The Financial Accounting Standards Board created the objectives of financial reporting.
a. True
b. False
Identify where each of the following accounts would be reported on CocaÂCola’s
financial statements.
a. Balance Sheet-Property, Plant, and Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
g. Statement of Cash Flows
Copyright
Which of the following adjusting entries involves the cash account?
a. Deferred Revenue
b. Accrued Asset
c. Deferred Liability
d. None of the Above
Sliders Company Sliders Company sells its merchandise only on credit. The following
data is available at December 31, 2014:
Refer to the data for Sliders Company. Assume the company estimates bad debts using
an aging analysis and the aging schedule indicates that $3,600 of the end of the year
Accounts Receivable will be uncollectible. A) What amount will Sliders Company
recognize as bad debt expense for the year? B) If the ending balance of Accounts
Receivables is $38,700, what is the net realizable value of Accounts Receivable
reported on December 31, 2014?
Ashley Wilson’s grandparents want to give her some money when she graduates from
high school. They have offered Ashley the following three choices:
a. Receive $25,000 immediately. Assume that interest is compounded annually.
b. Receive $3,200 at the end of each six months for four years. Ashley will receive the
first check in six months.
c. Receive $7,000 at the end of each year for four years. Assume that interest is
compounded annually. REQUIRED:
Ashley wants to have money for a new car when she graduates from college in four
years. Assuming an interest rate of 8%, what option should she choose to have the most
money in four years? (Round your answers to the nearest dollar.)
When a company purchases treasury stock, which of the following statements is true?
a. Treasury stock is considered to be an asset because cash is paid for the stock.
b. The cost of the treasury stock reduces stockholders’ equity.
c. Dividends continue to be paid on the treasury stock because it is still issued.
d. Since treasury stock is held by the original issuer, it is no longer considered to be
issued.
Callable bonds may be retired by the issuer before their specified due date.
a. True
b. False
The following accounting principles and assumptions are included in the conceptual
framework of accounting:
For each situation in A through C below, identify which assumption or principle applies
by selecting from the list provided above, and explain why that assumption or principle
applies. A) Global Corp. has divisions in several countries around the world. Each of
these countries has a currency different from the U.S. dollar. Global Corp. is a U.S.
company and must include the financial data of its worldwide divisions in its financial
statements.
B) Steve and Mike operate a security business as a partnership. They are considering
the advantages of changing over to the corporate form of business.
C) Island Pasta is a locally owned and operated fast-food business. The owners have
decided to expand into nearby cities. Expansion will require more capital, but
management doesn’t expect it will stay in business for more than a year or so regardless
if it expands or not.
One concern of the internal auditor is the efficiency with which the organization is run.
a. True
b. False
With regard to a corporation’s stock, par value is
a. the current market price of the stock.
b. an arbitrary amount that exists to fulfill legal requirements.
c. the amount at which the stock has been repurchased.
d. the amount at which treasury stock can be sold.
Match the following bond and long-term liability related terms to the appropriate
definition.
a. Long-term liability
b. Face value
c. Debenture bonds
d. Serial bonds
e. Callable bonds
f. Face rate of interest
g. Market rate of interest
h. Bond issue price
i. Premium
j. Discount
k. Effective interest method of amortization
l. Carrying value
m. Gain or loss on redemption
The principal amount of the bond as stated on the bond certificate.
Stella Gregson received a windfall from one of her investments. She would like to
invest $100,000 of the money in Shoreline Industries, which is offering common stock,
preferred stock, and bonds on the open market. The common stock has paid $8 per
share in dividends for the past three years, and the company expects to be able to
perform as well in the current year. The current market price of the common stock is
$100 per share. The preferred stock has an 8% dividend rate, cumulative and
nonparticipating. The bonds are selling at par with an 8% stated rate.
A(n)is a form sent by the seller to the buyer as evidence of a sale.
Assume that you want to accumulate $20,000 as a down payment on a home. You
believe that you can save $2,000 per semiannual period, and your bank will pay interest
of 6% per year, or 3% per semiannual period. How long will it take you to accumulate
the desired amount?
_________is the practice of using the least optimistic estimate when two estimates of
amounts are about equally likely.
Burger Barn Company issued $150,000 face value bonds at a premium of $6,000. The
bonds contain a call provision of 102. Burger Barn decides to redeem the bonds due to a
significant decline in interest rates. On that date, Burger Barn had amortized only
$1,500 of the premium. REQUIRED: 1> Calculate the gain or loss on early redemption
of the bonds.
2> What journal entry should be recorded at the time of bond redemption?
3> Where should the gain or loss should be presented on the financial statements?
4> Why is the call price is normally higher than 100?
Describe how the inventories of manufacturers differ from the inventories of retailers.