Which of the following transactions would cause net income for the period to decrease?
A.Paid $2,500 cash for raw material cost
B.Purchased $8,000 of merchandise inventory
C.Recorded $5,000 of depreciation on production equipment
D.Paid $2,000 for production supplies
On January 1, 2013, Lamb and Mona LLP admitted Noris to a 20% interest in net assets
for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had
net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona.
After the admission of Noris, the partnership contract included the following
provisions:
– Salary of $40,000 a year to Noris.
– Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%.
– During the fiscal year ended December 31, 2013, the partnership had income of
$90,000 prior to recognition of salary to Noris.
Record the journal entry to allocate the salary of Noris.
The Fortune Company reported the following income for 2014:
What is the company’s number of times interest is earned ratio?
A.7 times
B.6 times
C.4 times
D.None of these answers is correct.
Which of the following is/are objective(s) of ratio analysis?
A.Assessing past performance.
B.Assessing the prospects for future performance.
C.Analyzing how a company finances its operations.
D.All of these answers are correct.
Which of the following cash flow patterns represents of an annuity?
A.A
B.B
C.C
D.Any of the answers can represent an annuity.
The capital account balances for Donald & Hanes LLP on January 1, 2013, were as
follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The
partners agreed to admit May to the partnership with a 35% interest in partnership
capital and net income. May invested $100,000 cash, and no goodwill was recognized.
What is the new total balance of the partnership accounts?
A.$84,000.
B.$140,000.
C.$176,000.
D.$200,000.
E.$400,000.
Partnerships have alternative legal forms including all of the following except:
A.General Partnership.
B.Limited Partnership.
C.Subchapter S Partnership.
D.Limited Liability Partnership.
E.Limited Liability Company.
On January 1, 2014, Fleming Company borrowed $160,000 cash from the First Trust
Bank by issuing a five-year 8% term note. The principal and interest are repaid by
making annual payments beginning on December 31, 2014. The annual payment on the
loan was $40,074.
The amount of principal repayment included in the December 31, 2014 payment is:
A.$27,274.
B.$27,615.
C.$37,329.
D.$40,575.
The dissolution of a partnership occurs
A.only when the partnership sells its assets and permanently closes its books.
B.only when a partner leaves the partnership.
C.at the end of each year, when income is allocated to the partners.
D.only when a new partner is admitted to the partnership.
E.when there is any change in the individuals who make up the partnership.
During its first year of operations, Forrest Company paid $30,000 for direct materials
and $50,000 in wages for production workers. Lease payments, utility costs, and
depreciation on factory equipment totaled $15,000. General, selling, and administrative
expenses were $20,000. The average cost to produce one unit was $2.50. How many
units were produced during the period?
A.40,000
B.46,000
C.38,000
D.None of these.
During a reorganization, cash reserves tend to grow. How should interest earned on
these reserves be reported on the financial statements?
A.as an unearned revenue until the reorganization is complete.
B.as a credit directly to retained earnings.
C.on the balance sheet as a long-term liability.
D.on the income statement, but not classified as a reorganization item.
E.on the income statement as a reorganization item.
The following information pertains to inventory held by a company at December 31,
2013.
What is the amount of inventory loss shown on the income statement under U.S.
GAAP?
A.$1,000.
B.$2,000.
C.$4,000.
D.$5,000.
E.$8,200.
The following balance sheet information was provided by O’Connor Company:
Assuming that net credit sales for the year 2014 totaled $270,000, what is the
company’s most recent accounts receivable turnover?
A.18 times
B.20 times
C.22.5 times
D.7.7 times
Norris Company experienced the following transactions during 2013, its first year in
operation.
1) Issued $6,000 of common stock to stockholders.
2) Provided $2,300 of services on account.
3) Paid $1,600 cash for operating expenses.
4) Collected $1,900 of cash from accounts receivable.
5) Paid a $100 cash dividend to stockholders.
The amount of retained earnings appearing on Norris Company’s December 31, 2013
balance sheet is:
A.$500.
B.$600.
C.$700.
D.$6,600.
The following data are from the income statement of Rathbun Company:
The company’s gross margin percentage is:
A.12.5%.
B.37.5%.
C.62.5%.
D.60.0%.
What is the purpose of the SEC’s Regulation S-K?
Lucky Co. had cash of $65,000, inventory worth $117,000, and a building worth
$169,000. Unfortunately, the company also had accounts payable of $234,000, a note
payable of $104,000 (secured by the inventory), liabilities with priority of $26,000, and
a bond payable of $195,000 (secured by the building).
Assets available for unsecured creditors after payment of liabilities with priority are
calculated to be what amount?
What occurs in the accounting records for fresh start accounting when a bank agrees to
accept less than the debtor’s book value of a note payable?
By what methods can a person gain admittance to a partnership?
What was the purpose of the Securities Act of 1933?
What are the four categories of debts in a Statement of Financial Affairs?
Lucky Co. had cash of $65,000, inventory worth $117,000, and a building worth
$169,000. Unfortunately, the company also had accounts payable of $234,000, a note
payable of $104,000 (secured by the inventory), liabilities with priority of $26,000, and
a bond payable of $195,000 (secured by the building).
Total unsecured liabilities are calculated to be what amount?
What are the six key FASB initiatives to further convergence?