1) use the following data to calculate the current ratio.
a.1.81 : 1
b.1.44 : 1
c.3.07 : 1
d.2.69 : 1
2) the amount you must deposit now in your savings account paying 6% interest, in
order to accumulate $4,000 for a down payment 5 years from now on a new zippie mpg
sedan is
a.$800.00
b.$2,989.04
c.$2,984.88
d.$2,800.00
3) which of the following would not be considered a change in accounting principle?
a.changing the estimated percentage used in calculating bad debt expense
b.changing the inventory costing method used from fifo to lifo
c.changing from straight-line depreciation to double-declining balance depreciation
d.changing from the cost method of accounting for investments to the equity method
4) mcdonald’s financial statements contain the following selected data (in millions).
instructions
(a)compute the following values and provide a brief interpretation of each.
(b)the notes to mcdonald’s financial statements show that subsequent to this year the
company will have future minimum lease payments under operating leases of $10,513.8
million. if these assets had been purchased with debt, assets and liabilities would rise by
approximately $9,400 million. recompute the debt to total assets ratio after adjusting for
this. discuss your result.
5) marvin services corporation had the following accounts and balances:
if the balance of the buildings account was $34,000, what would be the total of
liabilities and stockholders’ equity?
a.$68,000
b.$70,000
c.$54,000
d.$50,000
6) on july 1, 2012, dillman kennels sells equipment for $44,000. the equipment
originally cost $120,000, had an estimated 5-year life and an expected salvage value of
$20,000. the accumulated depreciation account had a balance of $70,000 on january 1,
2012, using the straight-line method. the gain or loss on disposal is
a.$6,000 gain
b.$4,000 loss
c.$6,000 loss
d.$4,000 gain
7) a merchandiser that sells directly to consumers is a
a.retailer
b.wholesaler
c.broker
d.service enterprise
8) in order to determine net cash provided by operating activities, a company must
convert net income from an accrual basis to a cash basis under
a.the direct method only
b.the indirect method only
c.both the direct method and the indirect method
d.neither the direct nor the indirect method
9) expenses that are associated with sales are classified as
a.general expenses
b.other expenses
c.selling expenses
d.administrative expenses
10) marvin services corporation had the following accounts and balances:
if the balance of the buildings account was $28,000 and $2,000 of accounts payable
were paid in cash, what would be the balance of the total stockholders’ equity?
a.$54,000
b.$48,000
c.$68,000
d.$52,000
11) the following information pertains to lance company. assume that all balance sheet
amounts represent both average and ending balance figures. assume that all sales were
on credit.
what is the current cash debt coverage ratio for this company?
a.0.80 times
b.3 times
c.0.29 times
d.0.44 times
12) an advantage of the single-step income statement over the multiple-step form is
a.the amount of information it provides
b.its comprehensiveness
c.its simplicity
d.its use in computing ratios
13) trading on the equity (leverage) refers to the
a.amount of working capital
b.amount of capital provided by owners
c.use of borrowed money to increase the return to owners
d.number of times interest is earned
14) in present value calculations, the process of determining the present value is called
a.allocating
b.pricing
c.negotiating
d.discounting
15) holland company has purchased equipment that requires annual payments of
$25,000 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 equipment?
a.$150,000
b.$102,785
c.$138,143
d.$96,375
16) logan corporation issues 40,000 shares of $50 par value preferred stock for cash at
$60 per share. the entry to record the transaction will consist of a debit to cash for
$2,400,000 and a credit or credits to
a.preferred stock for $2,400,000
b.preferred stock for $2,000,000 and paid-in capital in excess of par valuepreferred
stock for $400,000
c.preferred stock for $2,000,000 and retained earnings for $400,000
d.paid-in capital from preferred stock for $2,400,000
17) the _______________ ratio is calculated by dividing net sales by average total
assets.
18) the long-term liability section of alpha corporations balance sheet includes the
following accounts
alpha corporation is an established company and does not experience any financial
difficulties or have any cash flow problems. discuss at least two items that are
questionable as long-term liabilities.
19) the petty cash fund of $200 for tomkins company appeared as follows on december
31, 2012
instructions
1>briefly describe when the petty cash fund should be replenished. because there is
cash on hand, is there a need to replenish the fund at year end on december 31? explain.
2>prepare the general journal entry to replenish the fund.
3>on december 31, the office manager gives instructions to increase the petty cash fund
by $50. make the appropriate journal entry.
20) the lower the _______________ to _______________ ratio, the more equity
“buffer” is available to the creditors if the company becomes insolvent.
21) moss county bank agrees to lend the sadowski brick company $400,000 on january
1. sadowski brick company signs a $400,000, 6%, 9-month note. what is the adjusting
entry required if sadowski brick company prepares financial statements on june 30?