ACC101 Wrap-Up Game Ch 7-12

Puffin Pastry, Inc. had Sales of $90,000 and Net income of $10,000 during 2016. At December 31, 2015, its total assets were $100,000, and its net fixed assets were $40,000. At December 31, 2016, its total assets were $200,000, and its fixed assets were $80,000. Puffin's asset turnover ratio equals: a.0.13 b.0.45 c.0.60 d.1.50

c

The statement of cash flows classifies items as a.current and noncurrent. b.operating and nonoperating. c.operating, investing, and financing. d.recurring and nonrecurring.

c

For a patent developed internally, the research and development costs are a.capitalized into the cost of the patent. b.expensed as incurred. c.recorded as a contra-asset to the patent. d.recorded as patent amortization expense.

b

GPS, Inc.'s sales were $200,000, cost of goods sold was $150,000 and net income was $20,000. Its average inventory was $25,000. The gross profit ratio equals ______. a.10% b.25% c.33% d.75%

b

Compute the inventory turnover ratio using the following information: Net sales is $100,000 for the year, costs of goods sold are $40,000, last year's assets in place were $900,000, and this year's assets in place are $1,100,000. Receivables for both years are $50,000. Inventory changed from $30,000 last year to $10,000 this year.

c

On September 1, ABC Company borrowed $50,000 on a 6%, 9-month note payable to XYZ National Bank. Given no previous adjusting entries have been recorded, ABC's adjusting entry at December 31 would include a ______. a.debit to Interest expense of $1,000 b.debit to Interest expense of $2,250 c.debit to Interest expense of $3,000 d.debit to Interest expense of $750

a

When treasury shares are reissued for an amount greater than cost, the amount over the cost increases a.additional paid-in capital. b.gain on sale of treasury stock. c.retained earnings. d.the investment account.

a

During the current year, Katie Corp. pays $5,120 on an installment note. The outstanding loan balance at the beginning of the year was $50,000; the effective interest rate is 8%. Which of the statements regarding the installment note balance at the end of the current year is correct? a.The balance is $44,470. b.The balance is $44,880. c.The balance is $48,880. d.The balance is $50,000.

c

If a company receives a payment from a customer in advance for work to be done the following year, this should be classified as a(n) a.accounts receivable. b.common stock. c.deferred revenue. d.revenue.

c

Which is a significant noncash activity? a.Collecting on customer accounts. b.Receiving proceeds from sale of stock. c.Repurchasing common stock. d.Signing a note payable in exchange for land.

d

Ace Electric's income statement reports Sales of $100,000; Cost of goods sold of $46,000, Operating expenses of $34,000, Interest expense of $15,000, Income tax expense of $2,000, and Net income of $3,000. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by a.$3,000. b.$15,000. c.$34,000. d.$46,000. $100,000.

e

Smith Corporation acquired West Company by paying $5 million in cash. The total fair value of West's identifiable assets is $8 million and the total fair value of its liabilities is $4 million. The amount of goodwill reported by Smith Corporation relating to its acquisition of West is: a.$0 b.$1 million c.$3 million d.$8 million

b

Amounts earned by the corporation and not paid out in dividends are referred to as a.common stock. b.paid-in capital. c.retained earnings. d.shareholders' equity.

c

Company A has an accounts receivable turnover of 8.0. Company B has an accounts receivable turnover of 10.0. Which of the following is true? a.Company A collects its receivables faster than Company B. b.Company A makes more sales on account than Company B. c.Company B collects its receivables faster than Company A. d.Company B has more receivables than Company A. e.Company B makes more sales on account than Company A.

c

Norbert Company reports the following net cash flows in its statement of cash flows: net inflow from operating activities: $200; net outflow from investing activities: $220; net inflow from financing activities: $130. The current year beginning balance of cash was $80. During the current year, cash must have a.decreased by $110. b.decreased by $190. c.increased by $110. d.increased by $190.

c

An end-of-period adjusting entry that debits Deferred Revenue most likely will credit a(n) ______ account. a.asset b.expense c.liability d.revenue

d

If ABC Company receives $100,000 cash in exchange for issuing 100 bonds at their $1,000 face value, the transaction will be recorded with a a.debit to Bonds payable of $100,000 and a credit to Cash of $100,000. b.debit to Cash of $100,000 and a credit to Bonds payable of $100,000. c.debit to Cash of $100,000 and a credit to Bonds payable of $99,000 and to Premium on Bonds Payable of $1,000. d.debit to Cash of $100,000 and a credit to Bonds payable of $99,000 and to Discount on Bonds Payable of $1,000.

b

ABC Corporation issued $100,000 of 10%, 5-year bonds on January 1, 2018, for $92,280. The market interest rate when the bonds were issued was 12%. Interest is paid semi-annually on January 1 and July 1. Using the effective-interest amortization method, how much cash will ABC pay bondholders on July 1, 2018? a.$5,000 b.$5,537 c.$6,000 d.$12,000

a

Identify a primary reason why financial statement users assess a company's liquidity. a.Lack of liquidity can lead to the bankruptcy of a company that otherwise may have been successful. b.Lack of liquidity is a strong indication of fraud. c.Lack of liquidity leads to low asset turnover ratios. d.Liquidity represents the most important indicator of profitability.

a

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares authorized. Stockit has repurchased 10,000 of its shares. The number of shares authorized represents the: a.maximum number of shares Stockit is allowed to sell. b.number of shares left to be sold. c.number of shares sold. d.number of shares that have been repurchased.

a

Walker Inc. signs a $24,000 installment note, which requires equal monthly payments of $1,100 over the next two years. The journal entry to recognize the note includes a: a.credit to Notes Payable for $24,000 b.credit to Notes Payable for $26,400 c.debit to Notes Payable for $24,000 d.debit to Prepaid Interest for $2,400

a

What is the first issue that needs to be addressed in order to properly report tangible and intangible assets? a.Determining the amounts to be included in the assets' initial cost b.How to recognize additional costs incurred during the assets' service life c.How to record the disposal of the assets d.The method for expensing the cost of the assets

a

Balance Corporation sells $1,000 of goods to a customer for cash. The sales tax is 5%. The journal entry to record the sale will include which of the following? a.Credit revenues $1,050 b.Credit sales tax payable $50 c.Debit cash $1,000 d.Debit sales tax expense $50

b

Carola Inc. issues common stock for $20 million and pays dividends of $2 million. Net cash inflows from financing activities will be: a.$1 million b.$18 million c.$20 million d.$22 million

b

At the beginning of year 1, Valerie Corp. purchases equipment for $10,000. The equipment has a residual value of $4,000 and an expected service life of 4 years. What is straight-line depreciation for year 1? a.$1,000 b.$1,500 c.$4,000 d.$6,000

b

On January 1, year 1, Clem Corp. purchased equipment for $160,000. The equipment has a residual value of $10,000, and has a life of 100,000 hours. Clem uses the activity-based method of depreciation. In year 1, Clem used the machine 2,000 hours, and in year 2, Clem used the machine 3,000 hours. Which of the following statements is true? a.Clem must change to straight-line method in year 3. b.Clem will depreciate the machine $150,000 over its service life. c.Clem will depreciate the machine $160,000 over its service life. d.The maximum depreciation is the $10,000 residual value.

b

The Discount on Bonds Payable account is classified as a(n) a.asset. b.contra-liability. c.expense. d.loss.

b

Ima Rich purchased 100 shares of Stockits, Inc.'s $1 par value common stock for $5 per share. Which statement is true regarding the effect of this transaction on Stockits' financial statements? a.A gain on sale of stock will be reported on the income statement. b.Stockholders' equity on the balance sheet decreases. c.Stockholders' equity on the balance sheet increases. d.The investing activities section of the statement of cash flows increases.

c

Which of the following methods for reporting cash flows from operating activities begins with net income and works backward to calculate net cash flow from operating activities? a.Accrual method b.Direct method c.Indirect method d.Matching method

c

Gosling Corp. has 100,000 shares of common stock authorized, 80,000 shares issued, and 20,000 shares of treasury stock. Gosling declares a dividend of $0.10 share. Which of the following entries is required at the date of declaration? a.Credit cash $8,000. b.Credit dividends payable $8,000. c.Debit dividends $10,000. d.Debit dividends $6,000.

d