Question
1. The following are categories of accounts reported in the financial statements: Current Assets E. Stockholders Equity Non-Current Assets F. Revenue Current Liabilities G. Expense
1. The following are categories of accounts reported in the financial statements:
- Current Assets E. Stockholders Equity
- Non-Current Assets F. Revenue
- Current Liabilities G. Expense
- Non-Current Liabilities H. Not Applicable
Indicate where each of the following accounts would be reported (classified) in the financial statement categories noted above (categories may be used more than once or not at all). Identify only one category for each account listed below.
_______Long-term Notes Payable ________Current Income Tax Payable
_______Property, Plant & Equipment ________Accrued Liabilities
_______Accounts Payable ________Rental Income
_______Intangibles ________Retained Earnings
2.
_____i. What is total Stockholders Equity based on the following account balances?
Paid in Capital:
Common Stock | $922,000 |
Paid-in-Capital in excess of par | 9,243,000 |
Retained Earnings | 20,875,000 |
Other Comprehensive Income | 65,000 |
Treasury Stock | 74,000 |
Total Stockholders Equity = ________________
_____ii. Treasury stock represents
- Contra-equity account
- The cost of company shares repurchased by the company
- A reduction of stockholders equity
- All of the above are both correct
3.
_____i. Bonds are popular source of financing because:
- Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issue of stock.
- A company having cash flow problems can postpone payment of interest to bondholders.
- Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.
- The bondholders can always convert their bonds into stock if they choose.
____ii. Assume bonds were issued during the month of September. When comparing the balance sheet for August 31 to September 30, if Total Assets increased by $428,000 and Total Liabilities increased by $250,000, then the change in Stockholders Equity would be _____________. (Identify amount and if it is an increase or decrease)
_____4. The time it takes McDonalds to purchase beef patties, cook and sell burgers, and collect cash from customers is known as the:
- Accounting cycle
- Financing cycle
- Operating cycle
- Investing cycle
- Spin cycle
_____5. Which of the following is a current liability?
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_____ 6. The Notes to the financial statements indicate the types of sales included in the receivables accounts along with the uncollectible amounts balance (Allowance for Doubtful Accounts).
- T or F: If gross receivables are $225,000 and the allowance for doubtful accounts is 25,000, the Balance Sheet will indicate a line item for Receivables, net = $200,000.
- The valuation method for receivables is called:
- Fair value
- Historical Cost
- Net present value
- Lower of cost or net realizable value (LCNRV)
- Net realizable value
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