What is the fourth item in the financing section

Assignment Help Financial Accounting
Reference no: EM131358530

Financial Accounting Exam

1) The fundamental accounting equation is a reflection of the:

Money measurement concept

Conservatism concept

Dual-aspect concept

Historical cost concept

2) The historical cost concept reflects the fact that financial accounting practice favors:

Reliability over relevance

Management's best guess over historical financial information

Relevance over reliability

Consensus market values over historical financial information

3) Jon Sports' inventory account increased from $25,000 on December 31, 2003 to $30,000 on December 31, 2004. Which one of the following items would be included in the operating section of its 2004 indirect method statement of cash flows?

Add increase in inventory $5,000

Subtract increase in inventory ($5,000)

Add inventory balance $20,000

Subtract inventory balance ($20,000)

4) Turnkey Systems, Inc. began the month of June, 2004 with a prepaid expenses balance of $240,000. During the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. What was the June, 2004 ending balance of prepaid expenses?

A debit balance of $210,000

A credit balance of $210,000

A debit balance of $270,000

A credit balance of $270,000

5) Pentex and Marbro, small companies in the stationery business, each had a dollar gross margin of $20,000 during September 2004. Pentex's September sales were twice that of Marbro's. If Pentex's gross margin as a percentage of sales for September was 10%, Marbro's gross margin as a percentage of sales for the same period was:

10% 5% 20% Cannot be calculated

6) When an entity recognizes revenue before it has received cash for the sale, it records an increase in a(n):

Liability such as 'Advances from customers'

Accounts payable

Accounts receivable

Prepaid expense

7) Juan Foods pays off a long-term debt in full. Which one of the following statements describes the effect of the sale on Juan Foods?

Current ratio increases; total debt to equity ratio decreases

Current ratio decreases; total debt to equity ratio decreases

Current ratio decreases; total debt to equity ratio increases

Current ratio increases; total debt to equity ratio increases

8) On January 1, 2005, Mansfield Company has a retained earnings balance of $256,000. During 2005, its net income is $44,000 and it announces and pays $12,000 in dividends. There is no other dividend-related activity during the year. Its December 31, 2005 retained earnings balance is:

$2,12,000 $2,88,000 $3,00,000 $2,24,000

9) Juan Foods makes a cash sale with a positive gross margin. Which one of the following statements describes the effect of the sale on Juan Foods?

Current ratio increases

Current ratio decreases

No change to Juan Foods' current ratio

Insufficient information to judge effect on current ratio

10) Juan Foods pays off a long-term debt in full. Which one of the following statements best describes the appropriate book-keeping for this transaction?

Debit cash; credit long-term debt

Debit long-term debt; credit owners' equity

Debit owners' equity; credit long-term debt

Debit long-term debt; credit cash

11) On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. What is the effect of these April transactions on Preston's balance sheet?

Cash increased by $12,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings increased by $2,000.

Accounts receivable increased by $2,000; inventory decreased by $8,000; cash increased by $12,000; retained earnings increased by $12,000.

Cash increased by $12,000; retained earnings decreased by $2,000; inventory decreased by $10,000; accounts receivable decreased by $12,000.

Cash increased by $2,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings decreased by $12,000.

12) Consider the same scenario as in the previous question: On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. If Preston had no other sales and records no other collections from customers during the month of April, the operating section of Preston's indirect method statement of cash flows for April will show the following de-accrual adjustments to net income:

Subtract change in accounts receivable; add change in inventory.

Add change in accounts receivable; subtract change in inventory

Add change in accounts receivable; add change in inventory.

Subtract change in accounts receivable; subtract change in inventory.

13) Planet Music buys all of its inventory on credit. During 2005, Planet Music's inventory account increased by $10,000. Which of the following statements must be true for Planet Music during 2005?

It made payments of less than $10,000 to suppliers.

It made cash payments of $10,000 to suppliers.

It made more cash payments to its suppliers than it recorded as cost of goods sold.

It paid less cash to suppliers than it recorded as cost of goods sold.

14) On December 31, 2005, Juan Foods purchases a van for $12,000. How does the purchase of the van affect Juan Foods' 2005 income statement?

Decreases sales by $12,000

Increases operating expenses by $12,000

No material effect

Increases cost of goods sold by $12,000

15) To be recorded as a liability, an item must meet three specific conditions. Two of them are: it must involve probable future sacrifice of economic resources by the entity, and it must be a present obligation that arose as a result of a past transaction. Which one of the following is the third condition?

The item must reduce the market value of the recording entity

It must involve a transfer of resources to another entity

It must involve the expenditure of cash now or in the future

It must not cause total liabilities to exceed total assets

16) The next 9 questions are based on Patnode Inc.'s balance sheets at year end 2004 and 2005.

During 2005, Patnode announced and paid dividends of $1,000, the only dividend-related activity during the year. What was its 2005 net income?
$5,600 $3,600 $4,600 Cannot be estimated

17) During 2005, Patnode had a cash outflow of $15,000 for investing activities and a cash inflow of $7,000 from financing activities. Its 2005 cash flow from operations was:
Outflow of $15,000

Inflow of $15,000

Outflow of $8,000

Inflow of $8,000

18) Patnode's 2005 statement of cash flows contains four items in the financing section. Three of them are: Short-term debt issued, $15,000; Short-term debt paid, ($10,000) and Dividends paid, ($1,000). What is the fourth item in the financing section?

Retained earnings, $4,600

Common stock issued, $3,000

Long-term debt paid, ($3,000)

Cash from financing, $3,000

19) How much total depreciation and amortization expense did Patnode record during 2005?

$10,000 $6,000 $3,000 $5,000

20) During 2005, Patnode recorded sales of $17,000. How much cash did it collect from its customers?
$17,000 $14,000 $3,000 Cannot be estimated

21) Which one of the following items will not appear in the operating section of Patnode's 2005 indirect method cash flow statement?

Deduct: increase in accounts receivable $3,000

Add: decrease in accounts payable $1,000

Add: increase in taxes payable $2,400

Add: decrease inventories $6,000

22) What is Patnode's current ratio at the end of 2004?

2.46 0.41 1.12 0.89

23) What is Patnode's total debt to equity ratio at the end of 2004 (rounded to two decimal places)?

5.3 0.19 0.25 4.04

24) Patnode recorded a 2005 tax expense of $3,000. What amount did it pay to the tax authorities during 2005?
$2,400 $7,000 $600 $5,400

25) Kirby, Inc. records a sale with a gross margin of $1,400. Which one of the following statements correctly describes the effect of such a sale on its balance sheet?

Common stock increases by $1,400

The sales revenue account increases by $1,400

The gross margin account increases by $1,400

The retained earnings account increases by $1,400

26) Sandy Robbins is the sole owner of a hair salon. He often takes small amounts of "lunch money" from the cash register, figuring that "it is my business anyway." His accountant, however, insists that Sandy make a note of the cash he takes, and at the end of the each accounting period, she debits owners' equity and credits the cash account for the total amount that Sandy has taken during the period.

In recording the cash withdrawals even though Sandy is sole proprietor, the accountant is correctly applying the:
Matching concept

Entity concept

Materiality concept

Conservatism concept

27) Anderson Electronics' 2005 return on sales percentage is 20%. Its 2005 net income is $40,000. What is its 2005 sales?

$4,00,000 $80,000 $2,00,000 $1,00,000

28) Anderson Electronics' 2005 return on sales percentage is 20%. Its 2005 net income is $40,000. What is its 2005 sales?
$4,00,000 $80,000 $2,00,000 $1,00,000

29) During June 2005, Bextra Inc. recorded sales of $55,000 but only $20,000 was collected in cash from customers. Cost of goods sold of $38,000. What was the effect of these sales on Bextra's current ratio?

Current ratio increases

Current ratio decreases

Current ratio remains unchanged

Insufficient information provided to judge effect on current ratio

30) Which one of the following statements is not true about statements of cash flows prepared according to U.S. GAAP?
The operating section of the indirect method starts with the net income of the period

In the indirect method statement, the period's depreciation is added to net income because it is a source of cash

Interest payments are included in the operating section of the direct method statement

The investing section of the direct method statement for a period is identical to the investing section of the indirect method statement for the same period

31) A company raised $50,000 in cash by taking a one-year loan of $10,000 and a 5-year loan of $40,000. Which of the following is the correct journal entry to record this transaction?
Debit short-term debt $40,000; debit retained earnings $10,000; credit cash $50,000

Debit short-term debt $50,000; credit cash $50,000

Debit cash $50,000; credit long-term debt $50,000

Debit cash $50,000; credit short-term debt $10,000; credit long-term debt $40,000

32) Which one of the following statements describes the rules about posting transactions into T-accounts in the ledger?
For assets, debits are entered on the left; for liabilities, credits are entered on the left

For assets, credits are entered on the left; for liabilities, debits are entered on the left

Debits on the left; credits on the right

Credits on the left; debits on the right

33) Baxtra, Inc. pays $20,000 in cash as interest to its lenders during 2005. According to U.S. GAAP, in which section of the statement of cash flows would this payment be included?
The operating section

The financing section

The investing section

Depends on whether cash flow statement is direct or indirect method.

34) Taylor Company had a salaries payable balance of $18,000 on December 31, 2004. During 2005, it paid $50,000 in cash as salaries, and recorded a salary expense of $50,000. Its December 31, 2005 salaries payable balance is:
$50,000

$18,000

$1,00,000

Cannot be determined from the information provided

35) On April 30, 2005, Zono Electronics, Inc. made a payment of $3,500 to Imperial Distributors, a supplier. Choose the statement that best describes the recording of this financial transaction by Imperial Distributors.
Debit cash $3,500; credit accounts payable $3,500

Debit accounts receivable $3,500; credit cash $3,500

Debit accounts payable $3,500; credit cash $3,500

Debit cash $3,500; credit accounts receivable $3,50

36) Sardi Company estimates its 2005 tax expense to be $80,000. It makes a cash payment of $20,000 to the tax authorities on December 31, 2005. How should this transaction be recorded by Sardi?
Debit tax expense $80,000; credit cash $60,000; credit taxes payable $20,000

Debit tax expense $80,000; credit cash $20,000; credit taxes payable $60,000

Debit tax expense $80,000; credit cash $20,000

Debit tax expense $80,000; credit cash $20,000; credit accounts payable $60,000

37) On June 1, 2005, Planet Music has accounts payable of $45,000. During the month, debits of $3,000 and credits of $11,000 were made to the account. At the end of June 2005, what was the accounts payable balance?
A credit balance of $53,000

A debit balance of $42,000

A credit balance of $56,000

A debit balance of $53,000

38) Barnaby & Sons receives a large shipment of goods from its supplier. It pays $58,000 at the time of delivery and promises to pay the remaining $42,000 within the next two months. What is appropriate journal entry for this transaction?
Debit cash $42,000; debit inventory $16,000; credit accounts payable $58,000;

Debit inventory $100,000; credit cash $58,000; credit accounts payable $42,000

Debit accounts payable $58,000; credit cash $42,000; credit inventory $16,000

Debit accounts payable $58,000; debit cash $42,000; credit inventory $100,000

39) Annie's Fitness sells a set of free weights to a customer for $1,000. The customer pays $600 in cash and puts the rest on her store credit account. Which one of the following statements describes the most appropriate accounting for the transaction?
Debit cash $600; debit accounts receivable $400; credit cost of good sold $1000

Debit cash $600; debit accounts receivable $400; credit revenues $1,000

Debit revenues $1,000; credit cash $600; credit accounts receivable $400

Debit cash $600; debit accounts receivable $400; credit inventory $1,000

40) Annie's Fitness sells a set of free weights to a customer for which Annie's had paid $750. Which one of the following statements describes the most appropriate accounting for the transaction?
Debit cost of goods sold expense $750; credit cash $750

Debit inventory $750; credit cost of goods sold expense $750

Debit cost of goods sold expense $750; credit inventory $750

Debit inventory $750; credit accounts payable $750

Reference no: EM131358530

Questions Cloud

General description that includes a brief history : Company name  (Starbucks) and general description that includes a brief history. A brief overview of their products and/or services and how they meet the needs of customers.
What is the approximate duration on this bond : The bank invested portfolio owns a bond with a 15 year maturity, coupon of 5% semianually, paid a price of $1,075 for the bond. What is tthe YTM on this bond? if interest rates rise 100 basis points what will the new price on the bond be? What is the..
Identify domestic and global environments : 1. Identify Domestic and Global Environments (countries) that are in opposing cultural clusters (as identified in International business: theory and practice) identify which cluster(s) your two countries fit.
Return on investment (roi) of these resources : What tangible and intangible resources will be needed to implement your project - What improved outcomes do you anticipate will occur that could indicate the project produced a successful return on investment (ROI) of these resources?
What is the fourth item in the financing section : Three of them are: Short-term debt issued, $15,000; Short-term debt paid, ($10,000) and Dividends paid, ($1,000). What is the fourth item in the financing section?
Analysts estimate universal forest : Suppose Universal Forest’s current stock price is $65.00 and it is likely to pay a $0.42 dividend next year. Since analysts estimate Universal Forest will have a 13.0 percent growth rate, what is its required return? (Round your answer to 2 decimal p..
Compute the matrices for the intact laminate : Evaluate the strength ratio RF P F on top and bottom of each lamina using the given failure criteria:- Compute the matrices for the intact laminate.
Compare the terms mental health and mental illness : In 500 words compare and contrast the terms mental health and mental illness. You must use a minimum of 4 current references in your response
Type of hedge could be used to deal with this cost change : Your financial firm needs to borrow $200 million by selling time deposits with 270 day maturities. If interest rates on comparable deposits are currently at 2.5%, what is the cost of issuing these deposits? Suppose interest rates decline to 2%. What ..

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  What analysis did you use to select the target or targets

What analysis did you use to select the target or targets? Identify and evaluate sources of debt and/or equity financing, determine optimal target capital structure, and determine how the parent will pay for the acquisition.

  Consider a federal government coupon bond

Consider a Federal Government coupon bond with a $1,000 face value and a coupon rate of 1%. If the bond matures in 25 years, pays semi-annual coupons, and the yield to maturity is 5%, then what will the bond sell for?

  Prepare the journal entries

First three years of operations for Mallard Production Company. Prepare the journal entries to record each of the transactions in the picture

  What basic accounting principle is violated

Using the information gained from reading the SEC's Accounting and Auditing Enforcement Release against Federico Quinto, Jr., what stands out to you as the most serious of the charges? Why? In the Delphi Corporation case, why is the recording of the ..

  What is journey entry for this transaction

The firm delivers goods with a sales price of $375,000 to customers during 2014, as contracted. This amount includes the goods ordered on 11/15/2013 ( this transaction was dr cash 45,000 and cr unearned revenue 45,000). the remaining goods were sold ..

  Analysis essential to management-investors and creditors

Evaluate at least (2) factors that make financial statement analysis essential to management, investors, and creditors. Provide a rationale for your response

  What makes them an entrepreneur

Describe a person (famous or not) who you consider to be an entrepreneur. Thinking about this person what makes them an entrepreneur? What skills do they have that sets them apart from others?

  Loss is disallowed due to her tax basis or at-risk amount

Sue invested $5,000 in the ABC General Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of unsecured debt. Sue is allocated a 10 percent share of the debt resulting in a tax basis of $9,000 and at risk am..

  Calculate corporations income tax liability for current tax

Walnut Corporation owns 60 percent of Teak Corporation, a domestic corporation. During the current year, Walnut Corporation received $20,000 in dividends from Teak Corporation. Calculate the corporation's income tax liability for the current tax year..

  Analyze the case from both the travelers perspective

Analyze this case from both the traveler's and the police officer's perspective. What constitutional rights are at issue? Have any of them been violated?

  Different from the one reported on the trial balance

Company’s Bank statement shows a cash balance of $31,000, which is different from the one reported on the trial balance.

  Properly reflects the time value of money in this situation

Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. Assume an interest rate of 8% properly reflects the time value of money in this s..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd