Accounting 1 Final 8-12

Use the incomplete stockholder's equity section of the Tokin Company's balance sheet as of 12/31/2012 to answer the following question. Common stock $7 par, 100,000 shares authorized $700,000 Additional paid in capital common 160,000 Retained earnings ? Treasury stock (2,000 shares at cost) (16,000) Total stockholders equity 974,000 What is the amount of retained earnings?

$130,000

Roehr Corp. issues 20,000 shares of $.50 par value common stock for $6 per share, the Additional Paid in capital Common stock amount will increase by

-$110,000 -$5.50 times 20,000

Router Inc lends $70,000 on a 4 month, 9% promisorry note. The total interest that Router will receive at maturity is?

-$2100 -Interest = Principal times Rate times Time 70,000 * .09 * 4/12

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3 and pays March 12, then the amount paid to the seller would be

-$3136.00 -3200 less 2% discount of 64 or $3136

If current assets amount to $150, total assets $350, current liabilities $65, and total liabilities $100, then the current ratio is

-2.31 to 1 -CA/CL = 150/65

Grover purchased a crane for $80,000. Crane has an estimated residual value of $5,000 and estimated life of 8 years or 12,500 hours of operation. The crane was purchased on January 1, 2013 and was used 2,700 hours in 2013 and 2,600 hours in 2014. If Grover uses the units of production method, what is depreciation rate per hour for equipment.

80,000-5000 = 75,000/12,500 hours of operation = depreciation rate per hour of $6

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called.

Accumulated Depreciation

With regard to a corporation's stock, par value is?

An arbitrary amount that exists to fulfill legal requirements

When should interest be accrued on a notes payable?

As time passes

Which of the following statements best describes the term "revenues"?

Assets received from the sale of products or services.

A liability for dividends is created?

At the date of declaration

Research and development costs are

Capitalized and amortized over the periods that will probably benefit from the research and development

Which balance sheet accounts are most affected by operating activities?

Current assets and current liabilities

Which of the following is an example of liquidity analysis?

Current assets are divided by current liabilities

A solvency measure that focuses specifically on the extent to which a company relies on outsiders for funds is:

Debt to equity ratio

On January 1, 2013, Grover, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and estimated life of 8 years. If Grover uses straight line for depreciation, what is the book value at Dec 31, 2020

Dec 31, 2020 is the end of the life. So we don't even have to calculate depreciation we know at the end of the life all that is left for BV is the salvage value of $5,000

The payment on accounts payable results in a(n)

Decrease in liabilities and decrease in assets

Assets classified as property, plant, and equipment are reported at:

Each assets original cost less depreciation since acquisition

Which of the following organization is primarily responsible for establishing GAAP today?

Financial Accounting Standards Board (FASB)

Horizontal or trend analysis is the comparison of

Financial statements over time.

Cost of goods sold represents

Goods available for sale less ending inventory

Tropical Co. declared a cash dividend of $30,000. The entry includes a(n).

Increase to dividends of $30,000

Operating assets with no physical properties are called

Intangible assets

Where is the receipt of cash from the sale of long-term investments reported on the statement of cash flows?

Investing activity

The recognition of cost of goods sold expense in the same period tha sales revenue is recognized from the sale of merchandise is a good example of the

Matching principle

When using the indirect method, how is depreciation expense included on the statement of cash flows?

Operating activity

What best describes the term "expenses"?

Outflow of assets resulting from the sale of goods and services.

When an inventory system updates the inventory account at the time of each sale this is known as:

Perpetual system

Which should be an investing activity?

Proceeds from sale of truck which had previously been used in the business

Earnings per share is considered a?

Profitability ratio

Which of the following is an example of a capital expenditure?

Replacing an engine in a company car

Jose Exports Inc. reported net income of $150,000 for 2013 but its cash balance decreased $40,000. Which financial statement should Jose Exports' management refer to for an explanation of this situation?

Statement of Cash Flows

Plant assets are depreciated because?

The accrual basis of accounting requires matching costs to revenues

Depreciation is the process by which:

The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.

When a company declares a 2 for 1 stock split

There is no effect on total stockholder's equity

Expenses can be matched against revenue?

Through allocation to the accounting periods in which the benefits are recognized

Stockholders equity is equal to

Total assets minus total liablities

When are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Under the cash basis of accounting