The alternate term for a credit card draft is an invoice.
a. True
b. False
In a vertical analysis of the balance sheet, the 100% amount is
a. Current assets
b. Working capital
c. Total assets
d. Total stockholders’ equity
Parachute Country Club Use the selected accounts for Parachute Country Club
presented below to answer the following question(s).
Read the information on Parachute Country Club. On which date did the country club
collect an advance deposit?
a. August 2
b. August 3
c. August 5
d. August 7
Below are several independent items listed for which the outcome of events is unknown
at year-end, December 31, 2015. a. Maldova Company had a barge that leaked oil into
the waters surrounding Alaska. The company’s legal counsel believes that the outcome
may be unfavorable but has not been able to estimate the costs of the possible loss.
b. It is alleged by Maldova Company that Argo Company has infringed on its
trademark, during a recent advertising campaign. Maldova is suing Argo and its legal
experts believe that the suit will result in an award of $750,000 in Maldova’s favor.
c. Maldova offers 2-year warranties on the equipment it sells and believes that 5% of its
equipment will require warranty repairs.
d. A $35 coupon, good for one year is offered by Maldova during December. At
December 31, approximately 10% of the coupons have been redeemed and it is
estimated that there will be a total redemption rate of 45%.
e. Maldova Company has been sued by the federal government for EPA violations. The
company’s legal counsel believes that there will be an unfavorable verdict and has made
an estimate of the probable loss. REQUIRED:
1> Identify which of the items (a) through (e) should be recorded at year-end.
2> Identify which of the items (a) through (e) should not be recorded but should be
disclosed in the year-end financial statements.
If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable to
settle an open account will cause the ratio to decrease.
a. True
b. False
Parachute Country Club Use the selected accounts for Parachute Country Club
presented below to answer the following question(s).
Read the information for Parachute Country Club. On which date did the country club
make a credit sale of club memberships?
a. August 2
b. August 3
c. August 5
d. August 7
Comfort Shoes received a promissory note from a customer on April 1, 2014. The face
amount of the note is $2,000; the terms are 12 months and 8% annual interest. How
much total interest revenue will Comfort Shoes recognize for the year ended December
31, 2014?
a. $ 40
b. $ 107
c. $ 120
d. $ 160
Research and development costs are
a. treated as an expense when incurred.
b. capitalized but not amortized.
c. capitalized and amortized over the periods that will probably benefit from the
research and development.
d. included with the cost of the patent resulting from the research and development.
It important that the proper amount be assigned to inventory because the amount
assigned to inventory will affect the amount eventually recorded as net sales.
a. True
b. False
Which one of the following statements is true?
a. Recognition is concerned with the dollar amount of each economic effect that should
be reported in the financial statements.
b. Measurement is concerned with how economic effects should be quantified.
c. The stability concept is concerned with identification of the specific entity for which
economic effects are to be recognized and measured.
d. The monetary unit assumption is concerned with the valuation of economic effects in
terms of current purchasing power.
During what year did the IASB and FASB reaffirm their commitment to achieving
convergence of accounting standards in the U.S.?
a. 2007
b. 2009
c. 2002
d. 2008
The following information is taken from Harvey Company’s balance sheet at December
31, 2014:
Using the information provided for Harvey Company, answer the following questions:
A) How much did creditors provide to Harvey Company? B) On which financial
statement would an investor look to see if any stock was issued during the year?
Padagonian Company Use the deferred tax account that appears in the financial
statements of Padagonian Company to answer the related questions.
Review the information for Padagonian Company. REQUIRED: (1) In your opinion,
are deferred income taxes an appreciable portion of both long-term liabilities and total
liabilities? Why? (2) What difference between accounting income and taxable income
produces the Deferred Income Taxes account? (3) Will Padagonian eventually pay the
deferred tax liability? When?
Most financial reports contain the following list of basic elements. For each element
identify the person(s) who prepared the element and describe the information a user
would expect to find in each element.
Complete the following data taken from the condensed income statements for
merchandising companies: Action, Break, & Connors.
Theprinciple attempts to associate with the revenue of the period, all costs necessary to
generate that revenue.
Distinguish between capital and revenue expenditures.
A check written by a company but not yet presented to the bank for payment is called
a(n)
_________________________.
The 2014 income statement of Nasir Inc. shows operating revenues of $135,800, selling
expenses of $40,310, general and administrative expenses of $33,990, interest expense
of $880, and income tax expense of $13,090. Nasir’s stockholders’ equity was $250,000
at the beginning of the year and $345,000 at the end of the year. The company has
10,000 shares of stock outstanding at December 31, 2014.Compute Nasir’s profit
margin. What other information would you need in order to comment on whether this
ratio is favorable?
Learning Tree, Inc. The following data is available for one of the products sold by
Learning Tree, Inc., which uses the perpetual inventory system:
Refer to the data for Learning Tree, Inc.
Explain why the amounts are different for LIFO under periodic and perpetual inventory
systems.