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managerial accounting tools for business decision making

Questions and Answers of Managerial Accounting Tools For Business Decision Making

During the introductory phase of a company’s life cycle, one would normally expect to see:(a) negative cash from operations, negative cash from investing, and positive cash from financing.(b)
Net income is $132,000, accounts payable increased$10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased$12,000 during the year. Under the indirect
The following data are available for Bill Mack Corporation.Net income $200,000 Depreciation expense 40,000 Dividends paid 60,000 Gain on sale of land 10,000 Decrease in accounts receivable 20,000
The following are data concerning cash received or paid from various transactions for Orange Peels Corporation.Sale of land $100,000 Sale of equipment 50,000 Issuance of common stock 70,000 Purchase
The following data are available for Retique!Increase in bonds payable $100,000 Sale of investment 50,000 Issuance of common stock 60,000 Payment of cash dividends 30,000 Net cash provided by
Free cash flow provides an indication of a company’s ability to:(a) generate net income.(b) generate cash to pay dividends.(c) generate cash to invest in new capital expenditures.(d) Both (b) and
The beginning balance in accounts receivable is$44,000, the ending balance is $42,000, and sales during the period are $129,000. What are cash receipts from customers?(a) $127,000. (c) $131,000.(b)
Which of the following items is reported on a cash flow statement prepared by the direct method?(a) Loss on sale of building.(b) Increase in accounts receivable.(c) Depreciation expense.(d) Cash
Why is it necessary to use comparative balance sheets, a current income statement, and certain transaction data in preparing a statement of cash flows?8.(a) What are the phases of the corporate life
Transactions made by Leonardo Bloom Co. for the month of March are shown below. Prepare a tabular analysis that shows the effects of these transactions on the expanded accounting equation, similar to
A On April 1, Vagabond Travel Agency Inc. was established. These transactions were completed during the month.1. Stockholders invested $30,000 cash in the company in exchange for common stock.2. Paid
Franz Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.Instructions Analyze the transactions
At December 31, 2011, Craig Corporation reported these plant assets.During 2012, the following selected cash transactions occurred.Apr. 1 Purchased land for $2,600,000.May 1 Sold equipment that cost
Refer to the financial statements and the Notes to Consolidated Financial Statements of Tootsie Roll Industries in Appendix A.Instructions Answer the following questions.(a) What were the total cost
The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A.Instructions(a) Based on the information in
The September 9, 2007, issue of the New York Times includes an article by Denise Caruso entitled “When Balance Sheets Collide with the New Economy.”Instructions Read the article and answer the
Bob Evans Farms, Inc. operates 714 restaurants in 31 states and produces fresh and fully cooked sausage products, fresh salads, and related products distributed to grocery stores in the Midwest,
Purpose: Use an annual report to identify a company’s plant assets and the depreciation method used.Address: www.annualreports.com, or go to www.wiley.com/college/kimmel Steps 1. Select a
Clean Air Anti-Pollution Company is suffering declining sales of its principal product, nonbiodegradable plastic cartons. The president, Dixon Nuber, instructs his controller, Gavin Wood, to lengthen
A company’s tradename is a very important asset to the company, as it creates immediate product identification. Companies invest substantial sums to ensure that their product is well-known to the
Research and development costs are:(a) expensed under GAAP.(b) expensed under IFRS.(c) expensed under both GAAP and IFRS.(d) None of the above.
Newell Industries spent $300,000 on research and $600,000 on development of a new product. Of the $600,000 in development costs, $400,000 was incurred prior to technological feasibility and $200,000
To be classified as a current liability, a debt must be expected to be paid:(a) out of existing current assets.(b) by creating other current liabilities.(c) within 2 years.(d) Either (a) or (b).
Ottman Company borrows $88,500 on September 1, 2012, from Farley State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2012?(a) $2,655. (c) $4,425.(b)
Alexis Company has total proceeds from sales of$4,515. If the proceeds include sales taxes of 5%, what is the amount to be credited to Sales Revenue?(a) $4,000.(b) $4,300.(c) $4,289.25.(d) The
No Fault Insurance Company collected a premium of $18,000 for a 1-year insurance policy on April 1.What amount should No Fault report as a current liability for Unearned Insurance Premiums at
The market interest rate:(a) is the contractual interest rate used to determine the amount of cash interest paid by the borrower.(b) is listed in the bond indenture.(c) is the rate investors demand
In a recent year, Derek Corporation had net income of $150,000, interest expense of $30,000, and income tax expense of $20,000. What was Derek Corporation’s times interest earned ratio for the
On January 1, Xiang Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on January1.The entry on December 31 to record accrued bond interest and the amortization of bond
For the bonds issued in question 16, what is the carrying value of the bonds at the end of the third interest period?(a) $492,000. (c) $472,000.(b) $488,000. (d) $464,000.
On January 1, Holly Ester Inc. issued $1,000,000, 10-year, 9% bonds for $938,554. The market rate of interest for these bonds is 10%. Interest is payable annually on December31.Holly Ester uses the
On January 1, Nicholas Corporation issued $1,000,000, 14%, 5-year bonds with interest payable on December31.The bonds sold for $1,072,096. The market rate of interest for these bonds was 12%. On the
Sampson Corp. purchased a piece of equipment by issuing a $20,000, 6% installment note payable. Quarterly payments on the note are $1,165. What will be the reduction in the principal portion of the
Presented here are long-term liability items for Borders Inc. at December 31, 2012. Prepare the long-term liabilities section of the balance sheet for Borders Inc. Bonds payable (due 2016) Notes
The 2009 adidas financial statements contain the following selected data (in millions).Compute the following values and provide a brief interpretation of each.(a) Working capital. (c) Debt to total
McDonald’s 2009 financial statements contain the following selected data (in millions).Instructions (a) Compute the following values and provide a brief interpretation of each.(1) Working capital.
A large retailer was sued nearly 5,000 times in a recent year—about once every two hours every day of the year. It has been sued for everything imaginable—ranging from falls on icy parking lots
A On January 1, 2012, the ledger of Kindt Company contained these liability accounts.During January, the following selected transactions occurred.Jan. 1 Borrowed $18,000 in cash from Premier Bank on
A The following information is taken from Lima Corp.’s balance sheet at December 31, 2011.Current liabilities Interest payable $ 96,000 Long-term liabilities Bonds payable (4%, due January 1, 2022)
A Durango purchased a new piece of equipment to be used in its new facility.The $370,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a
A Beryl Forman has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2011, Beryl was loaned$150,000 at an annual
On January 1, 2012, the ledger of Fleming Company contained the following liability accounts.During January, the following selected transactions occurred.Jan. 1 Borrowed $18,000 from TriCounty Bank
The following section is taken from Lois Corp.’s balance sheet at December 31, 2011.Interest is payable annually on January 1. The bonds are callable on any annual interest date.Instructions (a)
The following selected information was taken from the financial statements of Krispy Kreme Doughnuts, Inc.Rent expense, net of rental income, totaled $9.6 million in fiscal 2010, $11.8 million in
Daisy Corporation purchased a new piece of equipment to be used in its new facility. The $450,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the
Irina Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.Instructions Analyze the transactions
The intangible assets section of Cepeda Corporation’s balance sheet at December 31, 2012, is presented here.The patent was acquired in January 2012 and has a useful life of 10 years. The copyright
A receivable that is evidenced by a formal instrument and that normally requires the payment of interest is:(a) an account receivable.(b) a trade receivable.(c) a note receivable.(d) a classified
Kersee Company on June 15 sells merchandise on account to Soo Eng Co. for $1,000, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $300 to Kersee Company. On June 24, payment is
Net credit sales for the month are $800,000. The accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage of receivables basis. If
An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data:What is the cash realizable value of the accounts receivable at December 31, after adjustment?(a)
Which of these statements about promissory notes is incorrect?(a) The party making the promise to pay is called the maker.(b) The party to whom payment is to be made is called the payee.(c) A
Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000.The balance in receivables at the beginning of the year was $100,000 and at the end of the year
Prall Corporation sells its goods on terms of 2/10, n/30. It has a receivables turnover ratio of 7.What is its average collection period (days)?(a) 2,555 (b) 30 (c) 52 (d) 210
Which of these statements about Visa credit card sales is incorrect?(a) The credit card issuer conducts the credit investigation of the customer.(b) The retailer is not involved in the collection
What are some common types of receivables other than accounts receivable or notes receivable?
Else Company has been in business several years. At the end of the current year, the ledger shows:Bad debts are estimated to be 7% of receivables. Prepare the entry to adjust the Allowance for
At December 31, 2011, Ihrke Imports reported this information on its balance sheet.Instructions (a) Prepare the journal entries to record each of these five transactions. Assume that no cash
Here is information related to Shashko Company for 2012.Instructions (a) What amount of bad debts expense will Shashko Company report if it uses the direct write-off method of accounting for bad
At December 31, 2011, Littman Company reported this information on its balance sheet.During 2012, the company had the following transactions related to receivables.Instructions (a) Prepare the
Here is information related to Vansen Company for 2012.Instructions (a) What amount of bad debts expense will Vansen Company report if it uses the direct write-off method of accounting for bad
Porter Corporation’s balance sheet at December 31, 2011, is presented below.During January 2012, the following transactions occurred. Porter uses the perpetual inventory method.Jan. 1 Porter
Refer to the financial statements of Tootsie Roll Industries and the accompanying notes to its financial statements in Appendix A.Instructions(a) Calculate the receivables turnover ratio and average
The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.Instructions(a) Based on the information contained in
The information below is from the 2008 financial statements and accompanying notes of The Scotts Company, a major manufacturer of lawn-care products.Instructions Answer each of the following
Purpose: To learn more about factoring from websites that provide factoring services.Address: www.ccapital.net, or go to www.wiley.com/college/kimmel Instructions Go to the website, click on Invoice
As its year-end approaches, it appears that Lopez Corporation’s net income will increase 10%this year. The president of Lopez Corporation, nervous that the stockholders might expect the company to
Credit card usage in the United States is substantial. Many startup companies use credit cards as a way to help meet short-term financial needs. The most common forms of debt for startups are use of
Which of the following statements is false?(a) Loans and receivables include equity securities purchased by the company.(b) Loans and receivables include credit card receivables.(c) Loans and
Under IFRS:(a) the entry to record estimated uncollected accounts is the same as GAAP.(b) loans and receivables should only be tested for impairment as a group.(c) it is always acceptable to use the
Which of the following statements is true?(a) The fair value option requires that some types of financial instruments be recorded at fair value.(b) The fair value option allows, but does not require,
What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?INTERNATIONAL FINANCIAL REPORTING
Corrieten Company purchased equipment and incurred these costs:What amount should be recorded as the cost of the equipment?(a) $24,000. (c) $25,400.(b) $25,200. (d) $25,800. Cash price $24,000 Sales
Harrington Corporation recently leased a number of trucks from Andre Corporation. In inspecting the books of Harrington Corporation, you notice that the trucks have not been recorded as assets on its
Cuso Company purchased equipment on January 1, 2011, at a total invoice cost of $400,000. The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5 years. What is the
Additions to plant assets:(a) decrease liabilities.(b) increase a repair expense account.(c) increase a purchases account.(d) are capital expenditures.
Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2012. The machine was purchased for $80,000 on January 1, 2008, and was depreciated on a straight-line basis
Which of the following measures provides an indication of how efficient a company is in employing its assets?(a) Current ratio.(b) Profit margin ratio.(c) Debt to total assets ratio.(d) Asset
Lake Coffee Company reported net sales of $180,000, net income of $54,000, beginning total assets of$200,000, and ending total assets of $300,000. What was the company’s asset turnover ratio?(a)
Pierce Company incurred $150,000 of research and development costs in its laboratory to develop a new product.It spent $20,000 in legal fees for a patent granted on January 2, 2012. On July 31, 2012,
Indicate which one of these statements is true.(a) Since intangible assets lack physical substance, they need to be disclosed only in the notes to the financial statements.(b) Goodwill should be
Kant Enterprises purchased a truck for $11,000 on January 1, 2011. The truck will have an estimated salvage value of $1,000 at the end of 5 years. If you use the units-of-activity method, the balance
Hidden Lakes Company purchased a delivery truck. The total cash payment was $30,020, including the following items.Explain how each of these costs would be accounted for. Negotiated purchase price
Ramona Company incurred the following costs.Instructions Indicate to which account Ramona would debit each of the costs 2. Painting of and lettering on truck immediately upon purchase 3. Installation
Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to:(a) safeguard its assets.(b) create fraud.(c) analyze financial statements.(d)
The principles of internal control do not include:(a) establishment of responsibility.(b) documentation procedures.(c) financial performance measures.(d) independent internal verification.
Permitting only designated personnel such as cashiers to handle cash receipts is an application of the principle of:(a) documentation procedures.(b) establishment of responsibility.(c) independent
Which statement correctly describes the reporting of cash?(a) Cash cannot be combined with cash equivalents.(b) Restricted cash funds may be combined with Cash.(c) Cash is listed first in the current
A check is written to replenish a $100 petty cash fund when the fund contains receipts of $94 and $2 in cash.In recording the check:(a) Cash Over and Short should be debited for $4.(b) Petty Cash
Coggins Inc. owns the following assets at the balance sheet date.What amount should be reported as Cash in the balance sheet? Cash in bank-savings account Cash on hand Cash refund due from the IRS
Lisa’s Pizza operates strictly on a carryout basis. Customers pick up their orders at a counter where a clerk exchanges the pizza for cash. While at the counter, the customer can see other
Tasha Orin is unable to reconcile the bank balance at January 31. Tasha’s reconciliation is shown here.Instructions (a) What is the proper adjusted cash balance per bank?(b) What is the proper
This information relates to the Cash account in the ledger of Hawkins Company.Balance September 1—$16,400; Cash deposited—$64,000 Balance September 30—$17,600; Checks written—$62,800 The
During October, Central Light Company experiences the following transactions in establishing a petty cash fund.Oct. 1 A petty cash fund is established with a check for $150 issued to the petty cash
A The bank portion of the bank reconciliation for Horsman Company at October 31, 2012, is shown here and on the next page.The adjusted cash balance per bank agreed with the cash balance per books at
A You are provided with the following information taken from Washburne Inc.’s March 31, 2012, balance sheet.Additional information concerning Washburne Inc. is as follows.1. Gross profit is 25% of
A Fetter Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum,
The bank portion of the bank reconciliation for Carlin Company at November 30, 2012, is shown here and on the next page.The adjusted cash balance per bank agreed with the cash balance per books at
Monti Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the
On December 1, 2012, Bluemound Company had the following account balances.Debits Credits Cash \($18,200\) Accumulated Depreciation—Notes Receivable 2,200 Equipment $ 3,000 Accounts Receivable 7,500

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