Three organizations important to accounting are listed below. Select the organization th
at most closely achieves the role described.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Issues financial accounting concepts
that are used as a guide to accounting standard setting.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
or event would be reported on a statement of cash flows if the operating activities
section is prepared using the indirect method.
a. Operating activity-add to net income
b. Operating activity-deduct from net income
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Increased the accounts receivable balance.
The LIFO conformity rule requires that if a company uses LIFO in reporting income to
stockholders, it also must use LIFO on its tax return.
a. True
b. False
Latahmer Corporation is reconciling its May bank account. For each item listed, state
how it would be handled on the bank reconciliation.
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to book balance
d. Subtraction from book balance
e. Would not appear on the May reconciliation
Service charge on the May bank statement for new checks
Speed Wear Bicycle Gear accepts VISA credit cards from its customers. Speed Wear is
closed on Sundays and on that day records the weekly sales and remits the credit card
drafts to VISA. For the week ending on Sunday, April 12, cash sales totaled $3,650 and
credit card sales amounted to $3,900. On April 15, Speed Wear received $3,794.70 from
VISA as payment for the credit card drafts. Prepare the necessary journal entries on
April 12 and April 15. As a percentage, what collection fee is VISA charging Speed
Wear?
All of the following describe a revenue except :
a. A revenue can result in the inflow of assets.
b. A revenue can result in the settlement of liabilities from the delivery or distribution of
goods.
c. A revenue can result in the settlement of liabilities from rendering services.
d. A revenue must involve an inflow of assets.
For several years, Flame Corporation has had a current ratio that was consistent with
other companies in its industry. For the most recent year, Flame’s current ratio was
significantly higher than that for the industry. What is the best possible explanation for
this situation?
a. The other companies in the industry were not as profitable.
b. Flame’s liquidity has improved or is not leveraging financial resources effectively.
c. Flame has less property, plant and equipment than other companies.
d. Flame has too much debt.
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 the need described to the right of the blank. Some
user groups may be used more than once or not at all.
a. Capital stock
b. Asset
c. Owners’ equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
The assumption that an entity is notin the process of liquidation and that it will continue
indefinitely.
Readers.com uses a perpetual inventory system.
If Readers.com uses the moving average method, how much is ending inventory on
February 28?
a. $300
b. $306
c. $312
d. $318
The time period assumption assumes a company prepares financial statements every
month.
a. True
b. False
Which one of the following steps in the accounting cycle is completed only at the end
of an accounting period?
a. Business transactions are recorded.
b. Adjustments are recorded.
c. Transactions are journalized.
d. Journal entries are posted to the ledger.
For each of the following intangible assets, indicate the amount of amortization expense
that should be recorded for the year 2014 and the amount of accumulated amortization
on the balance sheet as of December 31, 2014.
The accounts receivable turnover ratio is computed by dividingby average accounts
receivable.
Learning Tree, Inc. The following data is available for one of the products sold by
Learning Tree, Inc., which uses the perpetual inventory system:
Refer to the data for Learning Tree, Inc. If the moving average method is used, what is
the amount assigned to cost of goods sold for the 2,500 units sold on May 10?
As a result of rapid technology changes.
Falcon Company has 1,000 shares of $100 par value, 9% preferred stock and 10,000
shares of $10 par value common stock outstanding. The preferred stock is cumulative
and nonparticipating. Dividends were paid in 2012. Since 2012, Falcon has declared
and paid dividends as follows:
Required
1> Determine the amount of the dividends to be allocated to preferred and common
stockholders for each year 2014 to 2016.
2> If the preferred stock had been noncumulative, how much would have been
allocated to the preferred and common stockholders each year?
A(n)is a form that a department uses to initiate a request to order merchandise.
The basis of accounting that fails to take into consideration amounts earned that are
not collected and expenses incurred but are not paid is the
_________________________.
Hu Corporation Use the following Assets section of Hu Corporation’s balance sheets for
the years ended December 31, 2015 and 2014 to answer the questions that follow.HU
CORPORATION
Assets Section of Consolidated Balance Sheets (in millions)at December 31,
Refer to the information for Hu Corporation.
On January 1, 2015, Blankenship Solutions began business. The company offers
scalable cloud computing to small businesses for a monthly fee of $0.25 per gigabyte,
$.05 per hour for public IP addresses, and $.01 per hour for Internet services. During
January, 150 companies signed up for the service, and each will have until the fifth of
the following month to pay the monthly fee. By the end of January, 120 companies had
paid the monthly fee for an average company usage of 100 gigabytes. In addition, IP
addresses were accessed for an average of 680 hours per company and Internet services
averaged 600 hours per company during January. Assume that Blankenship Solutions
uses the accrual basis of accounting. REQUIRED
1> Prepare the Revenues section of Blankenship Solutions’ income statement for the
month of January.
2> Prepare the Cash Receipts section of Blankenship Solutions’ statement of cash flows
for the month of January.
3> In addition to the Cash account, what other account will appear on Blankenship
Solutions’ balance sheet at the end of January? What amount will be in this account?
The inventory of a(n)consists of three distinct types of costs: direct materials, direct
labor, and manufacturing overhead.