1) secured bonds are bonds that
a.are in the possession of a bank
b.can be converted into common stock
c.have specific assets of the issuer pledged as collateral
d.mature in installments
2) in recording accounting transactions, evidence that a transaction has taken place is
obtained from
a.source documents.
b.the internal revenue service.
c.the public relations department.
d.the securities and exchange commission.
3)
4) determine the missing items.
assets = liabilities + stockholders equity
$61,000 $50,000 (a)
(b) $18,000 $30,000
$54,000 (c) $40,000
5) financial information is presented below:
gross profit would be
a.$77,000
b.$70,000
c.$64,000
d.$83,000
6) the ability of an investing company to affect the operating and financial activities of
another company, even though the investor holds less than 50% of the stock, is known
as
a.significant influence
b.control
c.a combination
d.influence and control
7) the purchase or sale of long-lived assets used in operating the business is
a.an operating activity.
b.an investing activity.
c.a financing activity.
d.none of these answer choices are correct.
8)
9) use the following data to determine the total dollar amount of assets to be classified
as current assets.
eddy auto supplies
a.$540,000
b.$240,000
c.$380,000
d.$260,000
10) the two ways that a corporation can be classified by purpose are
a.general and limited
b.profit and not-for-profit
c.state and federal
d.publicly held and privately held
11) jack and jill form a partnership. jack runs the business in new york, while jill
vacations in hawaii. during the time jill is away from the business, jack increases the
debts of the business by $20,000. which of the following statements is true regarding
this debt?
a.only jack is personally liable for the debt, since he has been the managing partner
during that time
b.only jill is personally liable for the debt of the business, since jack has been working
and she has not
c.both jack and jill are personally liable for the business debt
d.neither jack nor jill is personally liable for the business debt, since the partnership is a
separate legal entity
12) when using a periodic inventory system, which statement concerning the
computation of cost of goods sold is correct?
a.the amount of ending inventory is determined on the last day of the accounting period
b.cost of goods available for sale includes net purchases plus the ending inventory
c.purchases represent cash paid for purchases during the accounting period
d.freight in is ignored
13) which of the following groups uses accounting information to determine whether a
marketing proposal will be cost effective?
a.investors in common stock
b.marketing managers
c.creditors
d.chief financial officer
14) if accounts receivable have increased during the period
a.revenues on an accrual basis are less than revenues on a cash basis
b.revenues on an accrual basis are greater than revenues on a cash basis
c.revenues on an accrual basis are the same as revenues on a cash basis
d.expenses on an accrual basis are greater than expenses on a cash basis
15) the stockholders’ equity section of patrick corporation’s balance sheet at december
31 is presented here:
instructions
from a review of the stockholders’ equity section, answer the following questions.
(a)how many shares of common stock are outstanding?
(b)assuming there is a stated value, what is the stated value of the common stock?
(c)what is the par value of the preferred stock?
(d)if the annual dividend on preferred stock is $18,000, what is the dividend rate on
preferred stock?
(e)if dividends of $36,000 were in arrears on preferred stock, what would be the
balance reported for retained earnings?
16) the following data are taken from the financial statements of edington company. the
data are in alphabetical order.
accounts payable$ 28,000net sales500,000
accounts receivable76,000other current liabilities20,000
average common shares o/s20,000salaries payable7,000
cash56,000stockholders equity165,000
gross profit190,000total assets300,000
net income$ 50,000
instructions
compute the following:
(a)current ratio.(d)debt to total assets ratio.
(b)working capital.
(c)earnings per share.
17) at emerson company, one bookkeeper prepares the cash deposits while the other
bookkeeper enters the collections in the journal and ledger. which of the following is
the best explanation of this type of internal control principle over cash receipts?
a.physical controls
b.documentation procedures
c.segregation of duties
d.mechanical controls
18) ratios are most useful in identifying
a.trends
b.differences
c.causes
d.relationships
19) if bonds are issued at face value (par), it indicates that the ________________ rate
of interest must be equal to the ________________ rate of interest.
20) _______________ securities are bought and held primarily for sale in the near
future.
21) unearned revenue is a prepayment that requires an adjusting entry when services are
performed.
22) haden railroad co. is about to issue $800,000 of 10-year bonds paying a 9% interest
rate, with interest payable semianually. the discount rate for such securities is 10%. how
much can haden expect to receive for the sale of these bonds?
23) horner corporation reported net sales of $150,000, cost of goods sold of $90,000,
operating expenses of $35,000, other expenses of $10,000, net income of $15,000.
calculate the following values. profit margin ratio. 2. gross profit rate.
24) the basic accounting equation is assets = ____________ + _______________.
25) hutton company deposited $10,000 annually for 6 years in an account paying 5%
interest compounded annually. what is the balance of the account at the end of the 6th
year?
26) ______________ is the process of allocating the cost of a plant asset to expense
over its service life in a rational and systematic manner.
27) state whether each situation is a prepaid expense (pe), unearned revenue (ur),
accrued revenue (ar) or an accrued expense (ae).
1>unrecorded interest on savings bonds is $245.
2>property taxes that have been incurred but that have not yet been paid or recorded
amount to $300.
3>legal fees of $1,000 were collected in advance. by year end 60 percent were still
unearned.
4>prepaid insurance had a $500 balance prior to adjustment. by year end, 40 percent
was still unexpired.
5>unpaid salaries earned by year end but not yet paid or recorded amounted to $1,200.
28) on january 1, 2012, dunbar company purchased at face value, a $1,000 5%, bond
that pays interest annually on january 1. dunbar company has a calendar year end. the
adjusting entry on december 31, 2012, is