The payment of taxes would be included in the operating activities section of the
statement of cash flows.
ROI is a performance measure, which uses information only from a company’s income
statement.
In a just-in-time environment, a manager is interested in trends in inventory turnover.
Financial leverage is also known as trading on the equity.
In periods of falling prices, LIFO will result in a higher ending inventory valuation than
FIFO.
The debt to equity ratio is expressed in terms of dollars.
For available-for-sale securities, an unrealized loss on long-term investments appears as
part of other comprehensive income (loss) in the company’s financial statements.
Leasehold improvements are not subject to any form of cost allocation.
On a statement of cash flows prepared using the direct method, the FASB requires that
cash payments for interest be classified as operating activities.
Product unit cost is made up of direct materials and indirect materials only.
A job order costing system measures costs of each processes using an inventory account
for each.
A journal entry is a notation that consists of either a single debit or a single credit that is
recorded in the general ledger.
An adjusted trial balance will probably list fewer accounts than are listed in the trial
balance.
When making decisions to purchase new equipment, managers look into the capital
expenditure budget of an organization
A trial balance may be prepared at any point in time.
Assume the direct method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Increase in Prepaid
Expenses’”indicate the effect on cash payments for operating expenses by choosing one
of the following:
A.Add to operating expenses to arrive at cash payments for operating expenses.
B.Subtract from operating expenses to arrive at cash payments for operating expenses.
C.Not used to adjust operating expenses to arrive ay cash payments for operating
expenses.
The return on assets and the asset turnover ratios are used to analyze
A.leverage.
B.long-term solvency.
C.profitability.
D.liquidity.
Use the following information to obtain the ratios below. Round amounts to one
decimal place
a. Cash flow yield = _______________ times
b. Cash flows to sales = _______________ %
c. Cash flows to assets = _______________ %
d. Free cash flow = $ ________________
Public companies are required to
A.have an independent audit of financial statements.
B.have an audit of the internal control systems.
C.fully document and certify the company’s system of internal controls.
D.do all of these.
Assume the indirect method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Interest Expense (assume that
cash payments are equal to amount reported)’”indicate the effect on net income in
arriving at net cash flows from operating activities by choosing one of the following:
A.Add to net income to arrive at net cash flows from operating activities.
B.Subtract from net income to arrive at net cash flows from operating activities.
C.Not used to adjust net income to calculate net cash flows from operating activities.
Compute the correct amount for each letter in the following table:
Case 1 Case 2 Case 3
Balance per bank statement $ (a) $17,800 $3,980
Deposits in transit 1,200 (b) 250
Outstanding checks 3,000 2,000 150
Balance per books 6,900 18,800 (c)
Which inventory method generally best follows the matching principle?
A.Average-cost
B.LIFO
C.Whichever method is used for tax purposes
D.FIFO
a. Marco Corporation has 6,000 shares of $100 par value, 8 percent cumulative
preferred stock and 10,000 shares of $50 par value common stock outstanding. All
shares were issued at par value. In addition, retained earnings total $198,000. If the
preferred stock is callable at $105 per share and one year’s dividends are in arrears,
compute book value per share of preferred stock.
b. Assume the same facts as in a above. Calculate book value per share of common
stock.
c. Assume the same facts as in a above and that Marco Corporation declares a 15
percent stock dividend on its common stock. If the market value on the declaration date
was $60 per share, for what amount will Additional Paid-in Capital, Common be
credited?
d. Assume the same facts as in a above and that Marco Corporation declares a 4-for-1
stock split on its preferred stock. After the split, total par value of preferred stock equals
what amount?
Zach has bought Biannca’s interest in the A&B Partnership for a $120,000 direct
payment to Biannca. Zach and Biannca’s capital balances before the sale were $48,000
and $72,000, respectively. The entry to record the purchase of interest in partnership is:
Alex International needs 20,000 units of a certain part to use in its production cycle. If
Alex buys the part from Nicole Company instead of making it, Alex could not use the
released facilities in another activity; thus, all of the fixed overhead applied will
continue regardless of what decision is made. Accounting records provide the following
data:
Cost to Alex to make the part:
What should Alex’s decision be, and what is the total cost savings that would result?
A.Buy, $180,000
B.Buy, $20,000
C.Make, $180,000
D.Make, $20,000
The direct method of preparing a statement of cash flows
A.is the overwhelming choice of most companies.
B.begins with net income in the operating activities section.
C.will produce the same net figure as the indirect method.
D.All of these choices.
A. From the simplified balance sheet and income statement of the business below,
compute the following ratios. Assume that the April 30 amounts for total assets and
owner’s equity also represent their average amounts for the period. Round percentages
to the nearest whole percent.
a. Working capital
b. Current ratio
c. Profit margin
d. Return on assets
e. Debt to equity ratio
f. Return on equity
g. Asset turnover
B. Discuss the liquidity and profitability of TG Manufacturing.
Barkely Corporation has invested in the stock of two other corporations, Hayes
Corporation and Motz Corporation. Barkely does not own a controlling interest or
exercise significant influence over either corporation. Barkely’s accountant is preparing
financial statements and has compiled the following information:
What should be the balance in the Allowance to Adjust Long-Term Investments to
Market account, based on the above information?
A)$2,000 credit
B)$4,000 debit
C)$4,000 credit
D)$2,000 debit
All of the following are classified as definitely determinable liabilities except
A.sales tax payable.
B.estimated property tax payable.
C.the current portion of long-term debt.
D.unearned revenue.
Product X sells for $20 per unit and has variable costs of $10 per unit. If the fixed costs
amount to $45,000, the breakeven point will be:
A.4,500 units.
B.1,500 units.
C.2,250 units.
D.6,225 units.
One aspect of the corporate form can be considered both an advantage and a
disadvantage. What aspect is this, and why can it be considered both?
What criteria must be met for accepting any capital expenditure proposal with respect to
minimum rate of return on investment?
Indicate with an X in the appropriate column the type of entry to be made to close the
following accounts:
Assume that the $2,000, 90-day, 8 percent note was received on August 31 and that the
fiscal year ended on September 30. The adjusting entry that would be made to record
the interest receivable is (amounts rounded to nearest dollar):
State the definition of a current asset.
A current asset is cash or another asset that is expected to be converted into cash or
consumed within one year or the normal operating cycle, whichever is longer.
Using the information given below, determine the total standard unit cost.
Round your intermediate calculations and final answers to two decimal places.
A partner invests into a partnership a building with a $50,000 carrying value and
$80,000 fair market value. The related mortgage payable of $25,000 is not assumed by
the partnership. The entry to record the investment in partnership is:
On December 31, 20×5, the X&Y Partnership had the following assets, liabilities, and
partners’ equity:
When the partners agreed to liquidate the business, the assets were sold for $160,000
and the liabilities were paid. X and Y share profits and losses in a ratio of 3:1,
respectively. What is the final cash distribution to each partner after liquidation?
Given the following ledger account and postings, complete the Balance column.
Assume no previous postings in the account
