Identify whether the following investor questions are associated with (a) primary or sec
ondary financial reporting objectives.
a. primary financial reporting objective
b. secondary financial reporting objective How much revenue will Apple generate
during the time period in which I own the shares?
Mellon Corporation The data presented below is for Mellon Corporation for the year
ended December 31, 2015:
Refer to the data for Mellon Corporation. If Mellon estimates its bad debts at 2% of net
credit sales, what amount will be reported as bad debt expense for 2015?
a. $25,800
b. $27,000
c. $28,800
d. $30,000
When would LIFO liquidation occur?
a. As a result of selling more units than are purchased during the period.
b. As a result of selling less units than are purchased during the period.
c. As a result of selling the same number of units that are purchased during the period.
d. Not enough information.
All line items in common-size comparative income statements are stated as a
percentage of net income.
a. True
b. False
Royal Company purchased a dump truck at the beginning of 2012 at a cost of $60,000.
The truck had an estimated life of 6 years and an estimated residual value of $24,000.
On January 1, 2014, the company made major repairs of $20,000 to the truck that
extended the life 1 year. Thus, starting with 2014, the truck has a remaining life of 5
years and a new salvage value of $8,000. Royal uses the straight-line depreciation
method. What is the book value of the truck to be reported on the balance sheet at
December 31, 2014?
a. $44,000
b. $50,000
c. $56,000
d. $62,000
An investor found the following in an annual report: “The financial statements, in our
opinion, present fairly the financial position, operating results, and cash flows, in
conformity with accounting principles generally accepted in the United States.” In
which section of the annual report did the investor find this?
a. Balance Sheet
b. Notes to the Financial Statements
c. Management’s Discussion and Analysis
d. Report of the Independent Accountants
The following data is available for one of the products sold by Wild Optics Company,
which uses the periodic inventory system:
At the end of December, Wild Optics had 25 units on hand. The 75 units sold created
revenue of $13 each. Determine the amounts for the December 31 ending inventory, the
cost of goods sold for December, and the gross margin for December for each of the
inventory costing methods listed below.
Ending Inventory Cost of Goods Sold Gross Profit
a. Weighted average b. FIFO c. LIFO
Planet & Co. reported net income for the current year. Which of the following business
transactions would cause cash from operating activities to be higher than the amount of
net income?
a. Cash dividends were paid to stockholders during the year.
b. Depreciation expense was recorded for the year.
c. A bank loan was repaid during the year.
d. Equipment was purchased for cash during the year.
With few exceptions, the balance of all accounts should be on the side of the T account
that causes the increase.
a. True
b. False
All of the following are intangible assets except
a. patents
b. goodwill
c. franchises
d. accounts receivable
Comprehensive income is
a. considered an appropriation of retained earnings when reported in the stockholders’
equity section of the balance sheet.
b. the result of all events and transactions that affect income during the accounting
period that are reported on the income statement.
c. reporting all items that are not under management’s control on the statement of
retained earnings.
d. an all-inclusive approach to income that includes transactions that affect
stockholders’ equity with the exception of those transactions that affect owners.
Which of the following countries do not use a common law system?
a. The United States
b. Germany
c. The United Kingdom
d. Both a and c are correct.
A(n)lease is recorded on the lessee’s balance sheet as an asset and related liability.
On the statement of cash flows, thesection involves the issuance and repayment of long
term liabilities and stock transactions.
What is LIFO inventory liquidation? Why is it important to disclose the effects of a
LIFO inventory liquidation
Cuisine Company received a 6-month, 6% note for $10,000 from its president on
October 1, 2014. The note is due on March 31, 2015. If Cuisine’s accounting period
ends on December 31, how much interest revenue should Cuisine recognize during
2014 and 2015?
Bradenton Corp. reported accounts receivable of $38,000 on its December 31, 2015,
balance sheet. On December 31, 2016, accounts receivable had decreased to $29,000.
Sales for the year amounted to $57,000. What is the amount of cash collections that
Bradenton will report in the Operating Activities section of its 2016 statement of cash
flows assuming that the direct method is used?
What is the relationship between the book value of a plant asset, the market value of the
plant asset, and the salvage value of a plant asset? Explain.
Securities issued by corporations as a form of ownership in the business, such as
common or preferred stock, are called _________________________.
When a company using LIFO experiences a partial or complete liquidation of its older,
lower-priced inventory, its gross margin will be(higher, lower, or unchanged) for the
period.