accounting
1.TRUE
2.·$23,000
3.Net income (loss) appears in which two financial statements?
·Income Statement and Statement of Stockholders equity
4.The financial statement that represents activity over the entire life of a company is
·Balance sheet
5.Adding a refrigeration unit to a delivery truck that previously did not have this capability is an example of:
·Additions
6.Cowboy Development incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office building:
·Sale price of land: $400,000
·Sale of salvaged parts on land: $20,000
·Demolition of the old building: $30,000
·Ground breaking ceremony: $1,500
·Land prep: $7,500
What amount should be recorded for the purchase of land
·$417,500
7.During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck for $175,000. If the truck has an estimated life of 10 years or 300,000 miles, with an estimated residual value of $25,000, what amount of depreciation expense should Supplies, Inc. record in the second year using the activity based method.
·$11,000
8.Berry Co. purchases a patent on January 1, 2018, for $40,000 and the patent has an expected useful life of five years with no residual value. Assuming Berry Co. uses the straight line method, what is the carrying value of the patent on December 31,2019?
·$24,000
9.The factors used to compute depreciation expense are an asset’s
·Cost, residual value, and service life
10.The current portion of long term debt is
·The amount that will be paid within the next year
11.Kansas Enterprises purchased equipment for $60,000 on January 1,2018. The equipment is expected to have a five-year life, with a residual value $5,000 at the end of five years.
·$14,400
12.Region Jet has a $50 million liability at December 31,2018, of which $10 million is payable in 2019. In its December 31, 2018 balance sheet, the company reports the $50 million debt as:
·$10 million current liability and a $40 million long term liability on the balance sheet
13.Which of the following measures of liquidity does not control for relative size of the company?
·They all control for the relative size of the company
14.·2.98
15.·$5,000 interest payable
16·Debit Interest Expense, $2,000
17·TRUE
18.On January 1,2018 Julee Enterprises borrows $30,000 to purchase a new Toyota Highlander by agreeing to a 6%, 4 year note with the bank. Payments of $704.55 are due at the end of month with first installment due on January 31, 2018. Record the issuance of the note payable and the first two monthly payments
·JAN 1
i.CASH – Debit 30,000
ii.NOTES PAYABLE – CREDIT 30,000
·JAN 31
i.INTEREST EXPENSE – DEBIT 150
ii.NOTES PAYABLE – DEBIT 554.55
iii.CASH – CREDIT 704.55
·FEB 28
i.INTEREST EXPENSE – DEBIT 147.23
ii.NOTES PAYABLE – DEBIT 557.32
iii.CASH – CREDIT 704.55
19.If a company issues 1,000 shares of $1 par value common stock for $20 per share, which of the following accounts would be credited?
·Additional Paid in Capital
20.Large stock dividends and stock splits are issues primarily to
·Lower the trading price of the stock per share
21.Treasury Stock is normally reported as
·A reduction of total stockholders’ equity
22.When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include
·A credit to Paid in Capital for $225,000
23.A company issues 1,00 shares of $1 par value preferred stock for $5 per share. What is true about the journal entry to record the issuance?
·Credit Additional Paid in Capital $4,000
24.Match by letter the following terms with their definitions
25.When treasury stock is acquired, what is the effect on assets and stockholders’ equity
·Assets and stockholder’s equity decrease
26.Financing activities include cash receipts and cash payments for transactions relating to revenue and expense activities
·FALSE
27.Angel investors are investors that focus on companies at or near bankruptcy
·FALSE
28.Preferred stock is called preferred because it usually has two preferences over commons stock. These preferences related to:
·Dividends and distribution of assets if the corporation is dissolved.
29.Using the indirect method, we begin with net income and the list adjustments to net income in order to arrive at operating cash flows
·TRUE
30.All classifications on the Balance Sheet have a general relationship with sections identified on the Statement of Cash Flows. Indicate which relationships are correctly identified in the table below.
·IV, V
31.Which of the following is not correct about the statement of cash flows?
·Cash dividends paid are classified as cash flows from operating activities.
32.Assuming Net income for the year is $115,000, what is the net operating cash flows given the following information:
·$112,000
33.Cash flows from investing activities do not include
·Proceeds from the issuance of common stock
34.Bad Brads BBQ had cash flows for the year as follows ($ in millions)
·$100
35.Under the indirect method, an increase in accounts payable is added to net income to arrive at net cash flows from operating activities.
·TRUE
36.Listed below are several transactions. For each transaction, indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F), or noncash (NC) activity. Also, indicate whether the transaction is a cash inflow (CI), cash outflow (CO), or no effect on cash (NE).
37.We report the payment of cash dividends as cash outflow from investing activities
· FALSE
38.We can use ratios to help evaluate a firm’s performance and financial position
·TRUE
39.Other things being equal, the higher the debt to equity ratio, the higher the risk of bankruptcy
·TRUE
40.External transactions are transactions the firm conducts with a separate economic entity, such as selling products to a customer, purchasing supplies from a vendor, paying salaries to an employee, and borrowing money from a bank
·TRUE
41.Providing service to customers for cash causes stockholders’ equity to increase
·TRUE
42. A company sells common stock for $20,000 cash. Record the transaction.
·CASH – DEBIT 20,000
·COMMON STOCK – CREDIT 20,000
43.Which one of the following accounts would NOT have a balance after closing entries?
·Dividends
44.Below is the company’s cash T-account
·Beg. 1,200
5,200
·3,100
End 3,300
·Payment for salaries
45. An adjusted trial balance
·Is a list of all accounts and their balances after adjusting entries?
46.Given the information in the table below what is the company’s gross profit.
·Sale revenue $350,000
·Accounts receivable $280,000
·Ending inventory $230,000
·Cost of goods sold $180,000
·Sales returns $50,000
·Sales discount $20,000
·$100,000
47.In response to corporate accounting scandals and to public outrage over seemingly widespread unethical behavior of top executives, Congress passed the Sarbanes-Oxley Act
·TRUE
48.Common examples of cash equivalents include all of the following except:
·Accounts receivable
49.Which of the following items may be classified as nonoperating revenues and expenses?
·All of the other answers are classified as nonoperating revenues and expenses
50.Inventory is usually reported as a long term asset in the balance sheet
·FALSE