, 2014 are
a.$300,000.
b.$360,000.
c.$320,000.
d.$ 20,000.
What is the total stockholders’ equity based on the following account balances?
a.$1,400,000.
b.$1,820,000.
c.$1,760,000.
d.$1,700,000.
The cash records of the Dillon Company show the following:
There were no bank debit or credit memoranda and no errors were made by either the
bank or the Dillon Company.
Answer the following questions:
(a)What were the deposits in transit at August 31?
(b)What were the outstanding checks at August 31?
Sampson Company’s accounting records show the following for the year ending on
December 31, 2014.
Using the periodic system, the cost of goods purchased is
a.$330,210.
b.$354,210.
c.$358,610.
d.$345,810.
The ratio used to assess the liquidity of accounts receivable is the ______________.
Clinix is a medical office management franchise. There are currently twenty-five
medical offices managed by a Clinix franchisee. One of the services provided to
franchisees is assistance in training various staff members.
Clinix is preparing a manual for the front office staff to use as a reference guide. It will
be used in training new employees as well. One of the reasons the manual is being
prepared is to stress the importance of strong internal controls.
Prepare a short paragraph, to be included in the training materials, describing the
benefits of sound internal control, from the viewpoint of the employee.
A plant asset originally cost $64,000 and was estimated to have a $4,000 salvage value
at the end of its 5-year useful life. If at the end of three years, the asset was sold for
$12,000, and had accumulated depreciation recorded of $36,000, the company should
recognize a ______________ on disposal in the amount of $____________.
On October 1, 2014, Finley Company establishes a petty cash fund by issuing a check
for $200 to Sara Mead, the custodian of the petty cash fund. On October 31, 2014, Sara
Mead submitted the following paid petty cash vouchers for replenishment of the petty
cash fund when there is $7 cash in the fund:
Instructions
Prepare the journal entries required to establish the petty cash fund on October 1 and
the replenishment of the fund on October 31.
Listed below in alphabetical order are the balance sheet items of Nolan Company at
December 31, 2014. Prepare a balance sheet and include a complete heading.
The following information is available for Quayle Company:
Instructions
1>Use the above information to prepare a multiple-step income statement for the year
ended December 31, 2014.
2>Compute the profit margin.
Selected accounts from the ledger of McDaniel Corporation appear below. For each
account, indicate the following:
In the first column at the right, indicate the nature of each account, using the following
abbreviations:
(b) In the second column, indicate the normal balance by inserting Dr. or Cr.
Mideast Airlines purchased a 777 aircraft on January 1, 2012 at a cost of $40,000,000.
The estimated useful life of the aircraft is 20 years, with an estimated salvage value of
$6,000,000.
Instructions
Compute the accumulated depreciation and book value at December 31, 2014 using the
straight-line method and the double-declining-balance method.