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Horizontal analysis is analysis in which...

financial statement lines are expressed as a percent of the base (earliest) year.

The payment of Accounts Payable results in a(n)

increase in liabilities and a decrease in stockholders' equity

Which of the following operating activities results in a cash outflow?

paying creditors for merchandise

If the end-of-year supplies on hand totaled $200, the purchases totaled $300, and the supplies on hand at the beginning of the year amounted to $100, how much will be reported as supplies expense for the current year?

$200 To calculate the supplies expense for the current year, you can use the following formula: Supplies Expense = Beginning Supplies + Purchases − Ending Supplies Expense = $100 + $300 - $200 = 200

A customer's check for $25 that had been deposited into the company's checking account the previous month was returned stamped 'NSF' by the bank. Which of the following journal entries is required in the company's books?

Account Receivable 25 Cash 25

Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

Additional paid-in capital-common stock increases by $145,000.

Define amortization

Amortization of a premium continues over the life of the bond until the balance in the account is reduced to zero.

The following items were obtained from the financial records: · Accounts receivable, 12-31-2023 $100,000 · Accounts receivable, 12-31-2022 144,000 · Sales for 2023 945,000 How would the change in accounts receivable be reported in the operating activities section of the statement of cash flows under the indirect method?

As an addition to net income

What is the correct fundamental accounting equation?

Assets = Liabilities + Stockholders' Equity

Which of the following statements is true concerning assets?

Assets are initially recorded using the historical cost principle.

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Assets decrease and liabilities increase.

Accounts receivable, December 31, 2023 $122,000 Accounts receivable, December 31, 2022 113,000 Sales (all on credit) for 2023 850,000 How much cash was collected from customers during 2023?

Cash Collected = Sales + Beginning Accounts Receivable − Ending Accounts Receivable Sales for 2023 is $850,000 Beginning Accounts Receivable (December 31, 2022) is $113,000 Ending Accounts Receivable (December 31, 2023) is $122,000 Cash Collected = $850,000 + $113,000 - $122,000 Cash Collected = $841,000

This company purchased a semitruck at the beginning of 2021 at a cost of $100,000. · The truck had an estimated life of 5 years and an estimated residual value of $20,000 and will be depreciated using the straight-line method. · On January 1, 2023, the company made major repairs of $30,000 to the truck that extended its remaining useful life. · Thus, starting with 2023, the truck has a remaining life of 5 years and a new salvage value of $8,000. What amount should be recorded as depreciation expense each year starting in 2023?

Depreciation Expense per Year = Cost - Residual Value / Remaining Useful Life 2021: Depreciation Expense = $100,000 −$20,000 / 5 years = $16,000 Adjusted Calculation for 2023 (after repairs): Depreciation Expense=$100,000−$8,000 / 5years=$18,400 Since the repairs were made in 2023, you'll use the adjusted values for the remaining years. answer is: $18,000

Earnings per share is an indication of how much

Earnings the company has for each share of outstanding common stock.

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

FIFO

Form 10-K details the Income Statements and Statement of Cash Flows, Balance Sheets of a company, for how many years?

Income Statements and Statement of Cash Flows 3 yearsBalance Sheets 2 years

A company issued $500,000 of bonds for $498,351. Interest is paid semiannually. The bond markets and the financial press are likely to report the bond issue price as

Issue Price = Proceeds Received / Face Value × 100 Issue Price=$498,351/ $500,000 × 100 Issue Price=99.67%

Kiss Greetings planned to raise $500,000 by issuing bonds. · The bond certificates were printed bearing a stated interest rate of 6%, which was equal to the yield rate of interest. · However, before the bonds could be issued, economic conditions forced the yield rate up to 7%. · If the life of the bonds is 10 years and interest is paid annually on December 31. How much will the company receive from the sale of the bonds?

Less than $500,000 because the 7% yield rate of interest was higher than the stated rate.

What is the classification unearned revenue on a balance sheet?

Liability

Describe the term "retained earnings" of a company?

The accumulated net income of a company that has not been distributed to owners in the form of dividends

Which of the following groups of accounts represents permanent accounts?

Prepaid Insurance, Unearned Service Revenue, and Common Stock

Which of the following is an example of short-term liquidity ratios?

Quick assets are divided by current liabilities.

Which balance sheet accounts are most affected by investing activities?

Stockholder's Equity

Which of the following invests funds into a business and is considered an owner?

Stockholders

Which method of preparing the operating activities section of a statement of cash flows adjusts net income to remove the effects of deferrals and accruals for revenues and expenses?

The Indirect Method

Which of the following statements is true regarding a corporation's purchase of treasury stock?

The cost of treasury stock is a reduction in stockholders' equity.

If a corporation declares a 2-for-1 stock split, which of the following is true?

The number of outstanding shares is twice the number that was previously outstanding before the split.

Which allowance method approach is considered to be an income statement approach for estimating bad debts?

The percentage of credit sales method

When a financial analyst determines the percentage change in operating income for the five-year period from 2021 to 2025, she is performing a

Time series analysis.

The Discount on Bonds Payable account is

a valuation account that reduces the value of the bond to market value at the issue date.

Which of the following accounts is decreased by a debit entry?

accounts payable

A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from

borrowing

A company had a beginning accounts receivable of $175,000. All sales were on account and totaled $550,000. Cash collected from customers totaled $650,000. Calculate the ending accounts receivable balance.

Ending Accounts Receivable = Beginning Accounts Receivable + Credit sales - Cash Collected Ending Accounts Receivable = $175,000 + $550,000 - $650,000 Ending Accounts Receivable = $75,000

A company reported the following information: Interest receivable, December 31, 2023 $8,000 Interest receivable, December 31, 2022 11,500 Interest revenue for 2023 16,000 How much cash was received for interest during 2023?

Cash Received for Interest = Interest Revenue + Decrease in Interest Receivable First, calculate the decrease in interest receivable: Decrease in Interest Receivable = Interest Receivable at the end of 2022 − Interest Receivable at the end of 2023 Decrease in Interest Receivable = $11,500 - $8,000 = $3,500 Now, use the formula to find the cash received for interest: Cash Received for Interest = Interest Revenue for 2023 + Decrease in Interest Receivable Cash Received for Interest = $16,000 + $3,500 = $19,500 answer is: $19,500

Cash flows from acquiring and selling products are classified as

operating activities

Lanier Tech was incorporated as a new business on January 1. · The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. · On January 1, the company issued 8,000 shares of the common stock for $15 per share and 2,000 shares of the preferred stock for $30 per share. · Net income for the year ended December 31 was $375,000. What is the amount of the company's total capital stock at December 31?

To calculate the total capital stock, find the total value of both common and preferred stock. Common Stock: Common Stock = Number of Common Shares × Par Value per Share Common Stock = 8,000 X $5 = $40,000 Preferred Stock: Preferred Stock = Number of Preferred Shares × Par Value per Share Preferred Stock = 2,000 × $10 = $20,000 Total Capital Stock = Common Stock + Preferred Stock Total Capital Stock = $40,000 + $20,000 Answer = $60,000

Issued shares represent the

number of shares that the corporation has sold.

Which of the following statements is not true? The information in the statement of cash flows helps investors, creditors and others

show the inflows and outflows of net income on an accrual basis.

The going concern assumption is concerned with

the company's ability to continue operations long enough to carry out its existing obligations.

Depreciation is a process by which

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