Accounting Midterm
If a retail store has a current ratio of 2.5 and current assets of $195,000, the amount of working capital is:
$117,000
Shown below is information relating to the stockholders' equity of Reeve Corporation as of December 31, 2018: 3.5% cumulative preferred stock, $100 par $1,200,000 Common stock, $10 par, 400,000 shares authorized, 148,000 shares issued and outstanding 1,480,000 Additional paid-in capital: Common stock 444,000 Retained earnings (Deficit) (74,000) Dividends in arrears 42,000 Book value per share of common stock is: (Round to 2 decimal places.)
$12.22.
The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31, 2018, balance sheet: Treasury stock (200 shares, at cost) $2,000 Additional paid-in capital: treasury stock transactions $1,000 If the company had reacquired 700 shares of treasury stock in February of 2018, then for what amount was the other treasury stock sold for during 2018?
$2 per share above its cost
Shown below is information relating to the stockholders' equity of Reeve Corporation as of December 31, 2018: 3.5% cumulative preferred stock, $100 par $1,200,000 Common stock, $10 par, 400,000 shares authorized, 148,000 shares issued and outstanding 1,480,000 Additional paid-in capital: Common stock 444,000 Retained earnings (Deficit) (74,000) Dividends in arrears 42,000 What is total paid-in capital?
$3,124,000.
Rent expense in Burr Company's income statement is $480,000. If Prepaid Rent was $120,000 on January 1 and is $95,000 on December 31, the cash paid for rent during the year is:
$455,000
During its first year of operations, Brown Company incurred the following product costs: Direct materials used in production $200,000; Direct labor $175,000; and Manufacturing overhead $145,500. The Brown Company's ending Work in Process Inventory amounted to $35,000 at the end of the year. What is the company's cost of finished goods manufactured for the year?
$485,500
Early in 2018, Larsen Corporation purchased marketable securities at a cost of $90,000. In September, dividends of $6,600 were received; Larsen sold the securities in December at a gain of $5,600. How would these transactions be reported on Larsen's statement of cash flows for 2018?
$5,600 net cash provided by investing activities; $6,600 included in cash provided by operating activities.
At the beginning of the current year, Wilson Corporation had 200,000 shares of $1 par common stock outstanding and had retained earnings of $4,800,000. During the year, the company earned $1,675,000 and paid a year-end cash dividend of $3 per share. What was Wilson Corporation's retained earnings at the end of the year?
$5,875,000
During the current year, Jules Company incurred the following product costs: Direct materials used in production $250,000; Direct labor $185,000; and Manufacturing overhead $245,500. Jules Company's beginning Work in Process Inventory was $20,000 and its ending Work in Process Inventory amounted to $30,000. What is the company's cost of finished goods manufactured for the year?
$670,500
Shown below is information relating to the stockholders' equity of Reeve Corporation as of December 31, 2018: 3.5% cumulative preferred stock, $100 par $1,200,000 Common stock, $10 par, 400,000 shares authorized, 148,000 shares issued and outstanding 1,480,000 Additional paid-in capital: Common stock 444,000 Retained earnings (Deficit) (74,000) Dividends in arrears 42,000 How many shares of preferred stock are issued and outstanding
12,000 shares.
On January 1, 2018, Ole Corporation had 75,000 shares of $8 par value common stock outstanding. On July 31, 2018, Ole issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of earnings per share for the year 2018?
79,167
Family Fashions Corporation discontinued Kid-Choice, its entire line of children's clothing, in November of 2018. Prior to the disposal, Kid-Choice generated a loss of $600,000 (net of tax) for the period from January through the sale date. Because of the value of the real estate and machinery, there was a gain of $850,000 (net of tax) on the actual sale. How should this situation be reported in the financial statements of Family Fashions for 2018?
A $250,000 gain should be in the "discontinued operations" section of the income statement.
Seville Corporation has net assets of $2,072,000 and paid-in capital of $700,000. The only stock issue consists of 74,000 outstanding shares of common stock. From this information, it can be deduced that the company has:
A book value of $28 per share of common stock.
If the end of the fiscal year is not a payroll date, the Direct Labor account normally has:
A credit balance, representing accrued wages payable.
Which of the following indicates a cash receipt?
A decrease in accounts receivable.
On January 31, Village Bank had 500,000 shares of $3 par value common stock outstanding. On that date, the company declared a 10% stock dividend when the market price of the stock was $62 per share. The immediate effect of this dividend upon Village Bank was:
A reduction in retained earnings of $3,100,000.
The payment of raw materials previously purchased on account is recorded by an entry debiting:
Accounts Payable.
Which of the following is considered a quick asset?
Accounts receivable
The cost of the employee who computes total manufacturing costs would be considered:
Administrative costs.
On January 1, 2018, Aili Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $18 per share. On December 31, 2018, Aili Corporation's common stock is trading at $32 per share. Assume Aili Corporation decides to issue an additional 10,000 shares of its common stock on December 31, 2018. How will the above increase in value affect Aili?
Aili can issue the 10,000 shares at a higher price than the initial 60,000 shares.
The FASB classifies interest received on investments and interest paid on debt financing as part of operating cash flows, while the IASB:
Allows interest received to be classified as either operating or investing and interest paid as either operating or financing.
Which of the following statistics is generally computed for both common and preferred stock?
Annual dividend per share
Until the related goods are sold, product costs are viewed as:
Assets.
The quick ratio:
Cannot be higher than the current ratio
Which of the following should not be classified as a manufacturing cost?
Commissions paid to salespeople.
Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if:
Convertible securities are converted into shares of common stock.
A company failed to make an adjusting entry in the prior year to accrue earned revenue. To correct this they should:
Correct this year's statements with a prior period adjustment increasing beginning retained earnings.
On April 16, 2018, Rodriguez Corporation reacquired 12,000 shares of its own $10 par stock for $660,000 cash. On November 4, 2019, 1,000 of the treasury shares were reissued at a price of $65 per share. The journal entry to record the re-issuance of the 1,000 shares of stock on November 4 includes a:
Credit to Additional Paid-In Capital: Treasury Stock Transactions of $10,000.
The debt ratio is used primarily as a measure of:
Creditors' long-term risk
The wages paid to employees working directly on a company's products would be shown as a:
Debit to Direct Labor.
If a company has a current ratio of 2 to 1, and purchases inventory on credit, what will this do to its current ratio?
Decrease the current ratio
During the current year, Atkins, Inc. sold a parcel of land for $840,000 cash. The land had been purchased by Atkins several years ago for $410,000. Atkins, Inc. uses the indirect method to prepare its statement of cash flows. In order to reconcile net income to net cash flow from operating activities, net income must be:
Decreased by $430,000
Operating income excludes each of the following, except:
Depreciation
Which of the following is a period cost?
Depreciation on a sales showroom
The cost of the employee who installs the leather on the seats of a new automobile would be considered:
Direct labor
Of the items listed, which would appear closest to the bottom of the income statement?
Discontinued operations
The ending inventory of a merchandising company corresponds most closely to which of the following amounts of a manufacturer?
Ending inventory of finished goods
The completion of a computer by First Wireless, Inc. would require a debit to which of the following accounts?
Finished Goods Inventory
The amount of earnings per share is usually computed:
For common stock by deducting the dividends on preferred stock from net income and dividing the remaining amount by the weighted average number of common shares outstanding.
The current ratio will be _______________ the quick ratio.
Greater than or equal to
An organization that provides ratings of corporate governance services is:
ISS
Which of the following would be treated as a prior period adjustment by Gold Corporation in 2018?
In 2018, it was discovered that Gold Corporation recorded the purchase of a warehouse in 2015 as a debit to Repairs Expense.
In a "pump-and-dump" scheme, the owners of the company:
In a "pump-and-dump" scheme, the owners of the company:
Component percentages indicate the relative size of each item included in a total. Which of the following statements is true?
Income statement items are expressed as a percentage of net sales, while balance sheet items are expressed as a percentage of total assets.
Which of the following is not a characteristic of managerial accounting?
Information must be developed in conformity with generally accepted accounting principles or with income tax regulations.
Which of the following is not classified among the investing activities in a statement of cash flows?
Investment of cash made in the business by the owners.
All of the following are advantages of an increasing cash flow from operations except:
Large cash flows eliminate the need for borrowing.
A restriction of retained earnings:
Limits the dollar amount of dividends a corporation may declare.
In a statement of cash flows, cash transactions are classified into three major categories. Which of the following is not one of these three categories?
Managing activities
When equipment is purchased entirely through a loan:
Neither the loan nor the purchase of equipment is shown in the investing or the financing sections.
Herb Company manufactured more product than it was able to sell during the current year. If the salaries of the sales staff of Herb Company are improperly recorded as a product cost, what will be the likely effect on net income of the period in which the error occurs?
Net income will be overstated
Shore and Gardiner each own 10,000 shares of S&G Corporation $12 par value stock, which they purchased for $38 per share directly from the corporation. If Shore sells his stock to Gardiner for $475,000:
No account of S&G Corporation is affected.
In calculating earnings per share, the denominator of the equation includes:
Only common stock outstanding
Direct labor costs in a paint factory would include wages of employees who:
Operate paint-mixing machines.
Which of the following is a financing activity?
Payment of dividends
Cash flows from operating activities include all of the following except:
Payments of dividends
Treasury stock represents:
Previously outstanding shares that have been repurchased by the issuing company.
All of the following ratios are considered measures of profitability except:
Price-earnings ratio
Costs that are traceable to a particular unit and inventoriable are called:
Product costs.
Which of the following is not a measure of long-term credit risk?
Quick ratio
The placing of direct materials into the production process is recorded by an entry crediting:
Raw Materials Inventory.
Manufacturing companies normally have three types of inventory:
Raw materials, work in process, and finished goods.
A large stock dividend and a stock split are similar in that they both cause a:
Reduction in the market price per share.
Which of the following costs would not be considered part of the manufacturing overhead of a chemical plant?
Salaries of employees who operate distilling equipment used in the production process
Manufacturing costs do not include:
Selling expenses related to goods manufactured during the period.
An example of a non-cash investing or financing activity that is disclosed in a supplementary schedule accompanying the statement of cash flows is:
Selling land in exchange for a note receivable.
All of the following statements regarding management accounting's role in assigning decision-making authority are true except:
Since management accounting information is used for decision-making purposes, historical information is unnecessary.
If preferred stock is convertible, it is so at the option of the:
Stockholders
In a corporation's organization chart, who has/have the highest position?
Stockholders
Since manufacturing costs (direct materials, direct labor, and overhead) are incurred in the process of manufacturing units of product, these costs are credited to:
The Direct Materials Inventory, Direct Labor, and Manufacturing Overhead accounts respectively.
The "bottom line" in a statement of cash flows shows:
The cash (including cash equivalents) on the balance sheet at the end of the period.
Amounts credited to the Work in Process inventory account may best be described as:
The cost of finished goods manufactured.
In evaluating the quality of a company's earnings, which of the following factors is least important?
The dollar amount of earnings per share
When no-par stock is issued:
The issue price is credited to the Capital Stock account.
Management accounting systems are designed to assist organizations in the performance of all of the following functions except:
The preparation of income tax returns.
All of the following are true regarding benchmark studies except:
The studies are shared with competitors.
The accountant for Eric's Plumbing Equipment Company recently made a journal entry consisting of a debit to Work in Process and a credit to Raw Materials Inventory. This entry recorded:
The use of raw materials in the production process.
Comparative financial statements compare the company's current statements with:
Those of prior periods
Grand Co.'s ending inventory of work in process is twice as large as at the beginning of the period. Therefore:
Total manufacturing costs for the period must exceed the cost of finished goods manufactured.
When treasury stock is reissued at a price above cost:
Total paid-in capital is increased.
The term paid-in capital means:
Total stockholders' equity minus retained earnings.
When goods are completed and transferred from the assembly line:
Work in Process Inventory is credited and Finished Goods Inventory is debited.
The placing of direct materials into the production process is recorded by an entry debiting:
Work in process inventory
When products are completed:
work in process inventory is credited
