Questions and Answers of Horngrens Financial And Managerial Accounting

The purposes of the statement of cash flows are toa. evaluate management decisions.b. determine ability to pay debts and dividends.c. predict future cash flows.d. All of the above
The main categories of cash flow activities on the statement of cash flows area. direct and indirect.b. current and long-term.c. non-cash investing and financing.d. operating, investing, and
Operating activities are most closely related toa. long-term assets.b. current assets and current liabilities.c. long-term liabilities and stockholders’ equity.d. dividends and treasury stock.
Which item does not appear on a statement of cash flows prepared by the indirect method?a. Collections from customersb. Depreciation expensec. Net incomed. Gain on sale of land
Leather Shop earned net income of $57,000 after deducting depreciation of $5,000 and all other expenses. Current assets decreased by $4,000, and current liabilities increased by $8,000. How much was
The Plant Assets account and Accumulated Depreciation—Plant Assets account of Star Media show the following:Star Media sold plant assets at an $11,000 loss. Where on the statement of cash flows
Mountain Water Corp. issued common stock of $28,000 to pay off long-term notes payable of $28,000. In what section(s) would these transactions be recorded?a. Financing activities payment of note,
Holmes, Inc. expects net cash flow from operating activities to be $160,000, and the company plans purchases of equipment of $83,000 and repurchases of stock of$24,000. What is Holmes’s free cash
Maxwell Furniture Center had accounts receivable of $20,000 at the beginning of the year and $54,000 at year-end. Revenue for the year totaled $116,000. How much cash did the business collect from
If accrued liabilities increased during the year, which of the following is correct when using a spreadsheet to complete the statement of cash flows (indirect method)?a. Increase in Accrued
The statement of cash flows reports three types of cash flow activities. Explain the purpose of each of the following activities or sections in the statement of cash flows and how each of them
Cash flow items must be categorized into one of four categories. Identify each item as operating (O), investing (I), financing (F), or non-cash (N). If reported on the statement of cash flows, decide
Health Sports Company had the following beginning balances as at January 1, 2024 and reported the following data at year ended December 31, 2024:Net income for 2024 was $28,000. Net income included a
Good Choice Toys Shop includes the following accounting records for its financial year ended June 30, 2024:Requirement Compute cash flows from operating activities by the indirect method. Net income
Describe the multi-step income statement.
Travis Department Store uses a periodic inventory system. The adjusted trial balance of Travis Department Store at December 31, 2024, follows: TRAVIS DEPARTMENT STORE Adjusted Trial Balance December
Which principle or concept states that businesses should use the same accounting methods and procedures from period to period?a. Disclosureb. Conservatismc. Consistencyd. Materiality
Which inventory costing method assigns to ending merchandise inventory the newest—the most recent—costs incurred during the period?a. First-in, first-out (FIFO)b. Weighted-averagec. Specific
Assume Nile.com began April with 14 units of inventory that cost a total of $266.During April, Nile.com purchased and sold goods as follows:Under the FIFO inventory costing method and the perpetual
Suppose Nile.com used the weighted-average inventory costing method and the perpetual inventory system. Use the Nile.com data in Question 3 to compute the weighted-average unit cost of the
Which inventory costing method results in the lowest net income during a period of rising inventory costs?a. Weighted-averageb. Specific identificationc. First-in, first-out (FIFO)d. Last-in,
Which of the following is most closely linked to accounting conservatism?a. Lower-of-cost-or-market ruleb. Materiality conceptc. Disclosure principled. Consistency principle
At December 31, 2024, Stevenson Company overstated ending inventory by $36,000.How does this error affect cost of goods sold and net income for 2024?a. Overstates cost of goods sold and understates
Suppose Maestro’s had cost of goods sold during the year of $230,000. Beginning merchandise inventory was $35,000, and ending merchandise inventory was $45,000. Determine Maestro’s inventory
Suppose Nile.com used the LIFO inventory costing method and the periodic inventory system. Use the Nile.com data in Question 3 to determine Nile.com’s cost of goods sold at the end of the month.a.
Summer BBQ uses a perpetual inventory system to record inventory. All purchases and sales of merchandise inventory were on account. Company records indicate the following data for the month of June
Summer BBQ uses a perpetual inventory system to record inventory. All purchases and sales of merchandise inventory were on account. Company records indicate the following data for the month of June
Summer BBQ uses a perpetual inventory system to record inventory. All purchases and sales of merchandise inventory were on account. Company records indicate the following data for the month of June
Summer BBQ uses a perpetual inventory system to record inventory. All purchases and sales of merchandise inventory were on account. Company records indicate the following data for the month of June
Great Music Shop began April with merchandise inventory of 15 units that cost $80 each. The sale price of each unit is $280. During the month, Great Music purchased and sold merchandise on account as
Great Music Shop began April with merchandise inventory of 15 units that cost $80 each. The sale price of each unit is $280. During the month, Great Music purchased and sold merchandise on account as
Great Music Shop began April with merchandise inventory of 15 units that cost $80 each. The sale price of each unit is $280. During the month, Great Music purchased and sold merchandise on account as
Which of the following is not part of the definition of internal control?a. Separation of dutiesb. Safeguard assetsc. Encourage employees to follow company policiesd. Promote operational efficiency
The Sarbanes-Oxley Acta. created the Private Company Accounting Board.b. allows accountants to audit and to perform any type of consulting work for a public company.c. stipulates that violators of
Encryptiona. avoids the need for separation of duties.b. creates firewalls to protect data.c. cannot be broken by hackers.d. rearranges messages by a special process.
Separation of duties is important for internal control ofa. cash receipts.b. cash payments.c. Neither of the aboved. Both a and b
Michelle Darby receives cash from customers. Her other assigned job is to post the collections to customer accounts receivable. Her company has weaka. assignment of responsibilities.b. ethics.c.
Payment by check is an important internal control over cash payments becausea. the check must be signed by an authorized official.b. before signing the check, the official reviews the invoice
The petty cash fund had an initial imprest balance of $100. It currently has $20 and petty cash tickets totaling $75 for office supplies. The entry to replenish the fund would containa. a credit to
When recording credit card or debit card sales using the net method,a. cash received equals sales.b. cash received equals sales minus the fee assessed by the card processing company.c. cash received
The document that explains all the differences between the company’s cash records and the bank’s figures is called a(n)a. bank collection.b. electronic fund transfer.c. bank statement.d. bank
Sahara Company’s Cash account shows an ending balance of $650. The bank statement shows a $29 service charge and an NSF check for $150. A $240 deposit is in transit and outstanding checks total
Espinoza Air Conditioning & Heating had the following select financial data as of June 30, 2024.What is Espinoza’s cash ratio?a. 0.34 b. 0.65 c. 0.78 d. 1.54 Cash Cash Equivalents Accounts
Marathon Running Shoes reports the following:Journalize all entries required for Marathon Running Shoes. 2024 Sep. 1 15 30 Recorded National Express credit card sales of $96,000, net of processor fee
Mountain Cabin Rentals reported the following selected amounts in its post-closing trial balance as of December 31, 2023 and December 31, 2024. All accounts have normal balances.Requirements 1.
Each of the following describe internal control related to cash receipt or cash payment situations.a. Perfect Beauty Shop buys beauty products from suppliers and sells them to end customers. The
Anna is the owner of Wise Choice, a secondhand branded ladies’ bags company.As the business is small, there are only four employees at the company: Michelle, Sam, Simon, and Amy. The following
With good internal controls, the person who handles cash can alsoa. account for cash payments.b. account for cash receipts from customers.c. issue credits to customers for sales returns.d. None of
Which of the following is a limitation of the direct write-off method of accounting for uncollectibles?a. The direct write-off method overstates assets on the balance sheet.b. The direct write-off
The entry to record a write-off of an uncollectible account when using the direct write-off method involves aa. debit to Allowance for Bad Debts.b. credit to Cash.c. debit to Accounts Receivable.d.
Brickman Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $1,000. During the year Brickman
Brickman’s ending balance of Accounts Receivable is $19,500. Use the data in the preceding question to compute the net realizable value of Accounts Receivable at year-end.a. $16,800 b. $19,500 c.
During the year, Bernard Company had net credit sales of $45,000. At the end of the year, before adjusting entries, the balance in Accounts Receivable was $12,500 (debit)and the balance in Allowance
At December 31 year-end, Crain Corporation has an $8,400 note receivable from a customer. Interest of 10% has accrued for 10 months on the note. What will Crain’s financial statements report for
Using the data in the preceding question, what will the income statement for the year ended December 31 report for this situation?a. Nothing because the business has not received the cash yetb. Note
At year-end, Schultz, Inc. has cash of $11,600, current accounts receivable of $48,900, merchandise inventory of $37,900, and prepaid expenses totaling $5,100. Liabilities of $55,900 must be paid
Using the data in the preceding question, assume accounts receivable had a beginning balance of $67,400 and net credit sales for the current year totaled $807,800. How many days did it take Schultz
Ensuring internal control over the collection of receivables Consider internal control over receivables collections. What job must be withheld from a company’s credit department in order to
Recording credit sales and collections Record the following transactions for Summer Consulting. Explanations are not required. Apr. 15 18 Provided consulting services to Bob Jones and billed the
Applying the direct write-off method to account for uncollectibles Shawna Valley is an attorney in Los Angeles. Valley uses the direct write-off method to account for uncollectible receivables.At
Collecting a receivable previously written off—direct write-off method Spring Garden Greenhouse had trouble collecting its account receivable from Steve Stone. On June 19, 2024, Spring Garden
Applying the allowance method to account for uncollectibles The Accounts Receivable balance and Allowance for Bad Debts for Signature Lamp Company at December 31, 2023, were $10,800 and $2,000
Applying the allowance method (percent-of-sales) to account for uncollectibles During its first year of operations, Fall Wine Tour earned net credit sales of $311,000.Industry experience suggests
Applying the allowance method (percent-of-receivables) to account for uncollectibles The Accounts Receivable balance for Lake, Inc. at December 31, 2023, was $20,000.During 2024, Lake earned revenue
Applying the allowance method (aging-of-receivables) to account for uncollectibles Surf and Sun had the following balances at December 31, 2024, before the year-end adjustments:Requirements 1.
Computing interest amounts on notes receivable A table of notes receivable for 2024 follows:For each of the notes receivable, compute the amount of interest revenue earned during 2024. Round to the
Accounting for a note receivable On June 6, Lakeland Bank & Trust lent $80,000 to Stephan Stow on a 30-day, 9% note.Requirements 1. Journalize for Lakeland the lending of the money on June 6.2.
Accruing interest revenue and recording collection of a note On December 1, Kyle Corporation accepted a 60-day, 9%, $12,000 note receivable from J. Michael in exchange for his account
Recording a dishonored note receivable McKale Corporation has a three-month, $18,000, 9% note receivable from L. Peters that was signed on June 1, 2024. Peters defaults on the loan on September
Using the acid-test ratio, accounts receivable turnover ratio, and days’sales in receivables to evaluate a company Silver Clothiers reported the following selected items at April 30, 2024 (last
Match the terms with their correct definition. Terms 1. Accounts receivable 2. Other receivables 3. Debtor 4. Notes receivable 5. Maturity date 6. Creditor Definitions a. The party to a credit
On June 1, 2024, Best Performance Cell Phones sold $21,000 of merchandise to Anthony Trucking Company on account. Anthony fell on hard times and on July 15 paid only $5,000 of the account receivable.
Endurance Running Shoes reports the following:Journalize all entries required for Endurance Running Shoes. 2024 May 6 Jul. 1 Dec. 31 2025 Jul. 1 Recorded credit sales of $102,000. Ignore Cost of
The following selected transactions occurred during 2024 and 2025 for Baltic Importers. The company ends its accounting year on September 30.Journalize all required entries. Make sure to determine
Unique Media Sign Incorporated sells on account. Recently, Unique reported the following figures:Requirements 1. Compute Unique’s days’ sales in receivables for 2024. (Round to the nearest
Sleepy Recliner Chairs completed the following selected transactions:Record the transactions in the journal of Sleepy Recliner Chairs. Explanations are not required. (Round to the nearest dollar.)
Consider the following transactions for CC Publishing.Journalize all transactions for CC Publishing. Round all amounts to the nearest dollar. 2024 Dec. 6 31 31 2025 Mar. 6 Jun. 30 Oct. 2 Dec. 1 1 30
Relax Recliner Chairs completed the following selected transactions: Record the transactions in the journal of Relax Recliner Chairs. Explanations are not required. (Round to the nearest
Consider the following transactions for TLC Company.Journalize all transactions for TLC Company. Round all amounts to the nearest dollar. 2024 Dec. 6 31 31 2025 Mar. 6 Jun. 30 Oct. 2 Dec. 1 1 30
Which cost is not recorded as part of the cost of a building?a. Real estate commission paid to buy the buildingb. Construction materials and laborc. Concrete for the building’s foundationd. Annual
How should you record a capital expenditure?a. Debit a liabilityb. Debit capitalc. Debit an expensed. Debit an asset
Which method almost always produces the most depreciation in the first year?a. Units-of-productionb. Straight-linec. Double-declining-balanced. All produce the same depreciation in the first year.
A Celty Airline jet costs $28,000,000 and is expected to fly 200,000,000 miles during its 10-year life. Residual value is expected to be zero because the plane was used when acquired. If the plane
A copy machine costs $45,000 when new and has accumulated depreciation of$44,000. Suppose Print and Photo Center discards this machine and receives nothing.What is the result of the disposal
Suppose Print and Photo Center in the preceding question sold the machine for$1,000. What is the result of this disposal transaction?a. Loss of $44,000b. Gain of $1,000c. Loss of $1,000d. No gain or
Which method is used to compute depletion?a. Double-declining-balance methodb. Straight-line methodc. Depletion methodd. Units-of-production method
Which intangible asset is recorded only as part of the acquisition of another company?a. Patentb. Goodwillc. Copyrightd. Franchise
Liberty Corporation reported beginning and ending total assets of $25,000 and$22,000, respectively. Its net sales for the year were $18,800. What was Liberty’s asset turnover ratio?a. 0.75 b.
A truck costs $50,000 when new and has accumulated depreciation of $35,000.Suppose Wilson Towing exchanges the truck for a new truck. The new truck has a market value of $60,000, and Wilson pays cash
Perfect Skin Care Manufacturer purchased land for $350,000, paying $150,000 in cash and signed a note payable of $200,000. In addition, Perfect Skin Care paid delinquent property tax of $6,800 and
Midtown Telecom, a communication service provider in Iowa, Nebraska, the Dakotas, and Montana had the following transactions related to its intangibles during the year:Requirements 1. Journalize the
Central States Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana and had the following transactions during the year:Requirements 1. Journalize the entry to record
Accounting is the information system thata. measures business activities.b. communicates the results to decision makers.c. processes information into reports.d. All of the above
Which of the following is not an external user of a business’s financial information?a. Taxing authoritiesb. Customersc. Employeesd. Investors
Generally Accepted Accounting Principles (GAAP) are currently formulated by thea. Financial Accounting Standards Board (FASB).b. Securities and Exchange Commission (SEC).c. Institute of Management
Which type of business organization is owned by only one owner?a. Corporationb. Partnershipc. Sole proprietorshipd. Itemsa, b, and c are all correct.
Which of the following characteristics best describes a corporation?a. A business with a single ownerb. Is not taxedc. Stockholders not personally liable for entity’s debtsd. Not a separate taxable
Which of the following requires accounting information to be complete, neutral, and free from material error?a. Faithful representation conceptb. Cost principlec. Economic entity assumptiond. Going
At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning service, had total assets of $3,630 and equity of $2,280. How much were Global Cleaning Service’s
Consider the overall effects on Global Cleaning Service from selling and performing services on account for $6,400 and paying expenses totaling $2,500. What is Global Cleaning Service’s net income

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