Presented below are selected data from the financial statements of Carnival Corp. for
2016 and 2015.
The acid-test ratio is a stricter test of a company’s ability to pay its current debts as they
are due than the current ratio is.
a. True
b. False
The return on sales ratio is a variation of the profit margin ratio.
a. True
b. False
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) Has the ultimate authority to set
accounting standards, but has allowed the profession to do so.
Financial statements should be prepared before any adjustments are made.
a. True
b. False
The effective interest rate method of amortization amortizes the discount or premium in
a manner that produces a constant amount of interest expense from period to period.
a. True
b. False
Accountants often prepare work sheets at the end of an accounting period in place of
financial statements.
a. True
b. False
The Dividend account is known as which of the following?
a. Nominal account
b. Closing account
c. Real account
d. both b and c
Morton & Associates Use the following five transactions for Morton & Associates, Inc.
to answer the question(s).
See the transactions to Morton & Associates. The journal entry to record the May 31
transaction will include a credit to
a. Salaries Expense
b. Salaries Payable
c. Prepaid Salaries
d. Cash
A company using the periodic inventory system must total the selling prices of the units
on hand at the end of the period to value the ending inventory.
a. True
b. False
When Carson Real Estate Company sells equipment for a loss, the Loss on Sale of
Asset is treated as accumulated depreciation.
a. True
b. False
Most annual reports now include a report of management to the stockholders. In this
report, which group has the primary responsibility for the preparation and integrity of
the financial statements?
a. Management
b. The company’s CPAs
c. The company’s internal audit staff
d. The audit committee of the company’s board of directors
Share, Inc. The following data is available for one of the products sold by Share, Inc.,
which uses a perpetual inventory system.
Refer to the data for Share, Inc. If the moving average method is used, how much is
cost of goods sold for May?
In a vertical analysis, the base, or benchmark, on which all other items in the income
statement are compared is:
___________________.
The denomination or principal amount of the bond is usually referred to as the.
The three types of analysis that involve ratios are,, and
____________________.
Marathon Street Bank sent Flank Industries their end of month bank statement for
October. The end of month balance by the bank is $11,229. From the statement, it can
be determined that a deposit for $4,250 is in transit at the end of the statement period.
Also the statement reveals that checks for $86, $106, and $95 are outstanding.
Marathon Street collected a 90 day, 12% interest $4,000 note receivable charging $20
for the service. No interest has been accrued on the note. The bank charges a monthly
account fee of $35. The end of month balance per company books is $11,127.
REQUIRED:
Complete a bank/account reconciliation and write any necessary journal entries for the
reconciliation.
controls primarily concern safeguarding of assets and ensuring the reliability of the
financial statements.
Cash flows from purchases, sales, and maturities of investments are usually classified
as activities.
Giant-Mart purchased a large shipment of shoes from Primus, Inc. on credit near the
end of its accounting period. Primus shipped the shoes in January and Giant-Mart
received the shoes in February. Assume that Giant-Mart’s accounting period ends on
January 31, while Primus’ accounting period ends on May 31. Answer each independent
question in the set that follows. REQUIRED : If the shoes are shipped FOB
destination, when should Giant-Mart record the purchase? If the shoes are shipped FOB
shipping point, when should Giant-Mart record the purchase?