As of December 31, 2013, Gant Corporation had a current ratio of 1.29, quick ratio of
1.05, and working capital of $18,000. The company uses a perpetual inventory system
and sells merchandise for more than it cost. On January 1, 2014, Gant sold inventory on
account for $6,000. Which of the following statements is incorrect?
A.Gant’s current ratio will increase.
B.Gant’s quick ratio will decrease.
C.Gant’s working capital will increase.
D.None of these answers is correct.
Which of the following would cause net income on the accrual basis to be different than
(either higher or lower than) “cash provided by operating activities” on the statement of
cash flows?
A.Purchased supplies for cash.
B.Purchased land for cash.
C.Invested cash in an interest earning account.
D.All of these are correct.
Levenworth Company incurs unnecessary costs each period because of the excess
quantities of inventory maintained to meet unexpected customer demand. The costs of
inventory financing, storage, supervision, and obsolescence could most likely be
reduced by which of the following practices?
A.Activity-based costing
B.Just-in-time inventory
C.Total quality management
D.Benchmarking
The following information pertains to inventory held by a company on December 31,
2013.
What is the amount of inventory loss shown on the income statement under IFRS?
A.$0.
B.$3,000.
C.$14,000.
D.$10,000.
E.$8,400.
Which of the following could describe the effects of an asset exchange transaction on a
company’s financial statements?
A.
B.
C.
D.
When calculating the present value of an ordinary annuity, it is assumed that:
A.cash flows will be reinvested at the required rate of return.
B.cash flows are withdrawn at the end of each year.
C.the investor will wait until the end of the investment period to withdraw cash flows.
D.Both cash flows will be reinvested at the required rate of return and cash flows are
withdrawn at the end of each year are correct.
The audit committee of an entity subject to SEC regulation will do all of the following
except:
A.be responsible for agreeing to fee compensation of the independent audit firm.
B.sign certification of the annual financial statements.
C.be comprised only of individuals who are not members of management.
D.approve non-audit services provided by the independent audit firm.
E.serve as liaison between the board of directors and the independent audit firm.
Grove Corporation had sales of $3,000,000, cost of sales of $2,250,000, and average
inventory of $500,000. What was Grove’s inventory turnover ratio for the period?
A.1.6 times
B.6 times
C.4.5 times
D.23 times
The following transactions apply to Brunswick Corporation.
a) Issued common stock for $35,000 cash.
b) Provided services to customers for $18,000 on account.
c) Purchased land for $18,000 cash.
d) Purchased $500 of supplies on account.
e) Paid $9,000 for operating expenses.
f) Paid $450 on accounts payable.
g) Collected $15,000 cash from customers.
h) Accrued $400 of salary expense at year end.
i) Paid $2,500 dividends to stockholders.
Required:
a) Identify the effect on the statement of cash flows for each of the above transactions.
b) Classify the above accounting events into one of four types of transactions (asset
source, asset use, asset exchange, claims exchange).
In vertical analysis, each item is expressed as a percentage of:
A.Total assets on the balance sheet.
B.Total cash on the balance sheet.
C.Total current assets on the balance sheet.
D.None of these answers is correct.
The following accounts and balances were drawn from the records of Hoover Company
on December 31, 2013:
Total assets on the December 31, 2013 balance sheet would amount to:
A.$3,150.
B.$3,450.
C.$1,800.
D.$2,650.