Final Exam Review

Gilkey Corporation began the year with retained earnings of $310,000. During the year, the company issued $420,000 of common stock, recorded expenses of $1,200,000, and paid dividends of $80,000. If Gilkey's ending retained earnings was $330,000, what was the company's revenue for the year?

$1,300,000

Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was

$300,000.

Henson Company began the year with retained earnings of $380,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year?

$460,000

Elston Company compiled the following financial information as of December 31, 2017: Service revenue $840,000 Common stock 180,000 Equipment 240,000 Operating expenses 750,000 Cash 210,000 Dividends 60,000 Supplies 30,000 Accounts payable 120,000 Accounts receivable 90,000 Retained earnings, 1/1/17 450,000 Elston's assets on December 31, 2017 are?

$570,000

Use the following data to determine the total dollar amount of assets to be classified as current assets. Carne Auto Supplies Balance SheetDecember 31, 2014 Cash $ 35,000 Accounts payable $ 65,000 Accounts receivable 50,000 Salaries and wages payable 10,000 Inventory 70,000 Mortgage payable 90,000 Prepaid insurance 40,000 Total liabilities $165,000 Stock investments 90,000 Land 95,000 Buildings $115,000 Common stock $120,000 Less: Accumulated Retained earnings 250,000 depreciation (30,000) 85,000 Total stockholders' equity $370,000 Trademarks 70,000 Total assets $535,000 Total liabilities and stockholders' equity $535,000 a. $195,000 b. $125,000 c. $285,000 d. $165,000

a. $195,000

Use the following data to determine the total amount of working capital. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,060,000 Total liabilities and stockholders' equity $1,060,000 a. $240,000 b. $390,000 c. $130,000 d. $180,000

a. $240,000

Use the following data to calculate the current ratio. Pina Colada Corp. Balance Sheet December 31, 2017 Cash $127700 Accounts payable $150000 Accounts receivable 120000 Salaries and wages payable 30600 Inventory 201100 Mortgage payable 269500 Prepaid insurance 88800 Total liabilities $450100 Stock Investments (long-term) 256000 Land 285500Buildings $335000 Common stock $363500 Less: Accumulated depreciation (64600) 270400 Retained earnings 741200 Trademarks 205300 Total stockholders' equity $1104700 Total assets $1554800 Total liabilities and stockholders' equity $1554800 a. 2.98 : 1 b. 2.52 : 1 c. 1.44 : 1 d. 3.49 : 1

a. 2.98 : 1

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated depreciation (40,000) 170,000 Retained earnings 500,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,060,000 Total liabilities and stockholders' equity $1,060,000 a. $660,000 b. $350,000 c. $490,000 d. $390,000

b. $350,000

Based on the following data, what is the amount of current assets? Accounts payable................................................................. $62,000 Accounts receivable.............................................................. 100,000 Cash.................................................................................. 50,000 Intangible assets.................................................................. 100,000 Inventory............................................................................ 138,000 Long-term investments.......................................................... 160,000 Long-term liabilities............................................................... 200,000 Short-term investments.......................................................... 80,000 Notes payable...................................................................... 56,000 Property, plant, and equipment................................................... 1,340,000 Prepaid insurance................................................................. 2,000 a. $212,000 b. $370,000 c. $232,000 d. $230,000

b. $370,000

Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,060,000 Total liabilities and stockholders' equity $1,060,000 a. $570,000 b. $400,000 c. $340,000 d. $290,000

b. $400,000

Ayayai Corp. has current assets of $1850000 million and current liabilities of $640000. If they pay $339000 of their accounts payable what will their new current ratio be? a. 2.9:1 b. 5.0:1 c. 6.1:1 d. 0.7:1

b. 5.0:1

Accounting information should be verifiable in order to enhance a. comparability. b. faithful representation. c. consistency. d. relevance.

b. faithful representation.

Use the following data to determine the total dollar amount of assets to be classified as investments. Koonce Office Supplies Balance Sheet December 31, 2014 Cash $ 130,000 Accounts payable $ 140,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 110,000 Mortgage payable 160,000 Prepaid insurance 60,000 Total liabilities $320,000 Stock investments 170,000 Land 180,000 Buildings $210,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000depreciation (40,000) 170,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,060,000 Total liabilities and stockholders' equity $1,060,000 a. $0 b. $350,000 c. $170,000 d. $310,000

c. $170,000

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Carne Auto Supplies Balance SheetDecember 31, 2014 Cash $ 35,000 Accounts payable $ 65,000 Accounts receivable 50,000 Salaries and wages payable 10,000 Inventory 70,000 Mortgage payable 90,000 Prepaid insurance 40,000 Total liabilities $165,000 Stock investments 90,000 Land 95,000 Buildings $115,000 Common stock $120,000 Less: Accumulated Retained earnings 250,000 depreciation (30,000) 85,000 Total stockholders' equity $370,000 Trademarks 70,000 Total assets $535,000 Total liabilities and stockholders' equity $535,000 a. $270,000 b. $250,000 c. $180,000 d. $210,000

c. $180,000

Use the following data to determine the total dollar amount of assets to be classified as current assets. Eddy Auto Supplies Balance Sheet December 31, 2014 Cash $ 84,000 Accounts payable $ 110,000 Accounts receivable 80,000 Salaries and wages payable 20,000 Inventory 140,000 Mortgage payable 180,000 Prepaid insurance 60,000 Total liabilities $310,000 Stock investments 170,000 Land 190,000 Buildings $226,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (40,000) 186,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,050,000 Total liabilities and stockholders' equity $1,050,000 a. $534,000 b. $224,000 c. $364,000 d. $304,000

c. $364,000

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated? a. Comparability b. Relevance c. Faithful representation d. Consistency

c. Faithful representation

Which one of the following is not an enhancing quality of useful information? a. Timeliness b. Understandability c. Materiality d. Comparability

c. Materiality

Generally accepted accounting principles a. are accounting rules formulated by the Internal Revenue Service. b. are sound in theory but rarely used in real life. c. are accounting rules that are recognized as a general guide for financial reporting. d. have eliminated all errors in accounting.

c. are accounting rules that are recognized as a general guide for financial reporting.

Information that is presented in a clear fashion, so that users of that information can interpret it is an example of a. relevance. b. faithful representation. c. understandability. d. comparability.

c. understandability.

These are selected account balances on December 31, 2014. Land $100,000 Land (held for future use) 150,000 Buildings 800,000 Inventory 200,000 Equipment 450,000 Furniture 100,000 Accumulated Depreciation 300,000 What is the total amount of property, plant, and equipment that will appear on the balance sheet? a. $1,500,000 b. $1,300,000 c. $1,800,000 d. $1,150,000

d. $1,150,000

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.Eddy Auto SuppliesBalance SheetDecember 31, 2014 Cash $ 84,000 Accounts payable $ 110,000 Accounts receivable 80,000 Salaries and wages payable 20,000 Inventory 140,000 Mortgage payable 180,000 Prepaid insurance 60,000 Total liabilities $310,000 Stock investments 170,000 Land 190,000 Buildings $226,000 Common stock $240,000 Less: Accumulated Retained earnings 500,000 depreciation (40,000) 186,000 Total stockholders' equity $740,000 Trademarks 140,000 Total assets $1,050,000 Total liabilities and stockholders' equity $1,050,000 a. $686,000 b. $516,000 c. $556,000 d. $376,000

d. $376,000

All of the following are interrelationships that are important to understand when preparing financial statements except: a. the net income from the income statement is used in the retained earnings statement. b. the ending retained earnings from the retained earnings statement is used in the stockholder's equity section of the balance sheet. c. the cash on the balance sheet should be equal to the cash at the end of the period on the statement of cash flows. d. all of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows.

d. all of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows.

In a classified balance sheet, assets are usually classified as a. current assets; long-term assets; property, plant, and equipment; and intangible assets. b. current assets; long-term investments; property, plant, and equipment; and common stocks. c. current assets; long-term investments; tangible assets; and intangible assets. d. current assets; long-term investments; property, plant, and equipment; and intangible assets.

d. current assets; long-term investments; property, plant, and equipment; and intangible assets.

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? a.Monetary unit assumption b.Economic entity assumption c.Periodicity assumption d.Going concern assumption

d.Going concern assumption